IFS celebrated a successful 2021 with another set of positive results that sees the company continue, though not yet accelerate its growth trajectory because of Covid headwinds. That is something that Darren Roos, CEO, hopes will change in the coming year. Overall revenue grew by 14%; software revenues grew 22%, with cloud revenue up 105%.
Roos has a strategy to build IFS using partners rather than growing the internal professional services unit. That meant that the software revenue share grew to 73%, and recurring revenue increased 30%. IFS also shared several key figures for the full year 2021:
- software revenue was SEK bn 4.928, up 22% YoY (US$529m)
- recurring revenue was SEK bn 4.061, up 30% YoY (US$438m)
- net revenue was SEK bn 6.767, up 14% YoY (US$730m)
Roos commented: “Four consecutive years of double-digit growth is something the entire organization is hugely proud of, particularly in view of the challenging circumstances we’ve experienced since 2020.“
The numbers paint the picture of a strong and healthy business and I am particularly delighted that we are not compromising on any other metrics to achieve this level of sustained growth.”
Enterprise Times asked Roos what those headwinds were?
Roos answered: “In 2020 and through 2021, we saw a lot of companies, just given the uncertainty of supply chain issues and demand, putting decisions on hold deffering and delaying decisions.”
The growth is not just in financial terms. IFS has added 500 employees during the year, bringing the total to around 4,500. Roos also confirmed that he plans to add another 800 during 2022 to help accelerate revenue growth
A pivotal year for IFS
2021 was the most pivotal year since Roos joined the company in 2018. It was rebranded with a new logo and mission to deliver Moments of Service. In March, it launched IFS Cloud; it’s an all in one evergreen cloud ERP solution. There has also been significant acquisitions and the divestment of Workwave.
Roos explained: “In 2021, our goal to help companies deliver their greatest Moments of Service also became a reality through our M&A strategy. We successfully integrated two companies into IFS and, since our acquisition of Axios systems in June, have increased subscription bookings for IFS assyst by 236% compared to the same period in 2020.”
According to Roos, despite launching in March, IFS Cloud is now providing more than half of the cloud software revenues. He noted: “We’ve been amazed at the uptake and customers willingness to jump on board.”
That willingness is because the process of onboarding to IFS Cloud from other IFS applications that are already in the cloud is relatively simple. Roos said it takes weeks rather than months. The caveat is that the older the IFS applications version and the more modifications the customer has, the longer the timescale.
The strategy is succeeding. Roos commented, “We generated 28% of our new licence revenue last year through partners. And if you consider that in 2018, that was 1%, we’ve come a really long way, and that continues to ramp.”
Partner focused growth
ET asked Roos to explain the IFS partner strategy. There have not been many additions publicised over the last year though Cooper Software recently acquired a company in Germany to extend its IFS relationship.
Roos replied, “We’ve never had a strategy to have lots of partners. The key is to have lots of capacity. In an ideal world, we would have fewer partners with more capacity because, frankly, once a partner has critical mass, it enables them to ramp up more resources. And clearly, they would be more committed to IFS. A partner with a small IFS team is worth less than a partner with a big IFS team. We’ve certainly seen a bit of consolidation.
“The big influence is our academy. We train the partner resources at no cost to them. So, if any of our partners want to build more IFS capacity, we invest the money to train those people. There are more partners through either solution or geographic growth. The big impact is just the partners that we have, like Accenture, TCS, BearingPoint, etc. They are significantly increasing the number of consultants that they have certified and trained.”
IFS and BearingPoint formed a joint venture late last year to focus on business transformation enabled by IFS Cloud software products.
Other 2021 milestones
IFS has continued to make some significant announcements during the year.
In March, it acquired Axios, strengthening service management with ITSM and ITOM. In July, it bought the vendor responsible for the IFS Voice of the Customer program, Customerville. Both firms have not completed the integration into the IFS organisation.
It has added several high profile customers including Fugro, Aston Martin Cognizant Formula One team and Inca Digital Printers. In combination with Lockheed Martin, it won a significant US Navy contract for its A&D division. In total, 181 net new customers were added.
With sustainability top of the agenda for many organisations, it launched a sustainability strategy and pledged to become carbon neutral in 2025. It launched the IFS Cloud Sustainability Hub as part of the IFS Cloud 21R2 release.
It also announced its first Change for Good Sustainability Awards winners from 35 global entrants. IFS is taking the lead in sustainability, something that Jon Roskill, CEO at Acumatica, acknowledged in a recent interview
Besides the latest IFS Cloud release, The Axios platform unveiled the first major release since its acquisition, IFS assyst 11.4, enhancing collaboration, new integrations and a simpler pricing model.
All about 2022
IFS was originally founded as a provider of EAM software to the nuclear industry. IFS EAM has been relatively quiet recently regarding customer wins, at least. With the recent acquisition of Infor EAM by Hexagon, does that open up an opportunity for IFS?
Roos replied: “What we realised around the middle of last year was the significant opportunity around EAM outside just the A&E markets. We put a significant incremental investment into that in Q4 and recruited an entirely new, focused team on EAM.
“Through the first six months of this year, you’ll hear a lot more from us. Intelligent Asset Management is becoming a much more important element for people across many industries. Customers can get the best of asset management and field service management as a single solution (from IFS).”
ET then asked Roos for the wider strategy for 2022.
“Our big strategic direction is how do we make that implementation process as frictionless as possible? That means significantly reducing the time from when we meet a customer to when they go live. Because ultimately, that’s the thing that customers care about most. How do we drive that time to value down significantly? How do we do that through our partner relationships, simplifying the implementations and how do we enhance the technology to compress that time?”
And your objectives?
“As we come out of COVID, can we get that business back to where we were pre COVID which was 25% software growth. I think we can get back there. The market is growing at 300%, so we continue to significantly grow our market share. The ambition is to have ($)2 billion in software revenue in 2025. So it’s just moving towards that goal.”
Enterprise Times: What does this mean
IFS is growing; more importantly, putting pressure on larger rivals SAP, Oracle, and Infor in several sectors. The new emphasis on EAM is also interesting. There are three significant players in the market, Hexagon (Infor) EAM, IBM Maximo and IFS. It will be interesting to see which industries opt for which strategy.
- Hexagon, with its wider industrial applications
- the standalone and non-cloud-native Maximo
- or the single platform approach combining ERP and EAM by IFS.
For Roos to hit his target of $2 billion by the end of 2025, he will need to accelerate the growth. His headwinds were not seen uniformly by others, and the next twelve months will be important. IFS needs growth of 40% already from 2022 to achieve the target.
It is not beyond the reach of Roos and his team and the partner approach is something that sister company Acumatica has proven to work with its 58% growth. The question is how much TLC the larger enterprises want from their vendor. Will the partner first approach work in the enterprise market as well for IFS as it does for Acumatica?