Part One of the series Enterprise Applications Vendor Reverses Fortunes—But Will Perseverance and Agility Be Enough?
In a nutshell, IFS was the fastest growing enterprise resource planning (ERP) supplier in the mid-to-late 1990s. But the early 2000s marked a painful adjustment to slower growth and sometimes declining revenues. The vendor also had to deal with losses—some of which were whopping—for several years running, peaking at about $85 million (USD) on revenues of about $313 million (USD) for 2002. The IFS turnaround is thus impressive, since 2005 was the first profitable year in a long while (with profits of $13 million [USD] on total revenues of $288 million [USD]). The vendor also gained 10 percent in customers (including over 200 new customers), and over 15 percent of existing customers reportedly invested in new functionality during the year. IFS management attributes the success to its more focused sales strategy (including finding a tricky balance between not being seen as a niche provider and not being "all things to all people" either), increased organizational efficiencies (with costs and expenditures aligned with revenues), and continued emphasis on a selected, manageable number of vertical industries.
Before delving deeper into these current foundations of success, it might be useful to review the vendor's genesis. In general, IFS has typically found success when growing organically (for the most part) and by staying focused on midsized manufacturing enterprises. Technology Evaluation Centers (TEC) has frequently covered IFS since the late 1990s, when the vendor was undergoing a phase of rapid growth (especially in terms of new licenses) and global expansion. Add a good product, and one would have thought that nothing could ever go wrong with the vendor. The company's roots go back to 1983, when it was founded in Sweden, with software used to maintain assets for large utilities, and 1986 marked the launch of IFS Maintenance. After extending into manufacturing, distribution, and order entry and management, as parts of a more complete ERP suite in 1990, 1991 marked the company's geographic expansion into Norway, Finland, and Poland, whereas 1993 was marked by the first graphical user interface (GUI), and the opening of offices in Malaysia and Denmark.
In 1994, IFS pioneered component-based ERP software with IFS Applications, now in its seventh generation. Its component-based architecture has helped the vendor provide solutions that are typically easier to implement, run, and upgrade. It would be worthwhile to state at this point that IFS could be an object case of how a great product (in terms of functionality scope and technological foundation) and knowledgeable employees are only part of any wholesale success in the finicky enterprise applications market of today. For instance, back in 1994, IFS began a development project to transfer its flagship IFS Applications suite to object-oriented technology, which was completed in 1997 with the launch of the IFS Applications 1998 product suite. This was (and still is) in sharp contrast to the vast majority of competing enterprise applications, which remain largely on a monolithic client/server architecture and are in a midst of colossal efforts by vendors to move their spaghetti-like code-based applications to service-oriented architecture (SOA). The IFS business concept has since been to increase the "freedom of action" and competitiveness of user companies by enabling customers to either apply IFS solutions as a complete enterprise system, or as a complement to other vendors' applications within a specific part of the business process, which again is in tune with the SOA concepts of flexibility, agility, reuse, and so on. The main premise of SOA is to possess a number of individually developed, reusable software components (services) that can perform the functions of those applications (instead of having separate applications). Since many functions are common to many applications, services can supposedly be used in more than one setting, which in turn should reduce total development time and costs, and increase the agility of businesses. For more information, see Understanding SOA, Web Services, BPM, BPEL, and More and SOA as a Foundation for Applications and Infrastructure.
For over a decade, the cornerstone of the IFS strategy has thus been founded on its now proverbial component-based architecture with a well-rounded product footprint (to fit many manufacturing environments, including the mixed-mode or hybrid ones) and moderate vertical market focus. This has thereby become part of its identity, and a key ingredient in being able to deliver even deeper vertical industry functionality going forward. Also recognizing its scalability limitations (in addition to the rigidity of its erstwhile two-tier client/server architecture), in the mid-90s IFS embarked on creating an n-tier product architecture that would separate presentation, business logic, and data storage layers, and also render IFS independent from Oracle development tools and the use of stored procedures in the Oracle database.
IFS Applications 2001 was consequently heralded as a fully internet-enabled and componentized five-tier architecture suite, covering most traditional horizontal ERP functionality via a mandatory IFS Foundation layer, on top of which one can build (in a "pick and mix" manner) functional modules needed to satisfy the needs of more specific businesses. The architecture, which has been called Foundation1 since 2002, also allows new technologies and components to be swapped in and out of the technology stack relatively easily, without causing major distraction to the install base, and it also fosters an easier way for interfacing or integrating with other systems. Since 2002, IFS has also provided Web service access and Java 2 Enterprise Edition (J2EE) within its architecture. Namely, the original n-tier approach was based on older CORBA (Common Object Request Broker Architecture) technologies. As newer, better and standardized technologies became available (such as J2EE), IFS moved Foundation1 from CORBA to J2EE without significantly changing its application components. This fundamental technology shift demonstrated the value of this approach without impacting the core applications, and IFS customers received this technology uplift as part of a normal version upgrade.
Also, the IFS functionality has been split across over several dozen independent modules, which are actually coarser objects or components, and which can be implemented and upgraded separately from one another (this has been true for some time now). At their own convenient pace, companies can select modules to coexist with other legacy applications and databases, or simply avoid the "big bang" monolithic implementation approach that is increasingly being avoided as an unwieldy practice (for more information, see The �Joy' Of Enterprise Systems Implementations). Built-in extensible markup language (XML) messaging support and the external availability of all internal application programming interfaces (APIs) mean that integration between IFS components and other companies' software should be a reasonable endeavor. This layer of messaging via XML and Web services could in fact allow so-called "composite applications" to be assembled and deployed from multiple vendors. For more details, see IFS To Be At Customers' (Web) Service.
Further, owing to the component architecture, customers can, for example, install the latest version of a certain IFS component even while still using an older version of IFS Applications. And since the component architecture has been further enhanced within IFS Applications 2004 with the J2EE interface (dubbed IFS Service Oriented Component Architecture [SOCA]), thereby further basing IFS modules on open, commonly accepted standards, they should more readily be integrated into a company's existing information technology (IT) ecosystem. To that end, the IFS/Connect module allows any service or software component to be published as a Web service, transmitted via numerous protocols, integrated with messaging middleware products, or simply exported to a flat file. Designed for XML and the Web services concept, IFS/Connect also integrates with legacy systems, electronic data interchange (EDI) handlers, file import/export, and event notification. Moreover, while Foundation One is based on the commonly accepted open Internet standards, its design thinking is somewhat different, since IFS anticipated the need a while back to keep abreast of inevitable technology changes by incorporating the capability to add, change, or remove individual technology components on an ongoing basis and as required. To that end, Foundation One has already revised its web tier once and its mobile infrastructure layer twice.
One should note, though, that the aforementioned notable feats were built through the company's hefty research and development (R&D) investments and some modest acquisitions, especially throughout the ebullient dot-com era of the late 1990s, when not much attention was given to profitability. Around that time, in 1995, IFS opened offices in North America and Indonesia. Soon after, in 1996, it acquired Avalon Software, the US-based ERP provider, and in 1998 went public on the Swedish Stock Exchange, which, at the time, gave a false impression of almost unlimited capital investment. In 1997, IFS launched its web-based client (the predecessor of today's IFS/Collaborative Solutions which provides role-based portal views, which can be configured based on customers' unique requirements, so as to match the type of collaboration they desire), and expanded in the UK, Germany, France, Brazil, and Turkey. Hungary and Argentina followed in 1998.
In 1999, the vendor expanded into Greece and acquired US-based Effective Management Systems (EMS), as a way to move more aggressively into the North American market by getting a sales force team, a development team, and a local footprint. This has had only mixed success, since the acquired Time Critical Manufacturing (TCM) product line was discontinued, and only some of its customers migrated to the IFS product. IFS had hoped to convert its customer base from the maturing TCM product to its own modern enterprise applications, and consequently gain a quick US beachhead. However, customer satisfaction with TCM was very high, and customer loyalty therefore made it difficult to move customers away from it. With the majority of the TCM customers reluctant to make the transition, IFS then heavy-heartedly agreed to sell the TCM product line in November 2001, when IFS sold the business unit back to the original founder of EMS (Mike Dunham), who subsequently renamed the company WorkWise. Over 500 companies continue to use TCM to manage their businesses (see A User Centric WorkWise Customer Conference).
In a nutshell, IFS was the fastest growing enterprise resource planning (ERP) supplier in the mid-to-late 1990s. But the early 2000s marked a painful adjustment to slower growth and sometimes declining revenues. The vendor also had to deal with losses—some of which were whopping—for several years running, peaking at about $85 million (USD) on revenues of about $313 million (USD) for 2002. The IFS turnaround is thus impressive, since 2005 was the first profitable year in a long while (with profits of $13 million [USD] on total revenues of $288 million [USD]). The vendor also gained 10 percent in customers (including over 200 new customers), and over 15 percent of existing customers reportedly invested in new functionality during the year. IFS management attributes the success to its more focused sales strategy (including finding a tricky balance between not being seen as a niche provider and not being "all things to all people" either), increased organizational efficiencies (with costs and expenditures aligned with revenues), and continued emphasis on a selected, manageable number of vertical industries.
Before delving deeper into these current foundations of success, it might be useful to review the vendor's genesis. In general, IFS has typically found success when growing organically (for the most part) and by staying focused on midsized manufacturing enterprises. Technology Evaluation Centers (TEC) has frequently covered IFS since the late 1990s, when the vendor was undergoing a phase of rapid growth (especially in terms of new licenses) and global expansion. Add a good product, and one would have thought that nothing could ever go wrong with the vendor. The company's roots go back to 1983, when it was founded in Sweden, with software used to maintain assets for large utilities, and 1986 marked the launch of IFS Maintenance. After extending into manufacturing, distribution, and order entry and management, as parts of a more complete ERP suite in 1990, 1991 marked the company's geographic expansion into Norway, Finland, and Poland, whereas 1993 was marked by the first graphical user interface (GUI), and the opening of offices in Malaysia and Denmark.
In 1994, IFS pioneered component-based ERP software with IFS Applications, now in its seventh generation. Its component-based architecture has helped the vendor provide solutions that are typically easier to implement, run, and upgrade. It would be worthwhile to state at this point that IFS could be an object case of how a great product (in terms of functionality scope and technological foundation) and knowledgeable employees are only part of any wholesale success in the finicky enterprise applications market of today. For instance, back in 1994, IFS began a development project to transfer its flagship IFS Applications suite to object-oriented technology, which was completed in 1997 with the launch of the IFS Applications 1998 product suite. This was (and still is) in sharp contrast to the vast majority of competing enterprise applications, which remain largely on a monolithic client/server architecture and are in a midst of colossal efforts by vendors to move their spaghetti-like code-based applications to service-oriented architecture (SOA). The IFS business concept has since been to increase the "freedom of action" and competitiveness of user companies by enabling customers to either apply IFS solutions as a complete enterprise system, or as a complement to other vendors' applications within a specific part of the business process, which again is in tune with the SOA concepts of flexibility, agility, reuse, and so on. The main premise of SOA is to possess a number of individually developed, reusable software components (services) that can perform the functions of those applications (instead of having separate applications). Since many functions are common to many applications, services can supposedly be used in more than one setting, which in turn should reduce total development time and costs, and increase the agility of businesses. For more information, see Understanding SOA, Web Services, BPM, BPEL, and More and SOA as a Foundation for Applications and Infrastructure.
For over a decade, the cornerstone of the IFS strategy has thus been founded on its now proverbial component-based architecture with a well-rounded product footprint (to fit many manufacturing environments, including the mixed-mode or hybrid ones) and moderate vertical market focus. This has thereby become part of its identity, and a key ingredient in being able to deliver even deeper vertical industry functionality going forward. Also recognizing its scalability limitations (in addition to the rigidity of its erstwhile two-tier client/server architecture), in the mid-90s IFS embarked on creating an n-tier product architecture that would separate presentation, business logic, and data storage layers, and also render IFS independent from Oracle development tools and the use of stored procedures in the Oracle database.
IFS Applications 2001 was consequently heralded as a fully internet-enabled and componentized five-tier architecture suite, covering most traditional horizontal ERP functionality via a mandatory IFS Foundation layer, on top of which one can build (in a "pick and mix" manner) functional modules needed to satisfy the needs of more specific businesses. The architecture, which has been called Foundation1 since 2002, also allows new technologies and components to be swapped in and out of the technology stack relatively easily, without causing major distraction to the install base, and it also fosters an easier way for interfacing or integrating with other systems. Since 2002, IFS has also provided Web service access and Java 2 Enterprise Edition (J2EE) within its architecture. Namely, the original n-tier approach was based on older CORBA (Common Object Request Broker Architecture) technologies. As newer, better and standardized technologies became available (such as J2EE), IFS moved Foundation1 from CORBA to J2EE without significantly changing its application components. This fundamental technology shift demonstrated the value of this approach without impacting the core applications, and IFS customers received this technology uplift as part of a normal version upgrade.
Also, the IFS functionality has been split across over several dozen independent modules, which are actually coarser objects or components, and which can be implemented and upgraded separately from one another (this has been true for some time now). At their own convenient pace, companies can select modules to coexist with other legacy applications and databases, or simply avoid the "big bang" monolithic implementation approach that is increasingly being avoided as an unwieldy practice (for more information, see The �Joy' Of Enterprise Systems Implementations). Built-in extensible markup language (XML) messaging support and the external availability of all internal application programming interfaces (APIs) mean that integration between IFS components and other companies' software should be a reasonable endeavor. This layer of messaging via XML and Web services could in fact allow so-called "composite applications" to be assembled and deployed from multiple vendors. For more details, see IFS To Be At Customers' (Web) Service.
Further, owing to the component architecture, customers can, for example, install the latest version of a certain IFS component even while still using an older version of IFS Applications. And since the component architecture has been further enhanced within IFS Applications 2004 with the J2EE interface (dubbed IFS Service Oriented Component Architecture [SOCA]), thereby further basing IFS modules on open, commonly accepted standards, they should more readily be integrated into a company's existing information technology (IT) ecosystem. To that end, the IFS/Connect module allows any service or software component to be published as a Web service, transmitted via numerous protocols, integrated with messaging middleware products, or simply exported to a flat file. Designed for XML and the Web services concept, IFS/Connect also integrates with legacy systems, electronic data interchange (EDI) handlers, file import/export, and event notification. Moreover, while Foundation One is based on the commonly accepted open Internet standards, its design thinking is somewhat different, since IFS anticipated the need a while back to keep abreast of inevitable technology changes by incorporating the capability to add, change, or remove individual technology components on an ongoing basis and as required. To that end, Foundation One has already revised its web tier once and its mobile infrastructure layer twice.
One should note, though, that the aforementioned notable feats were built through the company's hefty research and development (R&D) investments and some modest acquisitions, especially throughout the ebullient dot-com era of the late 1990s, when not much attention was given to profitability. Around that time, in 1995, IFS opened offices in North America and Indonesia. Soon after, in 1996, it acquired Avalon Software, the US-based ERP provider, and in 1998 went public on the Swedish Stock Exchange, which, at the time, gave a false impression of almost unlimited capital investment. In 1997, IFS launched its web-based client (the predecessor of today's IFS/Collaborative Solutions which provides role-based portal views, which can be configured based on customers' unique requirements, so as to match the type of collaboration they desire), and expanded in the UK, Germany, France, Brazil, and Turkey. Hungary and Argentina followed in 1998.
In 1999, the vendor expanded into Greece and acquired US-based Effective Management Systems (EMS), as a way to move more aggressively into the North American market by getting a sales force team, a development team, and a local footprint. This has had only mixed success, since the acquired Time Critical Manufacturing (TCM) product line was discontinued, and only some of its customers migrated to the IFS product. IFS had hoped to convert its customer base from the maturing TCM product to its own modern enterprise applications, and consequently gain a quick US beachhead. However, customer satisfaction with TCM was very high, and customer loyalty therefore made it difficult to move customers away from it. With the majority of the TCM customers reluctant to make the transition, IFS then heavy-heartedly agreed to sell the TCM product line in November 2001, when IFS sold the business unit back to the original founder of EMS (Mike Dunham), who subsequently renamed the company WorkWise. Over 500 companies continue to use TCM to manage their businesses (see A User Centric WorkWise Customer Conference).
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