When IFS’s new CEO Mark Moffat took the reins in January this year, he inherited a rapidly changing enterprise resource planning (ERP) business. His predecessor, Darren Roos, started his role six years ago with the promise of harmony and growth. Roos’ point at the time was that IFS business units, while run with an entrepreneurial spirit, needed to be more centralised. It was a growing-up period for the company, culminating in impressive 2023 financial results with cloud revenues up 46%.
For Moffat, 2024 will be much the same – although, for an acquisitive company, that’s hard to imagine. Speaking to Computer Weekly earlier this year, Moffat hinted that mergers and acquisitions are still very much part of the IFS strategy, but the market is not quite right. The focus instead is on artificial intelligence (AI), automating processes and embedding generative AI (GenAI) capabilities to help customers with productivity challenges. Join the queue. That seems to be the same strategy for all ERP providers at the moment.
That said, the speed at which IFS has managed to pull its various products and past acquisitions together has impressed Mickey North Rizza, group vice-president for IDC’s enterprise software practice. She said IFS has “melded its solutions together much faster” than its competition. By this, she means Infor, although she adds that both businesses have been strong in targeting similar markets in recent years.
But this speed, this ability to move quickly and integrate new technologies in its composable format, will make IFS interesting to watch, especially with AI. North Rizza said IFS has, in many ways, shown its customers that it will move quickly without losing focus, and that should stand it in good stead when it comes to selling the benefits of integrated AI, especially given IFS was, in North Rizza’s words, “a little slow” in getting to GenAI and automated workflow compared with other suppliers.
“Whether it’s ERP, enterprise asset management, field service, enterprise services or management, IFS has really tied it in and stayed true to the industries it’s good at – aerospace and defence, energy, construction and engineering, manufacturing, services and telecoms,” said North Rizza. “I think that says a lot about them.”
Out with legacy IT, in with AI
The point is that IFS, like Infor and Sage, knows its game and is not about to start spreading itself too thin. But that doesn’t mean it’s not prepared to talk up its ambitions. When he joined in January, Moffat said he wanted IFS to become the “reflex response for a CIO who is replacing legacy technology for the functional area of the asset, in the same way the reflex response would be SAP for finance, arguably; Workday for HCM [human capital management]; or Salesforce for CRM [customer relationship management]”.
That is pretty much every CEO’s aim in this area, but AI is the new tool that is driving differentiation. However, so many customers across the board still have not migrated to cloud-based solutions, so does this make talk of AI seemingly premature? For Martin Gunnarsson, senior vice-president of IFS research and development, this is not the case. He sees it as essential for a dual approach, claiming that a “major focus” for the business is “accelerating our customers’ move to cloud-based solutions”. But he is also clear that many customers may want to remain on-premise and that IFS has to respect and honour that commitment.
We believe the organisations that embrace AI early and start to flip it up are going to double revenue in the next few years Mickey North Rizza, IDC
Gunnarsson said IFS wants to make AI “an integral and invisible part” of its customers’ daily operations through capabilities such as generative AI and large language models (LLMs). “This will allow them to extract insights from vast amounts of contextual data in real time, streamlining processes like reporting, forecasting and decision-making,” he said.
For North Rizza, this is an understandable goal, but she points to a recent IDC report, which found that 50% of organisations say their production application workloads are still in legacy. “We were shocked by this, but then we asked them where they want to go in the future,” said North Rizza. “What we found is those organisations said 44% of that [legacy] would be eliminated by generative AI in the next 18 months.”
The thrust of this is the need for modernisation. According to North Rizza, organisations understand they need to use GenAI within their modernisation strategies, but there is uncertainty about how best to do this. “Some organisations are willing to do it on their own, but most are saying they need to partner with somebody,” she says. “They’re looking for vendors to take that approach with GenAI.”
Adapt and scale
Gunnarsson is upbeat when it comes to espousing the IFS proposition. Speed of implementation is really important for any organisation migrating to cloud, for example, and IFS’s composable approach allows for what Gunnarsson calls “phased implementations”, designed to enable businesses to adapt to new requirements and scale internationally.
“IFS’s strategy of embracing complexity and offering adaptable, forward-thinking solutions sets it apart in the ERP market,” said Gunnarsson, “particularly against vendors less equipped to manage the intricacies of global, asset-intensive industries.”
For North Rizza, this is key to how she sees IFS and the need for customers’ modernisation coming together. With GenAI and AI in general, she expects most of the improvements over the next 18 months to be productivity gains. Embedded AI capabilities in ERP should enable this. Organisations are looking for use cases – they want a good reason to commit and this is where vendors like IFS can start to make inroads, she said.
“As those productivity gains start to build momentum this year, you’re going to see it flip into the revenue side of the equation, because organisations are suddenly like, ‘Hey, now that we’ve done this, we could do it for products and services’,” said North Rizza. “We believe the ones that embrace AI early and start to flip it up are going to double revenue in the next few years.”
It’s a good point, and one that many a vendor will note with interest. North Rizza talks about the emergence of what IDC refers to as the “experience-orchestrated business”, where value is created for employees, customers and ecosystem partners. GenAI and automation are at the heart of this, something that is clearly not lost on any ERP provider, including IFS.