SAP customers should know they have a choice, says IFS CEO Darren Roos

Profile picture for user pwainewright By Phil Wainewright January 28, 2020
Summary:
Do you stay with your current ERP vendor for your next big upgrade or is it time to make a switch? IFS CEO Darren Roos wants you to know you have a choice

IFS think SAP think again billboard

Many established, growing enterprises face a digital quandary. They realize the importance of modernizing their operations to keep up with digital change, but tbeir core business is strongly rooted in the physical world. While these organizations typically have a long-standing investment in IT systems, this is not where their core expertise lies. Now the vendor they've dealt with over the years for those IT systems is urging a significant new investment to upgrade to a modern digital platform, and they feel uncertain whether this is the right move. This is a quandary that Darren Roos recognizes both from his previous experience working at SAP and in his current role as CEO of challenger vendor IFS:

You are at an inflection point because the vendor that you bought into — maybe you're not with the vendor you bought into, the vendor who bought the vendor you bought into — is now saying to you, 'You have an ultimatum. You can commit to us, or go somewhere else.'

With a focus on asset-heavy industries, IFS wants to be the alternative these companies think of first. In many cases they are long-term SAP customers, although the reference to vendors who made acquisitions tells you that Oracle and Infor customers are part of this too. But SAP customers face very a specific deadline, with the withdrawal of support for its popular ECC platform currently scheduled for 2025, as Roos explains:

There's a very large population, thirty to forty thousand customers, that are sitting on what will soon be outdated SAP — maybe they'll extend the deadline, but the same thing will apply for a 2027 deadline or 2029 deadline, whatever it is. Many of them took many years to implement, and therefore they're under pressure to make a decision. And for the vast majority of those customers, they don't know there is a viable alternative. They think that they only have SAP as an alternative, or maybe Oracle.

There is an alternative

A billboard poster that went up just outside London's Heathrow Airport earlier this month — pictured above — nudges them to also consider IFS, with the slogan, "Think SAP? Think again." The billboard was a one-off to coincide with the firm's annual global sales kick-off held nearby, but Roos says the pitch may well make a reappearance more broadly later in the year. It aims to counter the reality that prospects often haven't heard of IFS the first time the name comes up in a buying process, he explains.

The idea is that we're able to both put ourselves out there, but immediately spread to people who we are, because people know what SAP do ...

I think for most of them, they don't understand that there is a third, or fourth, or fifth alternative for them. That's what that billboard is aimed at trying to do, which is to say, 'You are not as alone as you think you are.'

It's a pitch that presents IFS as a different choice on the same path of having one primary, integrated platform. Roos believes these companies want a more flexible, modern and cost-effective IT solution that is still able to deliver most of the core functionality they need. He doesn't see this market tempted by the idea, popular among digital-native businesses, of stitching together their IT infrastructure out of dozens or hundreds of separate best-of-breed applications:

This idea that ... they're going to buy all of this very heterogeneous best-of-breed cloud suite, and then somehow figure out how to integrate all of these things and manage them on disparate release cycles with 200 people in IT is, frankly, fantastical, and they can't do it ...

We see customers saying, 'Yes, we're going to have to compromise a little on the functional depth that we're getting. But the value that we get from cost, time-to-value, and ease of use — and not having to hassle with all of this integration nonsense — is really compelling for us.'

IFS has itself had to migrate customers from older versions to its latest platform, but this is a different proposition from what SAP customers face, says Roos.

If you're on IFS 7 or 8, then you can upgrade to IFS 10, and you will never have to do another big upgrade again, whether you're on-prem or in the cloud. Whereas if you are on ECC, it's not an upgrade. It is a major re-implementation. You have to completely replace your database — and we know what the implications of that are, that is not trivial. Not only do you have to have HANA skills and have confidence in HANA, but you have to get rid of your Oracle and all the stored procedures and all of the work that you've done in that database. That is a complete re-implementation.

The argument is that, if a business has to replatform anyway, why not consider a completely different vendor? Especially when, by targeting specific asset- and product-intensive industries, the implementation methodology is designed to be much cheaper and faster than what's expected in the SAP ecosystem. IFS is building out a partner ecosystem that follows the same framework, says Roos,:

There's no 10x software revenue option. What we see in our implementations is that the norm is 2x to 3x. That is incredibly compelling. And we don't get the pushback from the partners, because the comparison is not the 10x that they used to do it on. They've been able to build new IFS practices based on these metrics that they didn't have before.

Looking out for customer outcomes

One SAP hangover that Roos does value is the notion of value engineering, which was prevalent in the 1990s as a way of defining the value an ERP project would bring. It's fallen out of use but Roos swears by it.

We really will not go into any project willingly without doing the value engineering practice. I want the customer to have a clear understanding of where the benefit is going to come from. Because typically the benefit creates disruption. They are going to have to re-engineer processes, they are going to have to adapt their business to drive a fit-to-standard approach on the application, which is what we insist they do.

I don't want them modifying the application. I want them going live in 24 weeks like I did. I want them to be evergreen, I don't want them to ever have another big disruptive upgrade. I want them to have a significantly lower total cost of ownership.

But if they don't have a clear understanding of how they're going to realize that benefit, then they will not be successful. So we take that very seriously now.

Looking out for customer outcomes may be something SAP should have thought more about before its acquisition of Qualtrics last year, he reflects, as the conversation once again swings back to his former employer. Pushing a new product that would help SAP's customers understand how their own customers felt was the wrong message to send, he suggests.

I think the problem is closer to home ... How do I make sure that my customer is happy? Before I worry about their customers being happy with them.

But for those SAP customers who aren't happy — or who simply want to look at an alternative — all Roos is looking for is to have them consider IFS.

This campaign is really just about saying, "You may not have heard of us, but we have 10,000 customers. Some of the biggest organizations in the world trust us with their businesses, and you can too.

All I'm looking for is just having the opportunity — only in our focus industries — to be able to say, 'Just give us a chance, just have a look. If what you see isn't what you like, fantastic, no problem, but just don't go and do the SAP upgrade or re-implementation without evaluating the options.

My take

There is no easy answer for established businesses that don’t have digital as their core mission. They’re having to graft digital onto what they do, and none of the solutions out there offer an easy way out.

At one extreme, there’s the option of building an all-new infrastructure out of best-of-breed components, but few have the digital expertise and resources to do this.

At the other extreme there's the option of staying with the vendor who provided the existing core systems, and trusting that their quest to modernize their own products will be a good enough fit. Trouble is, those modernization roadmaps tend to prioritize upgrades to the underlying technology, rather than putting a premium on delivering rapid solutions to today's business problems.

This divide is opening up an opportunity through the middle for vendors to come in with a simpler business suite proposition that may not have all the answers, but is functionally good enough and delivers fast results. IFS is not the only vendor offering this kind of solution, but it seems determined to get noticed, especially among SAP customers considering a change.