State of Manufacturing ERP - Part 3, vendor profile - IFS

IFS is a Swedish manufacturing ERP software firm with a strong presence in asset-intensive industries (e.g., aviation, pipelines, oil & gas, etc.). The company has been around for quite some time but has been on a major re-invention journey the last few years. At its recent user conference, the company demonstrated a number of IoT capabilities as well as R&D efforts to incorporate drone and other technologies into their ERP solutions.

When I heard IFS executives speak at their October 2016 user conference, I didn’t fully appreciate the thought they’d put into their Industrial Internet of Things (IIoT) designs. I heard many, many IFS executives expound on how IoT impacted certain industries (e.g., pipeline management, aviation, mining, etc.). They clearly understood a number of differences between the Industrial and Consumer IoT worlds, too.

In preparing this update, I reviewed the 130+ slide images I took at that event.  A significant number of these involved IoT and how IFS software would use sensor data to drive value for its asset intensive customers. I now realize that IFS may be much further along in:

• Understanding the IoT space vis-à-vis their competitors
• Creating IoT solutions that are relevant to European and certain vertical customers
• Crafting a vision for how they will bring value to customers via new data and insights. The IFS vision appears practical and executable and it may be ahead of many of its competitors. This observation comes after validating the IoT or IIoT capabilities of IFS competitors.

I also get why Accenture is a partner of IFS as it wants to play in the digital transformations of companies in these verticals.

IFS hasn’t slowed down with news since their user conference. Latest developments include:

• IFS has released a new version of the Field Service Management (FSM) solution. Philosophically, IFS sees service a key function in a more digitally driven manufacturing world. More manufacturers will enable their products with sensors and it is the data (aka digital exhaust) from these devices that will enable manufacturers to create new as-a-service solutions. This phenomena is already present in a number of industries (e.g., companies can now buy locomotive or turbine engine power as a monthly service as opposed to making a huge upfront capital investment in an asset).
• For some manufacturers, this shift to providing services will expose major shortcomings in their existing application software portfolios. To that end, IFS has integrated its IoT Business Connector software with its FSM solution. The FSM module also got a new user interface/experience upgrade.
• IFS acquired a Canadian aviation maintenance software company in late 2016. The company, Mxi Technology Ltd., will bolster the IFS aviation vertical and should permit additional defense market penetration. IFS gets the Mxi product, Maintenix, and its personnel. This should cause IFS’ North American headcount to grow.
• IFS (via its investor EQT) intends to make more investments in areas such as mobility and global scalability.
• IFS grew revenue 15% for the last full reporting year with a 23% growth bump in Q4 alone. Cloud offerings are driving a third of new bookings. IFS has a large European install base and a respectable number of defense industry customers. As a result, IFS is still getting demand for on-premises or private cloud solutions.
• Approximately 44% of the company’s revenue comes from services. While mega-partners like Accenture were a presence at the user conference, I suspect more channel partners would like a crack at these service monies.

My revised take

• CEOs of Industrial or capital-intensive firms should definitely evaluate IFS if only to get an education on how IoT might work for them.
• Digitally-focused firms will find IFS’ approach to IoT more detailed and enlightened than many competitive offerings
• A good proof point for this digital focus in IFS is their recent enhancement of their Field Service Management solution. An ERP vendor can’t help a manufacturer morph into an “As-A-Service” firm if it doesn’t offer an IoT enabled FSM application.

Check back early next week when we showcase another of the manufacturing ERP cohort