Oracle and IFS doing well because of pandemic opportunity for customers

Profile picture for user gonzodaddy By Den Howlett July 15, 2020
Summary:
Oracle and IFS are not direct competitors but they are both seeing remarkably similar behaviors in the ERP market. What gives?

People with direction - individuals moving as a group in upwards arrow © Digital Storm - shutterstock
(© Digital Storm - shutterstock)

I don't normally conflate two vendors in a single story but this is an exception. Here's why. In recent days I've spoken with Steve Miranda, EVP applications at Oracle and Darren Roos, CEO IFS. Both are bullish about their current offerings based on what they see happening in their customer bases. Both have news too. Let's kick off with the news pieces. 

Oracle just released updates to both its Fusion Cloud ERP and EPM systems to give finance leaders help handling pandemic related topics. Predictive planning, improved document ingestion and code defaults in payables, digital skills assistance for time and project entries, and embedded incidence management are the headline features. JV accounting (at last!) and project driven supply chain complete the finance related improvements. 

Oracle digital assistant
A clean mobile UI (via Oracle presentation)

On the supply chain side, where Oracle was arguably behind the proverbial functional curve, a slew of improvements have been released that include replenishment planning, depot repair and backlog management. 

Oracle is even handed in declaring that it has no illusions there are any magic wands to be waved around when it comes to handling supply chain realties on the ground. No solution is going to help you when shipments are locked in harbors or where essential materials cannot be moved into production. The idea is to provide insights that at least get customers in a position to make best, median and worst case scenario decisions.

For its part, IFS just changed owners or rather PE fund owners at a transaction value of around €3 billion with TA Associates joining as a 'significant minority' partner. This isn't a case of swapping out to kick an exit can down the road but a firm commitment to IFS growth plans. Unsurprisingly, Roos is more than happy with the outcome. According to Roos, the company has doubled revenue and quadrupled profit since he joined. More important for customers, the future development of the company's products and services is assured for at least the next five years, the usual investment period for PE firms committed to the long term. 

So - what about the really good news? It seems that in both company cases, at least some customers are viewing the pandemic as an opportunity to solving long standing problems that in the past would likely be tackled in piecemeal fashion. This was unexpected according to both executives. First Miranda:

I was surprised by the number of large customers prepared to go live in the last quarter. We asked them, are you really sure about that and they emphatically said 'yes.' They were all done remotely. 

Roos:

When we last spoke, I could never have anticipated that we'd see projects successfully go live remotely and yet it's happened and is happening. 

Both told me they expect to see an accelerated rate of project delivery going into the second half of the calendar year. Miranda: 

I have no doubt - it's absolutely happening. 

Roos:

I was on a call today with 46 stakeholders for a large project in South Africa, which is in lockdown and they're determined to go ahead. 

Customers in both companies' portfolios are moving past the panic phase and are responding to what they see as the long term changes in the way business is conducted as a driver for the kind of organizational transformation that is normally difficult, time consuming and costly. As Erik Kimberling reminds us, getting people to adapt and to change is hard and usually meets with resistance. That may be changing. the clear implication I got from both my conversations is that at least some companies are undertaking the kind of forced change that would have been unimaginable at the beginning of the year. 

My sense, confirmed by both executives is that we are all going through what amounts to a global IBM Moment. It's a case of adapt to survive and thrive or die in true Darwinian fashion. The pandemic created options are binary. For context, check out this 2007 HBR story wherein the author noted of a talk given by Irving Wladawsky-Berger :

What made his presentation so memorable was the fact that he was so candid. Yes, IBM had engaged in a deep-seated transformation. But to this day he wonders whether Big Blue would have made such big changes had the company not walked to the edge of the abyss. “Can a company reinvent itself,” this legend of corporate transformation asked, “without going through a near-death experience?”

We’d all like to think so–that was the point of our gathering back in 1994, that is the point of the never-ending stream of books and articles exhorting the leaders of big companies to make big change. And yet, how many examples of truly deep-seated transformation can you site that did not involve what Wladawsky-Berger calls a near-death experience? 

As to the future of how technology proceeds and the place it has in all our lives remains uncertain. Both executives agree that fundamental change is underway but Roos caveats by saying that it is very much a regional experience with some countries (think Asia) where a return to whatever the current 'normal' representation its is underway. Culture plays a big role here so that while a variety of management principles appeared to operate in broadly similar fashion across the world, the forced remote working practices were met with varying degrees of success. This is partly because of the place that work occupies in individual cultures. It is a fascinating topic and one to which we will return. 

My take

As I reflected upon the remarkable similarities in what I heard I wondered whether the nature of the markets IFS and Oracle address has a bearing on their apparently similar experience? We've noted that Oracle was quick to respond to CFO and supply chain leader requirements. Miranda has long championed the need for better UIs coupled to digital and in examples I have seen (see screen above), Oracle Fusion on mobile looks good. That always helps to keep people onside.

For its part, IFS tackled gnarly problems during its MindFuel event. This story from Farrow & Ball gives a good perspective on the see-sawing of demand patterns experienced in the last few months. 

However, the experience of these companies to date may be an outlier. Research just published by Computer Economics notes some reduction in IT spending with deep capital cost cuts in some areas. It also notes that projects are not being cancelled but put on hold. But then this is an incredibly fast moving market. According to Roos, IFS did 90% of its Q2 target in June. End of quarter numbers are always skewed but that is an extraordinary outcome when you bear in mind the previous month's number was 10%. 

Regardless, I take it as a sign of optimism that increasing numbers of customers understand both the need and the value of digitization and servitization. The only question now is whether that acceleration will continue. Based on levels of interest in the MindFuel content, (more of which in a following story) Roos is confident. Miranda chose not to speculate ahead of its own events but it would not surprise me to discover that there is an underlying upwards trend.

As always, we shall be following events as they unfold, which, at the current pace, is pretty much every week.