For the challengers

Paul Esherwood Interviews Alan Laing

IFS may be the biggest (and best) ERP vendor that you haven’t heard of. With sales approaching $700m and plans to hit the $1bn mark by 2021, IFS is a taking a refreshing approach to selling enterprise technology. “We are basing our proposition on service, outcomes and time to value”, says Alan Laing, UK managing director. Paul Esherwood stopped by their sparkling new HQ in Staines to find out more.

IFS is not a newcomer to the enterprise technology sector. It was formed in 1983 and two years later released its first product, IFS Maintenance. From its base in Sweden, the company grew organically and rolled its products out across Scandinavia and eastern Europe, floating on the Swedish stock exchange in 1995. Since then IFS has conquered new geographies in north America, central Europe, the UK and Asia and now operates in more than 50 countries. Its revenues have soared to almost $700m and its growth, in terms of revenues and cloud license uptake, is far outstripping the wider ERP sector’s performance. It employs more than 3,500 people and has 10,000 customers world-wide. In 2015 it was acquired by EQT, the Swedish private equity house, and is on course to reach $1bn in revenues by 2021. Impressive stuff; so why has no-one heard of them?

If you work in aerospace and defence; if you run an airline or transport fleet; if you are involved in manufacturing and distribution; you probably have heard of IFS. But if you’re not in one of those asset-heavy verticals, IFS may just be the best ERP vendor you’ve never heard of and need to get to know. Globally recognised as the leader in field service management, enterprise asset management, and fleet, workforce and maintenance scheduling, IFS Applications 10 is amongst the most functionally rich and user-friendly software suite available. Its recent acquisition of Astea (see page 36 of this issue) further enhances the IFS portfolio and its tie-up with Acumatica (see last issue page 12) brings a new set of cloud-first capabilities to the IFS stable. It is very vertically focussed so if you are a retail customer or in financial services they won’t be an ideal stablemate. But as their portfolio of applications and solutions deepens they are beginning to make an impact with the upper tier of enterprise customers – historically the stronghold of Oracle and SAP.

One of the things we are most proud of is our ability to reduce the time-to-value for customers

Ambition, opportunity and passion

Having just opened their new head office facility in Staines, I spent the day talking to Alan Laing, UK managing director, about uncovered ambition, differentiation, solutions rather than products, time to value…and rugby.

A former Oracle and Sage senior executive, Laing joined IFS in November last year after being dragged out of semi-retirement by new CEO, Darren Roos. A solicitor by trade, Laing cut his teeth in the tech world working for a company called DEC that was at the forefront of the micro-computing revolution in the mid-80s. While negotiating patents in Hong Kong and China, Laing bumped into some Oracle people and soon joined the ranks of big red where he stayed for almost 15 years. After leaving Oracle in 2000, Laing joined Avaya – the unified comms company – before moving to Sage in 2014 where he spent five years prior to joining IFS.

“I joined in November last year and it was a really exciting time because I’d actually gone and talked to several customers to find out what IFS was about. I got this great feedback about the product and people. Everyone said they are easy people to work with. That their people stayed on the journey and whoever sold you the thing was there when it was being implemented and beyond.”

New CEO Darren Roos has to take a lot of credit for pivoting IFS into the kind of organisation that it is today compared with the one he inherited some 18 months ago. Aided by a significant chunk of capital from EQT and an inherently strong belief that it was possible to build a software business in a different way, Roos has ignited a feel-good factor around IFS – and its infectious. The branding and marketing is now on point; the company framework has been redefined in a simpler and more coherent structure; a strong CSR policy has been introduced to ‘give back and pay forward’ leading to a much clearer and worthier identity, and the leadership team has been invigorated with clear and decisive authority.

“Just after I joined, Darren organised an off-site meet-up and I came away from that feeling like I’d been pumped full of drugs because it was like, ‘wow, what an opportunity, even bigger than I’d thought’. We came together as a team and the combination of our management capability, our experience, the joined-up thinking, the same values and the same passion – it was second to none. We’re on a road now; we’re winning some good business, we’re winning some big business, and I think we have got a very good handle on what our differentiation is.”

The IFS difference

One, among many, differentiators for IFS is that they are not hell-bent on pushing their customers to the cloud. While most vendors have chanted for several years that SaaS is the way forward, IFS has taken a more pragmatic and measured approach by offering customers choice rather than ultimatums. Yes, cloud revenues are growing at IFS faster than any other part of their business. And yes, they are transitioning many customers from their install base to the cloud. But, they aren’t in a rush to do it and they are taking a customer-led rather than vendor-led approach to delivering the transformative technologies needed by their clients.

Laing said: “Our customer base is approximately 80 percent on-premise because that’s our history. Now that we have added our cloud and managed service capability a lot of customers are moving down the path towards cloud. But for a lot of customers, in the industries we serve, cloud is not in the top five priorities that they want to talk about. We want to offer choice and we want people to make the right decision for the right reason. It’s easy to get a bit carried away with the Salesforce model and think that’s the only way to do things. Other vendors look at Salesforce and see it took them 10 years or so to get to $12bn in revenues. They hardly turned a profit but their stock market valuation was off the chart and that’s become a model that many are trying to replicate. We build our products and services for our customers rather than building things with profit and shareholder value in mind.”

Products that deliver rapid ROI

Talking about outcomes and solutions rather than products and services is not unique to IFS. Many technology vendors and consultancies are refocussing their offerings to be much more aligned to an end goal, with technology as an enabler, rather than boasting about product capabilities. IFS is taking a lead in this conversation, not just by developing technology which can deliver demonstrable ROI, but also in its broader approach to implementation strategy.

“One of the things we are most proud of is our ability to reduce the time-to-value for customers that select IFS,” said Laing. “The days of spending several million pounds on some software, taking a year to implement it and three years to see the benefit are over.”

One of the main reasons that IFS is able to deliver rapid ROI for their customers is the way in which their products are developed and deployed. Of course the core offering is based on a set of applications and methodologies that form the ERP suite. But, many of the innovations that deliver maximum value are derived outside of these generic task orientated applications and are built on the back of deep domain expertise. Afterall, in finance a general ledger is a general ledger – and although organisations may set up their chart of accounts differently or apply different rules or logic to their finance functions – the core ERP is fundamentally transacting and recording the same type of information for all businesses. The innovation that drives a competitive edge is something that is built and deployed for a specific customer to solve a specific problem, and IFS is still at the scale where enterprise customers can influence the vendor (rather than the other way round) and they are able to build capabilities and extensions to tackle unique scenarios.

“We’re at that size you can influence us. You can influence our road map and tell us what you need. We have a very strong industries team here and they understand the specific challenges which we can address, not through customisation, but through building the capability into the core. That agility from being a mid-sized player as opposed to one of the really big guys is much more prevalent and it’s a big differentiator for us,” said Laing.

We pride ourselves on doing exactly what it says on the tin

Challenges for IFS to overcome

As with all good news stories (of which this is one) there are challenges that IFS will need to address if it is to retain its momentum. The first of these hurdles is to bring its install base up to the current ‘Apps 10’ version of its software so that they can benefit from the significant development that has gone into the product over the past few years. Many IFS customers are still languishing on much older versions and finding a way to create a clear business case for these customers will be key. Many of them will be smaller and more traditional manufacturers where the argument for spending any money on a technical upgrade project will be challenging to overcome. One option for IFS would be to transition those smaller customers to the Acumatica product which is a cloud-first SaaS suite that recently joined the EQT portfolio. However, there is no official relationship between IFS and Acumatica as yet and the arrangement is merely one of mutual benefit rather than true partnership. It may be that IFS would prefer to retain those customers, even if they are starting to slip below the level of their target market, and find an alternative way to bring them up to date.

Another challenge for IFS is the development of a true SaaS product that can be deployed in a multi-tenant public cloud. As Laing was keen to point out earlier, the majority of their customers are not focussed on moving to the cloud so it may appear this is not a factor for the vendor to be concerned about. But it should be, as the product development timescales for a fit-for-purpose SaaS product is years, not weeks or months, and at some point in the not too distant future when there is a higher level of maturation for cloud technologies, IFS will need to have a product that can at least be offered as an option, even if their customers may be slow to buy licenses at first.

While IFS’ brand now looks like something that belongs in the 21st century it still lacks serious recognition within the upper tier of enterprise customers. It is making in-roads and they now includes the likes of Sky, Rolls Royce, National Grid and FI team SportPesa Racing Point amongst its customers. However, there is still work to be done and one of the very best ways to drive brand awareness will be through an enhanced partner network that will effectively do the their bidding for them. IFS is strengthening its eco-system by enlisting new channel and implementation partners. However they are still some way off from convincing the likes of Deloitte, PwC and Capgemini that an IFS practice is a viable option and it will be interesting to see how this proposition develops over the next 12 months.

I came away from that feeling like I’d been pumped full of drugs because it was like, ‘Wow, what an opportunity

My final thoughts

IFS has a new-ish leadership team that is energised and motivated to build a business they can be proud of. Their customer base is not only loyal but satisfied and their products are exceptionally good when applied in the verticals that they serve. Under Roos’ leadership on a global scale and Laing’s leadership in the UK, they have two executives with clarity of purpose and the experience to deliver on their plans. Most importantly, IFS is realistic about where they can add value and they have zeroed in on the verticals where they can be the leading player rather than dilute resources and energy trying to be everything to everyone.

Laing summed up by saying: “We are the alternative and there’s a different way of doing ERP. You might not have heard of us but this company is on the move. It’s not a new company so you’re not risking yourselves by buying new technology. You’re buying hundreds of man years of experience backed by a renewed energy, renewed ambition and the fact that we get it right. I have lots of conversations with customers where they look me in the eyes and say, ‘are you going to deliver this for me? Because they have been bitten before – it’s easy to say but difficult to do – and we pride ourselves on doing exactly what it says on the tin.”