In the first part of this multi-part story, I talked about IFS approach to ERP for manufacturers and the emphasis on the Industrial IoT. I also talked about the more general issues associated with digital transformation as it relates to this industry, separating incremental change from bold moves. In this segment, I’m diving into the technology and IFS’s reliance on the Microsoft stack.
At some point in the customer event, one IFS executive remarked that they’re in the applications business not the technology business. That is why they’ve chosen to rely on Microsoft to power many components of their tech stack going forward. Microsoft will provide them with PowerBI, machine learning, Azure Managed Cloud, etc. These new Microsoft tools are a key component of IFS’ Industrial IoT strategy and tech stack.
The tech stack changes should deliver value in several ways including:
- Easier and faster ability for customers and partners to build out product extensions and enhancements
- Faster application of new releases
- Smaller and more easier upgrades
- Enablement of advanced functionality (e.g., algorithms)
- Quicker deployments
IFS is not the first vendor to embrace the Microsoft arsenal. I’ve heard similar stories from competitors such as Unit4, SYSPRO, Acumatica and more. With all of these vendors striking similar deals, where’s the differentiation in this strategy? An alternative strategy might have been to embrace more open source software in the tech stack the way that Workday and others have done. That strategy lets a vendor add an infinite number of customers and owe no (appreciable) additional monies to systems software providers.
That’s a critical point for vendors who want to work on relentlessly lowering the Total Cost of Ownership (TCO) for their solutions and to eliminate dependency on third parties. This does mean that there is no short cut route to development because in an open source world, vendors have to make careful bets about which version, fork or whatever they choose.
However, turning over cloud management and operations to Microsoft makes sense as few software firms will ever have the scale, customer base or capital appetite to match the abilities of Amazon or Microsoft. The risk for ISVs like IFS in this camp is that the cost of hosting on Amazon or Microsoft becomes prohibitive at massive scale.
We believe that while hosted cost may be a problem for the short term, both Amazon and Microsoft (along with Oracle and Google) will recognize the commodity nature of broad scale campmate architectures and respond accordingly.
Those arguments aside, there are plenty of customers who do care about the underpinning technology to the point where IFS selection of Microsoft as the stack of choice will be viewed favorably.
New stack opportunities
IFS’ last major release (#9) was announced 18 months ago at the last IFS World event with most customers gaining access to the product approximately one year ago. Today, about 20% of IFS’ 1 million users are currently on release 9.
This is interesting on a couple of levels. IFS executives indicated that the new release contained 500+ industry updates. As a result, existing users should be able to upgrade without needing to manually re-apply a number of their pre-existing customizations. Reduced customization effort should trigger reduced upgrade conversion costs for customers and act to lower TCO over time.
The new tech stack should also drive up adoption rates of new releases. As a result, new releases are now arriving in more digestible and smaller chunks. This also produces the added effect of reduced customer TCO, and that will be welcome for all customers.
In my final piece about IFS I’m going to talk about their operational intelligence offering, views on cloud and then my final summary. Buckle up folks, there’s plenty more to consider.
Image credit - via IFS
Disclosure - IFS covered the author's travel to the company's annual customer event