Enterprise Resource Planning (ERP)

How to deal with disruption

It was perhaps fitting that global enterprise software business IFS chose Boston, Massachusetts for its IFS World Conference on disruption this year. The city is famous for many things, many of them disruptive - the tea party protests that escalated into the American Revolution, as the birthplace of the original Ponzi scheme that certainly shook up the established banking community for a while and for being the home of the Boston Red Sox that successfully employed Billy Beane’s Moneyball ideas. And then of course there’s Harvard and MIT.

During his opening speech at the Hynes Convention Center, IFS CEO Alastair Sorbie talked about the impact of disruption on many of IFS’s customers. He pointed across the Charles River in the general direction of Cambridge, a Boston suburb that is home to MIT and Harvard. He talked about the clever minds, the graduates that are inventing things that aim to challenge the established business order, the status quo.

“Harvard and MIT are driving disruption,” he said, adding that it’s like “a raging torrent of white water”. They will be inventing things and getting jobs that don’t yet exist, he added. He also pointed at Manchester University in the UK and its work on graphene, which could ultimately replace steel. He also pointed at Elon Musk and the Tesla, the drop in oil prices and the increasing threat of job automation and robotics.

Disruptive effect

Disruption, he said, is inevitable. So is IFS being disrupted?

“No, not really. One of the strengths of IFS is that we built our technology in a far-reaching way,” says Sorbie. “We produce our underlying technology based on Oracle and our bigger customers like Oracle.”

OK, is IFS disrupting then?

Sorbie is non-committal although he does reveal a few plans. In its own words, IFS develops and delivers agile, component-based software for enterprise resource planning, enterprise asset management and field service management. Not exactly the first market areas that spring to mind when talking disruption but this is not to be sniffed at. Looking at its Q1 2015 results IFS is in a good place, with all areas increasing revenue except for in licensing. It’s just launched a new version of its software, Applications 9, and has announced a partnership with Microsoft.

“We should be stronger in service management,” he says with intent. “We need to find more partners in this space. It’s partly why we were attracted to Microsoft because we can put our solution on Azure and sell it in a different way.”

That “different way” is via the cloud of course. While Sorbie concentrates on pushing IFS “further up the food chain to bigger deals” he wants his new relationship with Microsoft to help IFS reach the SMEs that tend to dominate the field service market and are more open to cloud-based software delivery. Prudent but not very disruptive.

In the land of giants

What about SAP, the ERP category leader?

“We want to increase our capability in financing and HR to push SAP out of the picture completely,” he says with confidence. “It's a question of adding new features to fill gaps that we are perceived to have in those areas and we are already working on this with Applications 9.”

Bingo. SAP is clearly a target for Sorbie. He believes the German giant is “losing touch with customers” and thinks that IFS and its approach to “customer inclusion” will bear fruit. It’s a big ask. SAP is no mug.

Why does he think he can win this particular battle?

Sorbie’s pragmatism steps up to the plate. He talks about faith in the staff and skill levels and of course the new version. He’s proud of the fact that there’s “not a lot of staff churn” and IFS is a “mid-size firm that is growing well and punching above its weight”.

But is this enough? Sorbie points to the “loyal” customer base. IFS has just registered its one millionth user too. The plan is to convert these existing users and with about half of conference attendees claiming they would upgrade, this could be sooner rather than later. It’s certainly one to keep an eye on.

Efficiency and jobs

Building market share is now clearly on the agenda. The company’s global expansion is complete – “We've been good at growing internationally, in 50-odd countries,” says Sorbie. “We’ve got strong new partners in South Korea now, so the world map is ticked off in terms of where we want to be.”

Part of this world map is Sri Lanka, a key offshore source of skills for the business where IFS offers sponsorship. It’s “a scalable and cost-effective capability,” adds Sorbie, and one that will help the business compete with the next phases in global software development - automation.

Will IFS software eventually put people out of a job?

“I’d be misleading you to say that customers haven't saved headcount by putting in IFS software,” he says. “They have, but does that mean that people don’t find new jobs within the business?”

It’s a fair point. Most enterprise software vendors will be facing the same issue, as customers demand greater efficiency.

“It’s a classic way of saving costs, to move offshore for labour-intensive work. But if you get more money from aftersales than from making the thing in the first place, it surely shifts the job types that you want to employ?”

Skilfully done. Sorbie adds that this efficiency and shift in skills will help its customers cope with disruption. It will, he says, help them to innovate.

Morten Vardal, managing director of Accenture agrees. In a supporting speech on stage on the first morning of the conference he talked about how 47% of businesses from 2000 are no longer with us.

“Innovation is the medicine against disruption,” he said. In fact he said it twice, just to drive home the point. Did everyone agree?

Everyone nodded.           


Also read:

IFS boss comes out fighting from ERP giants’ shadows


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Marc Ambasna-Jones

Marc Ambasna-Jones is a UK-based freelance writer and media consultant and has been writing about business and technology since 1989.

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