IFS continues to buck mid-market ERP trend

Swedish extended enterprise software (ERP) vendor IFS has passed the £40 million revenues mark in the UK, including its joint venture operations with Bae Systems covering aerospace and defence globally. Turnover for Q4 for IFS UK alone, excluding the JV, is on track for £4.5 million. So says UK managing director Alastair Sorbie. While the company’s poor global profitability in recent months has led to the familiar picture of cost cutting measures and head count reductions following earlier acquisitions, it is nevertheless a picture of extraordinary growth – which itself goes some way to explaining the profit woes. Indeed, contrary to many in the ERP sector, Sorbie claims a “very good pipeline” and, at time of writing, said the UK arm “closed three substantial deals in the last week.” In fact, IFS UK has grown its business to 100-plus customers since 1997, and current hesitation in aerospace and defence notwithstanding, expects similar serious growth from the JV shortly. For the cynics, Sorbie insists that prices are not being cut to win business – although first year maintenance is now bundled into the license fee. He puts growth down to the firm’s technology, its Swedish culture of flexibility and, candidly, determined sales activity across the manufacturing user market. Existing users mostly note good customer service and systems that do what’s asked of them. And with reference sites including MG Rover and Swindon Pressings, that too seems likely to have much to do with it. And there’s an element of sales cunning too. Sorbie makes the point that there are still plenty of manufacturing users out there paying heavily for legacy and mainframe system maintenance. And he makes no bones about directing his sales force towards existing legacy systems accounts. And he cites early SSA and Mapics users specifically as ripe for change “because new systems are radically different.” Either way, he claims to be staffing up, taking defections from competitors in the ERP vendor community. And he makes the point that while costs are being brought under control company-wide, IFS has not cut back on R&D investment – for which it pays the Swedes in profitability terms. The result: “We’re seeing serious revenue growth and serious revenue growth per head.” There’s no doubt that this company is still going places. IFS gets onto many of the upper mid market shortlists now and has a respectable UK user base. Our take: the company will continue to go far.