Intentia says it’s not set to merge with IFS as ERP majors consolidate

Intentia and IFS, two of the three main Scandinavian ERP system developers are apparently not set to merge. As whispers of an acquisition come to a head again, Allan Davies, Intentia’s chief marketing officer, says: “I don’t know the latest rumour: we know the guys at IFS well, and we did a joint project on Java development.” It’s not a straight ‘no’, but Davies goes on to say that while consolidation of ERP companies will continue, Intentia will “be an acquirer not an acquiree”. He also notes that in the mid-market, a lot of manufacturers are now on quite old platforms, and that many of their existing suppliers are finding it tough to survive, let alone develop their systems with new technologies. “They have little future product, so they’re ripe for acquisition for their user base and geography.” And they may be targets for Intentia, just as they are for the rest of the pack. As for potential manufacturing users, he insists: “We’re well placed because we started our Java development in 1998, and in the last year we’ve built a really strong offering and customer base. We’re now the biggest ERP vendor on the Java platform.” And with strong financing, ongoing investment in R&D and current revenues around the eur300m mark, plus fully internationalised software, it appears he’s right: Intentia could well slot into manufacturing businesses that want an alternative to the current big five line-up. The issue, however, for Intentia is twofold. First, will users buy the idea of its future-proof Java technology, when it remains apparently a niche player with little to offer – apart from some references – outside Europe and Scandinavia? The big five – SAP, Oracle (with PeopleSoft and JD Edwards), SSA (with Baan, Marcam, Ironside, EXE Technologies, Infinium, Arzoon, the former CA products, Max etc), Infor (including Mapics, Frontstep, Lilly, Mercia and Agilisys) and Microsoft at the SME end, but working up – are bound to look a better bet. There are plenty of potential users among manufacturing SMEs for the remaining ERP firms with special talent, applications and technologies in specific sectors and locations. Think of IFS in aerospace and defence and automotive; think of the Syspro VARs in a spread of industries at the broad SME level. But that brings us to the second point. Will there be enough for a publicly quoted company like Intentia to be able to demonstrate adequate growth for its bankers and shareholders? For different reasons, the same goes for IFS. The precedent has been set many times – Mapics’ acquisition by Infor being merely the latest and most redolent. The likelihood is we will see an acquisition, one way or the other, in the not too distant future.