Since Darren Roos joined IFS in 2018, the company has undergone huge changes. It rebranded in 2021 and launched its evergreen all-in-one cloud solution. It has made several acquisitions to strengthen its portfolio, including Customerville, Axios, Assyst and Ultimo.
In 2022, Hg invested in the global software firm. The company has also grown every year under his tenure. So how would Roos describe the company that has changed so much over the last five years?
Roos replied, “We realise that the enterprise software market has changed significantly from the days of monolithic ERP. Everything is now composable. What we see is that there is still a huge requirement for customers to buy an application, which is vertically focused, that covers off the complex parts of ERP, field service management, and asset management. That’s the space where IFS plays.
“It is that intersection of those three applications. It’s why we’re winning market share. We’ve had five years of consecutive growth at three times the market. It is our ability to bring that complex capability to bear in those industries where we’re strong. “
When you say service management, there are several aspects of that with ITSM from Assyst and field service management.
“They are completely different things, and you’re right. I mean field service management. IFS assyst plays a slightly different role. We saw in discussions with customers that, increasingly, they’re thinking about what ServiceNow have done a great job of talking about, workflows in the organisation.
“And we saw that there were a bunch of our customers that were increasingly solving problems that sat outside of the conventional application landscape with the likes of ServiceNow. We didn’t want to end up in a situation where our customers were solving problems with ServiceNow when we felt like we could be solving them.
“The reality is that ESM, enterprise service management in that context, or ITSM, is a very simple use case. It’s been simple since the days of HEAT and Remedy. And yes, what ServiceNow does today, and what IFS Assyst does today, has evolved from there. But it’s still very, very simple compared to the level of complexity that we see in an enterprise-grade Asset Management solution, enterprise-grade field service management with complex scheduling and optimization, or in big ERP projects.”
What is the focus of IFS?
“The focus is on being able to provide solutions that are meaningful to those vertical industries. For organisations that really live and die, by the moments of service that it creates for its customers, leveraging assets and service.”
A single solution?
Roos also sees the all-in-one cloud solution as differentiating. He commented, “We provide FSM, EAM, and ERP on a single platform, database, UX, and data model. So they’re just modules on a single application. Nobody else does that across ERP, FSM, and EAM.”
Yet, last year IFS bought Ultimo, which provided a mid-market enterprise Asset management solution. I asked Roos when it will be part of the IFS cloud platform?
“That’s a great question. The intention isn’t to put Ultimo on (the platform). Because what we did recognise is that there are customers for whom the EAM requirements are simpler. If you look at the competitive landscape, you would see that lighter touch coming from a Hexagon EAM and the more complex stuff coming from an SAP or an IBM.
“We can solve the complexity of the integration on how they were then going to run it next to an ERP. So yes, there is a disconnect on that piece of the EAM. But we have loads of customers where we can rationalise it from maybe seven or eight different applications or more onto a single application, and then maybe two if they go with Ultimo instead of with IFS EAM.”
And how has Ultimo performed?
“Yeah, beyond our expectations. When we acquire a business, we put a business plan together. We typically come up with two versions—the version that underpins the acquisition – the base case. Then we come up with a business case, which is what we hope to achieve. And through 2022, exceeded that business case. So I’m super happy with the team.”
In the past, IFS obtained leads from its marketing efforts where IFS EAM was too complex for the customer’s requirements. Those leads are now passed to Ultimo, and it has had success.
Roos continued, “We’re seeing how the two fit really well together. Recently, we’ve put the two teams together. Willem-Jan (Scholten), who was the CEO of Ultimo, leads that joint EAM business under Marne Martin.“
Where is the iFS growth coming from?
IFS recently announced another set of results with significant growth. However, little was shared about which industry sectors you are seeing growth in.
“We saw a little bit of a slowdown last year in manufacturing as the global recession or pullback manifested itself. In areas like telco and utilities, aerospace and defence, where commercial aviation is coming back online, defence manufacturing has been pretty resilient. You have to consider that their investment horizons are longer.
“Utilities have benefited from increased energy prices, which is probably not surprising. We have about 40% of our business or manufacturing. So a bit of a slowdown, there have created a bit of a headwind.“
Despite the slowdown in manufacturing, IFS has managed to migrate over 80% of its on-premise manufacturing customers to the cloud, according to Roos. The transition is two years ahead of estimations. He added, “Customers are choosing to have IFS Cloud in the cloud versus remote, far more often than we expected.”
Regional growth
There was no split in the results by region. In the US, last year, there were two appointment announcements. How is IFS doing in the US? I generally see A&D wins but little else.
“We grew software revenue by 80% In the US last year. Only a tiny part of that came from A&D. The customers we won in 2022 are not going to be live in the US. We have had some fantastic success stories there. We definitely could be doing a better job of telling that story.
“In 2023, we will have over 50% of our business in the US. I think we were 22% in the US when I took over. It is by far the largest, fastest-growing region we have.
“I’m pretty sure we just about doubled the team in the US in 2022. Rather. It’s just going from strength to strength. Cindy Jourdan did an incredible job as our US president. Super happy to have Dave Spencer on board now. Cindy stays in the global COO role. The team is very strong. We won about 300 net new name logos last year, and over half were in the US.”
On acquisitions and investors
Can we expect more acquisitions in 2023?
“Yes, we are very focused on getting deeper into the industry capability across those asset and service-centric industries. I talked earlier about who we are today. But the aspiration is that if you’re a customer or a complex business, in an industry that we serve, so an asset or service-centric industry. And you’re looking for a solution that will help you be more efficient and productive. Then I want people to go, ‘I have to go to IFS’. It’s the default solution provider in the space.
“There are some areas that we can extend the capability that we already have? I think we are today the most rounded across the areas that I’ve just discussed. But, we’d like to add a bunch of pieces, which would make it even easier for customers.”
How has Hg made an impact on the company?
“Look, they are undoubtedly one of the world’s biggest and most experienced enterprise software investors today. EQT has been invested for seven years, two years before I came along. There’s a tendency to get to a point where you can’t see the wood for the trees. Hg has brought a fresh perspective on the business and a bunch of very interesting benchmark data from their portfolio. That’s been fantastic.
“The way I think about it is that we want to be the fastest growing, most successful scale enterprise vendor in the world. If we want to achieve that, then we have to surround ourselves with the best. We have to accept the challenge. We have to embrace the fact that to be the best, you have to accept criticism and input, and Hg knows what they’re talking about.
“It’s been a real pleasure. It’s been hard work. But there’s a high level of trust. Hg was the first potential investor I met after I joined other than EQT, obviously. They’ve stayed close to us for all of the time before they became invested. I have a really great relationship with Nick Humphries. And it’s been a really positive relationship.”
The book question
What was the latest book you read and your take out from it for business?
“It was the Nike book. I should have read it sooner. Someone gave it to me, and I was stopped in my tracks. On the first page of ‘Shoe Dog’ by Phil Knight (Amazon Aus, UK, US) has one of my new favourite quotes: ‘The cowards never started and the weak died along the way – that leaves us’. He is quoting a teacher he had who was talking about the people of Oregon and how they got to be there. I love the quote because it says something about anyone who achieves anything significant.“
