sorbie
Enterprise Resource Planning (ERP)

IFS CEO comes out fighting from shadow of the ERP giants

When you’re sitting in the shadow of SAP, Oracle et al in enterprise resource planning, it’s sometimes hard to get noticed, never mind getting into the procurement sights of the world’s largest organisations. But it’s the situation facing Swedish ERP company IFS and its British CEO Alastair Sorbie.

“That’s our daily challenge: to differentiate ourselves from them and from Microsoft too with Dynamics,” he says when we meet over coffee at his PR firm’s offices in central London.

The runners and riders Sorbie is facing are formidable. SAP is the German company that became synonymous with ERP, the back-office software that is the gearbox, engine and dashboard of modern businesses and as central to their fortunes as the Spinning Jenny was to the early Industrial Revolution. Oracle has pushed hard into ERP with the fortunes it raised in becoming the world’s biggest database company. Microsoft still earns huge sums from its operating system and desktop productivity franchises. Put together, this triumvirate represents about $650bn in market value. Big money, lots of power.

But Sorbie, a straight-talking man in his 60s with a long CV at the sharp-end of B2B IT automation, isn’t running scared. Against a tough market for the biggest players, IFS is growing licence revenues quite nicely – about 13% up year on year for its last reported six-month period. The IFS premise is fairly straightforward: deploy ERP systems that work rather than getting involved with the unendingly complex exercises that especially plagued early ERP and created barrow-loads of money for software developers and system integrators but much heartache for customers.

Sorbie sees opportunities for IFS in its heartland where he can point to companies like Babcock, Saab and Emirates as large customers. Defence has been a traditional stronghold but 2008 saw a sector downturn “and the gravy train stopped”. Still, oil and gas, EPCI (engineering, procurement, construction and installation), road, rail, power stations, ports, marine, offshore wind farms and so on, all are grist to IFS’s mill.

Also, while recognising the advantages of scale, Sorbie points to his company’s focus on getting the job done and contrasts that with the record of giants in the sector.

Here he is on SAP, for example:

“They don’t tend to be very successful in deploying their software. They’ve got some horror stories. The CIO has spent a huge amount of money and most general managers despise it. A CEO will say, ‘I don’t have a lot of choice in the market so who else can I think about?’ Once we’ve installed we tend to roll out more broadly. Customers tend to talk among themselves.”

Hence the importance of growing awareness.

And what of the others? Microsoft is not truly global in ERP and doesn’t have deep functionality, he says. Oracle “tends to be very arrogant”. But IFS runs on Oracle databases so Sorbie sees the ability for customers to segue from Oracle to IFS without major infrastructure upheavals. That leaves him with the chance to make IFS “the acceptable face of ERP” among the disenchanted.

“I don’t necessarily think people prefer buying from smaller software companies, he says, “but we’re more pleasant to deal with and we can’t afford to have failed projects.”

Another way to win is to take advantage of the sheer scale of mergers and acquisitions among rivals. IFS has acquired where it has seen a strong complement to current solutions but the relative stability of the company could see it benefit from some of the frenzied buying patterns of the last 10 years. Infor in particular has sucked up a host of assets and stragglers. Oracle acquired JD Edwards and PeopleSoft to bulk up in ERP and both SAP and Oracle have also backfilled capabilities in the cloud, on the periphery of ERP and in vertical segments.

This can lead to confusion, technical complexity, lack of funding for lesser-used products and problematic development.

“It’s a mincing machine: you’ve got to keep feeding software companies at one end,” Sorbie says. “Infor has to keep 40 or 50 products running so they put a lot of lipstick on the pig. It looks nice at the front end, but…”

Sorbie believes that the giants have effectively maxed out the Fortune 500 but struggled in the mid-range and failed in the low end. IFS is not itself pursuing the low end where companies like NetSuite have done so well in recent years, nor does Sorbie see any need to refocus on the cloud.

“Customers have always been on- or off-premise,” he says. “We offer both. That’s not a change in the game for any of us. It tends to be the smaller companies that go for that [all-cloud focus].”

Indeed, Sorbie is among those that question broad assumptions about the cloud value model with its inherent bias for operating expenditure over capital expenditure.

“[A large company] is not going to worry about buying [ERP] on a subscription basis,” he says. “They buy a licence and then scale. If they want to buy a subscription we’re laughing all the way to the bank.”

Sorbie sees a big future in mobility, however, and in handing selective power to users with smartphones, tablets and other devices. IFS has a strong reputation here for being fast, scalable and user-friendly.

He also sees the power of globalisation in creating lucrative new and surging markets, especially in mineral-rich countries like Australia, but he laments the fact that abusive regimes and geopolitics continue to crimp the progress of many countries. However, partnering is a major area of focus as IFS has built agreements with leading consulting firms and others recently, helping to take the company further in areas like Latin America.

IFS is a serious, grown-up company that’s well-liked by customers and partners despite (and perhaps in part because) it is not at the scale of its towering rivals. As the giants continue to grow this might well suit the Swedes and Sorbie, the Brit who leads the company.

“There are 900,000 users who sign onto IFS every day,” he concludes. “People seem to like working with us.”

PREVIOUS ARTICLE

« Ken Banks interview: Technology for social good

NEXT ARTICLE

Wavestack: Music & the Mexican startup scene »
author_image
Martin Veitch

Martin Veitch is Contributing Editor for IDG Connect

  • twt
  • twt
  • Mail

Recommended for You

Trump hits partial pause on Huawei ban, but 5G concerns persist

Phil Muncaster reports on China and beyond

FinancialForce profits from PSA investment

Martin Veitch's inside track on today’s tech trends

Future-proofing the Middle East

Keri Allan looks at the latest trends and technologies

Poll

Do you think your smartphone is making you a workaholic?