Much has been said lately by Technology Evaluation Centers (TEC) and other market observers about the ongoing turnaround success of IFS (OMX STO: IFS), the global enterprise applications company. Founded in 1983 in Sweden, the company can now boast approximately $300 million (USD) in revenues and 2,650 employees worldwide.
The vendor pioneered component-based enterprise resource planning (ERP) software with IFS Applications—now in its seventh generation—whose component architecture provides solutions that are easier than most to implement, run, and upgrade. IFS Applications is available in 54 countries and 22 languages, and the vendor has over 600,000 users across seven key vertical sectors: manufacturing; automotive; process industries; utilities and telecommunications; construction, contracting, and service management; aerospace and defense (A&D); and retail and wholesale. For information on IFS’s more recent state of affairs, see Two Stalwart Vendors Discuss Mid-market Issues
One of many reasons for the vendor’s stumbling and poor financial performance of yesteryear was its ill-advised acquisitions of several enterprise software companies in the late 1990s. Namely, IFS expanded into the customer relationship management (CRM) arena by acquiring former Israel-based CRM vendor Exactium for its product configuration module. The subsequent sell-off move to Pivotal (now part of CDC Software) in 2000 (see What Is IFS Up To in the CRM Arena?! ) represented IFS’s tacit concession that it had gone beyond its means with its too-ambitious product scope and geographic expansion.
IFS aimed at further expansion in the 1990s: hoping to gain a fast US beachhead by converting its customer base from the Time-Critical Manufacturing (TCM) product to its own enterprise applications, IFS bought US-based ERP vendor Effective Management Systems (EMS). However, customer satisfaction with TCM was (unexpectedly to IFS) high and, therefore, customer loyalty made it difficult to move customers away from TCM. With the majority of TCM customers reluctant to make the transition, and with IFS reluctant to maintain two separate ERP product lines, IFS then agreed to spin off the TCM product line in November 2001. Thus, the current WorkWise organization was created of former EMS staff, and has since focused solely on the TCM product line and its customer base (for more information, see A User-centric WorkWise Customer Conference).
Yet the sell-off at the end of 2004 of IFS’s Brazilian subsidiary; of tangential computer-aided design (CAD) applications for process, electrical, piping, and instrumentation design; and of applications for payroll (see IFS Continues Its Reinvention through Pruning) was a harbinger of today’s stabilized—even “upbeat”—company. After careful soul searching, IFS's then-management decided to stay focused on core competencies instead of extending painstaking efforts to develop peripheral applications for a small fraction of customers in Scandinavia, where the payback would have been highly unlikely.
Although creating a differentiating trait might have been tempting (no other ERP vendor has ever had native CAD applications for piping design), IFS’s CAD customer base was too small for the vendor to justify developing its own CAD applications in the long term, and the company did not have enough specialists outside the Nordic region to sell and support CAD applications globally. Again, this was possibly the best proof that IFS was getting rid of its erstwhile “not invented here” attitude.
Back to the Future?
Consequently, some might not have expected the vendor to consider acquisitions for some time to come. And yet, in July 2007, IFS’s joint venture with BAE Systems, IFS Defence Ltd., bought Information Science Consultants Ltd. (iSC). A privately held company based in Cirencester, UK, iSC specializes in naval maintenance management applications and services; the UK Royal Navy fleet uses iSC’s onboard and onshore unit maintenance management system (UMMS). The company also provides leading expertise in reliability-centered maintenance (RCM) processes and tool sets to a wide range of defense and commercial organizations. At the end of 2006, iSC (in British pounds) generated revenue of £2.4 million, with earnings before interest and tax (EBIT) of £0.5 million on gross assets of £1.8 million. Following the acquisition, iSC will operate as a business unit of IFS Defence.
Market Impact
Before jumping to a “not again!” conclusion, perhaps one should note that this acquisition might be of a somewhat different nature than IFS’s previous unsuccessful ones. Acquisitions of niche specialist companies, done to fill some functional gaps or to assert leadership in a certain vertical or geographic segment, usually make sense or justify themselves quickly. To that end, having originated from the realm of computer maintenance management systems (CMMS) for utilities in the 1980s, IFS has since become one of the leading suppliers of enterprise asset management (EAM) solutions, with a leading market share in the Europe, Middle East and Africa (EMEA) region.
source
http://www.technologyevaluation.com/research/articles/once-bitten-vendor-is-not-twice-shy-about-new-acquisition-19291/
The vendor pioneered component-based enterprise resource planning (ERP) software with IFS Applications—now in its seventh generation—whose component architecture provides solutions that are easier than most to implement, run, and upgrade. IFS Applications is available in 54 countries and 22 languages, and the vendor has over 600,000 users across seven key vertical sectors: manufacturing; automotive; process industries; utilities and telecommunications; construction, contracting, and service management; aerospace and defense (A&D); and retail and wholesale. For information on IFS’s more recent state of affairs, see Two Stalwart Vendors Discuss Mid-market Issues
One of many reasons for the vendor’s stumbling and poor financial performance of yesteryear was its ill-advised acquisitions of several enterprise software companies in the late 1990s. Namely, IFS expanded into the customer relationship management (CRM) arena by acquiring former Israel-based CRM vendor Exactium for its product configuration module. The subsequent sell-off move to Pivotal (now part of CDC Software) in 2000 (see What Is IFS Up To in the CRM Arena?! ) represented IFS’s tacit concession that it had gone beyond its means with its too-ambitious product scope and geographic expansion.
IFS aimed at further expansion in the 1990s: hoping to gain a fast US beachhead by converting its customer base from the Time-Critical Manufacturing (TCM) product to its own enterprise applications, IFS bought US-based ERP vendor Effective Management Systems (EMS). However, customer satisfaction with TCM was (unexpectedly to IFS) high and, therefore, customer loyalty made it difficult to move customers away from TCM. With the majority of TCM customers reluctant to make the transition, and with IFS reluctant to maintain two separate ERP product lines, IFS then agreed to spin off the TCM product line in November 2001. Thus, the current WorkWise organization was created of former EMS staff, and has since focused solely on the TCM product line and its customer base (for more information, see A User-centric WorkWise Customer Conference).
Yet the sell-off at the end of 2004 of IFS’s Brazilian subsidiary; of tangential computer-aided design (CAD) applications for process, electrical, piping, and instrumentation design; and of applications for payroll (see IFS Continues Its Reinvention through Pruning) was a harbinger of today’s stabilized—even “upbeat”—company. After careful soul searching, IFS's then-management decided to stay focused on core competencies instead of extending painstaking efforts to develop peripheral applications for a small fraction of customers in Scandinavia, where the payback would have been highly unlikely.
Although creating a differentiating trait might have been tempting (no other ERP vendor has ever had native CAD applications for piping design), IFS’s CAD customer base was too small for the vendor to justify developing its own CAD applications in the long term, and the company did not have enough specialists outside the Nordic region to sell and support CAD applications globally. Again, this was possibly the best proof that IFS was getting rid of its erstwhile “not invented here” attitude.
Back to the Future?
Consequently, some might not have expected the vendor to consider acquisitions for some time to come. And yet, in July 2007, IFS’s joint venture with BAE Systems, IFS Defence Ltd., bought Information Science Consultants Ltd. (iSC). A privately held company based in Cirencester, UK, iSC specializes in naval maintenance management applications and services; the UK Royal Navy fleet uses iSC’s onboard and onshore unit maintenance management system (UMMS). The company also provides leading expertise in reliability-centered maintenance (RCM) processes and tool sets to a wide range of defense and commercial organizations. At the end of 2006, iSC (in British pounds) generated revenue of £2.4 million, with earnings before interest and tax (EBIT) of £0.5 million on gross assets of £1.8 million. Following the acquisition, iSC will operate as a business unit of IFS Defence.
Market Impact
Before jumping to a “not again!” conclusion, perhaps one should note that this acquisition might be of a somewhat different nature than IFS’s previous unsuccessful ones. Acquisitions of niche specialist companies, done to fill some functional gaps or to assert leadership in a certain vertical or geographic segment, usually make sense or justify themselves quickly. To that end, having originated from the realm of computer maintenance management systems (CMMS) for utilities in the 1980s, IFS has since become one of the leading suppliers of enterprise asset management (EAM) solutions, with a leading market share in the Europe, Middle East and Africa (EMEA) region.
source
http://www.technologyevaluation.com/research/articles/once-bitten-vendor-is-not-twice-shy-about-new-acquisition-19291/
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