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IFS CEO Darren Roos on why enterprise software must change - "Vendors aren't focused on business outcomes"

Jon Reed Profile picture for user jreed April 3, 2023
Summary:
When Darren Roos joined IFS as CEO in 2018, he made some bold statements - so where do we stand now? Time for a gut check. We also hashed out the meaning of the IFS "Moment of Service" - and why I think IFS' digital value engineering pursuit is underrated.

IFS CEO Darren Roos
(IFS CEO Darren Roos talking shop)

IFS CEO Darren Roos has been busy, with IFS hitting earning milestones, despite headwinds facing customers globally.

Meanwhile, Roos' book,  Moment of Service, has come out - a book which crystallizes where IFS is headed. IFS doesn't seem like an under-the-radar enterprise software vendor these days.

But I have a different angle. I was at the IFS World user event in 2018, soon after Roos came on board. Roos was so new to IFS that he was literally taking fresh positions on IFS during his panel appearances with assembled analysts. I liked Roos' outspoken stances on why enterprise software vendors need to treat customers differently. Roos also had strong words on how IFS itself needed to change.

Enterprise software vendors are too inflexible - did IFS change?

During our video catch up last week, I told Roos that based on IFS' results, it appears he was true to his word. Customers do need a different experience from their ERP vendors - from the initial "hard sell" sales experience, right on through project delivery. Does Roos feel he has achieved this? As he told me:

I came out of a business where there was so much rhetoric and hyperbole. Coming into the role, being a first time CEO, I don't remember ever thinking about this - but I just instinctively thought, 'I really need to stick to what I know, and do the things that I really believe are important.'

On a rational level, you say, 'Well, you've got to listen to your customers, and you've got to listen to what they want. If you do what your customers want, they'll pay you more money for it. And they will be better evangelists for your technology, and then others will want to do it.' But so many companies don't do that.

Enterprise SaaS vendors have some pretty impressive technology. But there is still an underlying aspect of doing business with software vendors that needs to change. Most vendors, however modern their stack, don't take this fully into account. Roos responded:

I think you're 100% right. I don't remember deliberately thinking about that; it became a part of how we did things... What's the biggest complaint in this enterprise software market? It's that 'the vendors are inflexible, and they're not focused on our business outcomes.'  The technology, in many cases, is fairly similar.

Certainly, when I joined, our technology was very similar to what our competitors had. Since then, we have focused on going deeper in Asset Management and Field Service Management, and our asset and service-centric use cases around order management and project accounting, and so on. So we've legitimately built differentiation there. But in the beginning, what we had was, 'We're just not going to be the a-holes.'

The Moment of Service - inside the book

But in at least one way, Roos is behaving like other enterprise software CEOs: he wrote a book. Why?

I had this real allergy to doing a book at all. It just seemed like a very self-serving thing to do. You know, every CEO comes along and then writes a book. So we came up with this Moment of Service concept.

We wanted to find a way to articulate to customers - there was this abstract idea of: they've got assets; they've got customers; they've got their employees. To be successful, they have to orchestrate these things,  and all of them are different.

I remember talking to Roos about the need to break down the product walls between ERP, EAM, and FSM. One underlying concept was "Industrial IoT," but it wasn't perfect. It was also too techno-buzzwordy for a focus on business outcomes. And so the Moment of Service concept was born:

We didn't want to talk about ERP or asset management or field service management. That's not how our customers think about it. So as we went round and round on 'How do we message this?', We came up with this idea of the Moment of Service, and that you're orchestrating your customers, your people and your assets, to create Moments of Service.

Exceptional Moments of Service are not easy to consistently achieve, but it's a motivating target business leaders can wrap their heads around:

Every business has these Moments of Service, and probably multiple Moments of Service. Irrespective of the industry, irrespective of the size of customer, whether they are profit or non-profit, there are Moments of Service for everyone. Every executive, every C-level executive can relate to this.

Thus the book:

Then all of a sudden, we've got the book. It was just a vehicle to explain the Moment of Service. I hope that we hit the mark, but it's not about the book, it's really about finding a method to explain the importance of thinking about your company, whatever you do, as a series of Moments of Service. If you can get those Moments of Service right, then your customers will be more loyal; they will pay you more money; they will stay with you for longer, and that is surely what everybody wants.

Do customers buy in? The book cites a number of IFS customers on that have embraced the Moments of Service framework. Here is how Nick Ward, VP of Digital Systems at Rolls-Royce, reacted:

Any service interaction we have, whether that is delivering an engine, bringing an aircraft into service, delivering a maintenance task, whatever it is, they are all Moments of Service for us, and they are important. As with someone at a car launch event, the focal point is buying the car, and that is important, but that is point-in-time versus continuous service. We do have those big moments. We have our initial sale. We have renewal points. We have an engine delivery. And then a whole series of continuous service steps at every minute of the day, in between those points.

Can IFS' digital value assessment change the industry?

But how do you get started? This is a bugaboo for most enterprise software vendors. Even if they have an energizing vision, it still comes down to a heavy-handed sales pitch. This is one area where I believe IFS excels. IFS has done a dramatic rethink of classic "value engineering." The IFS approach starts with a digital business value assessment - DBVA for short. This is free to prospects, and it is not product-related. It's about analyzing where the opportunities are. Roos explains:

How do we decide where to start? How do we decide what to do first? The answer is surely where the value is, right? And that's what DBVA does - it helps us to immediately zoom in on, 'What is the problem that the customer is like?' We've got this amazing source of benchmark data. We're looking at the processes; we're looking at the expense line items; we're looking at the opportunities to run those businesses better. We're able to immediately zoom in and go 'Look, these are the areas where the customer is going to be able to see significant benefit.'

For those who want to go further with IFS, you can connect DBVA results into the IFS scoping tool:

We've integrated our digital business value assessment into our scope tool, which is effectively deciding what modules need to be implemented. We've got this closed loop now, which enables us to go back and measure whether we've been able to achieve the outcome. That's a million miles from where we were with these types of enterprise applications just a few years ago. So the answer to your question is very focused on, 'Where is the outcome? Where is the value?'

My take - enterprise projects need better visibility

As we see from the  IFS earnings numbers, IFS is definitely doing something right:

  • Annual Recurring Revenue (ARR) up 57% YoY driven by bookings from new customers.
  • Cloud revenue up 80% YoY driven by existing and new customers switching to IFS Cloud.

As Roos said:

For IFS, 2022 was a year characterized by acceleration. We increased our headcount to over 5,500 employees, reached a significant landmark in revenue at $1bn and outpaced our competitors by delivering double-digit growth for the 5th consecutive year.

There is more data to crunch; IFS also released their IFS State of Service 2023 Global Report. In terms of achieving that Moment of Service, it would be good to see a public maturity model, to show customers how their peers advance along this ambitious approach. I say "ambitious" because we all know how many things can go wrong in those elusive real-time moments - not to mention the amount of app/data silos that need to be broken down to achieve the visibility such moments are made of.

The Moment of Service book takes steps towards that maturity model, laying out seven characteristics that, "when combined, deliver the Moment of Service." It is a solid list - I especially like number five:

It’s not just the product or service: it’s about every tangential aspect including the delivery, the out-of-box experience, the billing, and how sustainable it is.

I've made no secret of why I think the IFS DBVA approach stands out. Most vendors can't offer prospects that kind of readiness assessment and benchmarking. Even if they can, it typically requires some kind of product license or emphasis, which really defeats the purpose. What purpose? Engage with prospects on their transformation goals, with their own data, on their own terms. Give them something of consultative value, without requiring any purchases. Amazing how purchases tend to flow after such experiences. I guess you could call that a "moment of service" also.

Enterprise projects are under greater budget scrutiny. Purchases still happen, but the evaluation process is rigorous. Roos says their DVBA method is helping customers here:

At a granular level, we're able to articulate where the value is. I think that gives confidence to people to go ahead and do projects.

I'm also tracking how the DVBA/scoping combination allows IFS to have a continual status monitor on projects. This kind of visibility enables course corrections that have eluded enterprise software implementations for decades. Roos has started to talk about this in his interviews and videos; IFS should play a vocal role in pressing this topic.Vendors might fantasize that all projects breeze from install to business outcome, but that's not how it is in the real world.

However, if you can combine:

  1. An energizing aspirational framework (e.g. Moment of Service)
  2. A realistic maturity model that demystifies the steps to get there
  3. An ability to assess transformation readiness, and to monitor the state of the project throughout

You have something we've rarely seen in enterprise software, if ever. That's much more interesting, to me, than any kind of ERP or FSM go-to-market messaging.

IFS still has plenty of challenges ahead. Getting the bulk of its older customers onto the IFS Cloud release is the obvious one - especially as IFS intends to make sure this upgrade process matches its customer-centric values.

I would be concerned if Roos presented the IFS of today as a finished state - an internal transformation completed. But he still sees plenty unfinished. Obviously, IFS is looking heavily into generative AI - but I'm avoiding such talk until we get further down the enterprise maturity path. That's another benefit of the Moment of Service concept: it brings a clear focus on the top priority obstacles. In line with that death-to-silos mantra, Roos sees room for better integration:

There's so much more that we can be doing. We can do a better job of making it easier to implement our software so that the time to value is faster. We can do a better job of integration.

We have this partnership with Boomi; we're working closely with Steve Lucas and the gang to make sure that we make it easier for our systems to interoperate with the the heterogeneous landscape that our customers inevitably will have, and will require in order to orchestrate these Moments of Service. I think it is an evolution - we're constantly looking at ways that we can leverage technology to make it better.

If I'm an IFS customer, that last comment from Roos is arguably the best thing in this entire piece. That tells quote tells me IFS is still hungry, still determined to get better. I'll take that any day over the usual happy talk I hear from most vendors about "seamless integration." To deliver for enterprise customers, we all have work to do.

 

 

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