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Mark Moffat, new CEO at IFS, on business value, MIT, and going head-to-head with IBM and Salesforce

Phil Wainewright Profile picture for user pwainewright February 6, 2024
Summary:
An exclusive interview with Mark Moffat, new CEO at IFS, about its new collaboration with MIT CISR, delivering business value for customers, and competing against Salesforce and IBM in FSM and EAM.

Headshot of Mark Moffat, CEO, IFS
Mark Moffat, IFS (IFS)

Within days of announcing its appointment of Mark Moffat as CEO, enterprise applications provider IFS unveiled a new collaboration with the prestigious MIT Center for Information Systems Research (CISR), which he had brokered during the eighteen months since he joined the company. As a patron of the research center, IFS will be able to introduce its customers to participate in research projects and apply some of the results in its product development. As a customer-focused initiative grounded in real-world research, it's characteristic of the approach Moffat seems destined to bring to his new role. This is no different from the ethos adopted by his predecessor Darren Roos, who remains closely involved with the company as Chair of the Board, but Moffat seems even more fervent on the topic. In an exclusive interview with diginomica, he tells us:

This customer obsession, it's really real. I spend over 50% of my time with customers, and the rest of the executive board do the same. The level of proximity that we have as a team to customer success is unrivalled, and we're all very proud of that ...

It's a very simple formula. You spend enough time in the customer environment, you listen to what you've been told and you listen to the customer's challenges about what they're facing, as an industry, as an organization. If you find a way to synthesize and respond, you're unbeatable — it gives you unbeatable currency. I think too many competitors lose sight of that.

Maintaining momentum

Last week, the company published its headline financial results for FY2023, posting €1.062 million ($0.96m) net revenue, up 30% on the previous year. Within that figure, ARR was up 26% and is expected to soon hit the $1 billion mark, while software revenue as a whole was up 33% and cloud revenue up 46%. It's not quite the 40% overall growth rate the company saw in the opening quarter of last year, but Moffat is confident of maintaining momentum in 2024. He believes the vendor's focus on delivering measurable outcomes is proving to be a good fit with the cautious mood of customers. He says:

The value cases are about how to increase operational effectiveness, how to reduce downtime of plants and assets, how to optimize workforces. A lot of what we enable is a much leaner, much more progressive CapEx capability in and around the assets. That plays very well in an environment where chief execs, CFOs, are coming under pressure to continue to deliver bottom line when top line is pressed.

In a tougher economic environment, what we do plays really well. We're seeing that there's still, I would say, longer sales cycles on average, compared to maybe two, three years ago. But we're not talking materially. As long as we're rigorous in our qualification, which we are, and as long as our demand gen holds up, which it is, then we're just finding it needs us to be much more execution-focused.

The past year has seen some notable wins, particularly in Europe, including Tele 2, Mattr, NOTE AB, Havfram, Van Oord, TÜV NORD and Stannah Lifts. Several have been former customers of Salesforce FSM subsidiary ClickSoftware, a product that is now end-of-life, and IBM Maximo, an Enterprise Asset Management (EAM) product. Moffat says:

Last year, we brought on 243 new logos. And we'd expect to do the same in the coming 12 months. So we're very focused on our net new business. We're just finding on an ongoing basis, where we're head-to-head against Salesforce, IBM Maximo, in that asset/service leading value case, our win rate is north of 70% — which, again, is partly down to our rigorous qualification. We don't waste a lot of time in sales cycles, if we don't think we're the right fit for a customer, or we can't create the value that we know we can. We're pretty ruthless, and hence the quality of our pipeline and the quality of what we deliver is always exceptional.

Establishing business value

IFS takes a methodological approach to establishing the value case for customers, which we've discussed in previous interviews with Darren Roos during his time as CEO. It starts with a 'Digital Business Value Assessment' to analyze opportunities for process improvement in the business, then ties that to the IFS product functions capable of delivering those improvements, and then after the roll-out finally measures whether the outcome was achieved. Moffat, who in his previous role as Chief Customer Officer, was responsible for "making sure we deliver all those promises" made by sales, sums up:

You can literally ascribe the components of that value case to the core functionalities of the IFS solution, and it's built into the product in such a way — and this is where we're really driving to next — that allows customers in the go-live scenario to be able to track the benefits actually delivered in accordance to that value case.

This focus on business value was instrumental recently in closing a very large contract with a North American utility company. Moffat says:

The customer said to us, basically, 'One of the reasons that you won was, your competitor tried to sell us licences, and you sold us outcomes.'

The collaboration with MIT CISR could further strengthen the value engineering proposition. Moffat, who during his previous career at PwC had worked with Peter Weill, the Center's Chairman and Senior Research Scientist, explains:

They have an awful lot of empirical research that aligns very closely with our value thesis. We're working right now with them to align our value engineering toolset with the MIT data set, that can give us independent credence to some of our claims in terms of what digital transformation can do for each of our functional capabilities. It's very early stage. We've got a couple of research projects we're going to work on with MIT, and we're going to invite customers to be part of that.

Meanwhile, he believes it may be possible to tap into new research on the impact of real-time decision making on metrics such as customer experience, employee experience, business operations and financial performance, with a view to IFS customers being able to benchmark their own performance. He says:

If we can find a way to make our customers be prepared to make their data available, we can give them productized guidance on how well they're doing in real-time decision-making relative to the norms, which in turn can give them a little bit of a stretch in terms of how they can view the upside in performance.

Ambitious strategy

Prior to joining IFS in July 2022, Moffat had led the technology consulting business in EMEA for PwC, where establishing the business value of technology was also a recurring theme. He says: "I spent a lot of time with boards, figuring out how to make sure that the value case was realized." Originally trained as an accountant, his previous roles at PwC included six years working with Vodafone, with an 18-month stint as CFO at Ghana Telecom after it became part of the telecoms giant.

He says he's formed a good working relationship with Roos in the past 18 months, which will carry over into their new roles. Moffat says Roos will be able to channel more of his attention into looking at M&A opportunities:

He's managing the board on an ongoing basis and I get to run the business and be thinking about what next for IFS, so we get the best of both worlds... He's just got a bit more time to be able to look strategically at the overall composition of our company.

So how does Moffat see his own impact on IFS? He's not yet ready to answer that question, preferring to take his time before coming to a conclusion. He says:

We've got a very clear strategy, which takes us through to the end of 2025, and the company are ruthlessly focused on executing that strategy. It's our six core industries and five functional areas. It's a set of company goals we've set ourselves.

I'm very deliberately taking the next six months to listen as much as I can to all of our partners, all of our customers, and of course, our internal staff, to understand what's working well, where's the strategic opportunity, where do we think the market's going? Then by the time I get to the back end of the year, and certainly Unleashed [the annual IFS conference in October], that's the point where we'll be declaring a bit more of a strategy.

For now, the existing strategy is ambitious enough, requiring IFS to punch above its weight against much larger competitors. He says:

In the short term, it's about lifting and reminding everyone about the opportunity that we have to be a competitor to Salesforce and SAP at the size and scale of those organizations. We know that we've got a winning product, we know we've got a winning ethos, and we've got a focus on the customer that no one else can match. When we scale that, I genuinely think we're unbeatable. Right now, we're valued in the region of 10 billion. Our competitors are 10 times order of magnitude more. That's the opportunity for us.

But in doing that, I'm ruthlessly focused on making sure we protect fiercely the things that make us different in the eyes of our customers.

My take

A change of CEO always raises questions about whether this presages a change in company strategy. In this case, there's little sign of a significant shift. This has clearly been a carefully planned succession. Darren Roos has done the hard work of transitioning IFS from a largely on-premises software vendor selling perpetual licenses into a largely cloud-based SaaS vendor selling recurring subscriptions. He now moves up to a role where he can continue to take a strategic view as well as potentially getting involved in new transformation tasks, whether through acquisitions by IFS or at other companies in its private equity owner's portfolio and elsewhere.

Moffat now comes in to pick up a much more operationally focused role, helping to scale the company to new heights around its core IFS Cloud platform. But that doesn't mean all the hard work has been done. More transformation looms, particularly as the company brings new AI-powered capabilities into its products, and also with a potentially more aggressive acquisition strategy extending its reach. A significant on-premise installed base still remains as cloud migrations continue, and the expansion of the partner ecosystem is ongoing. All while continuing to deliver the business outcomes customers expect from IFS, now starting to be tracked in detailed dashboards built into its own products. There are a lot of spinning plates here for Moffat to keep in the air, but first impressions are that he'll relish the challenge of doing it calmly and competently.

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