IFS CEO Darren Roos: Customer investment in cloud and digital has held up during Covid

Darren Roos, CEO of business applications supplier IFS, says his worst fears for the commercial impact of the Covid-19 pandemic failed to be confirmed. “Every prediction I made this year has been wrong,” he says. “I am no Nostradamus.”

Roos adds: “When the crisis originally hit, I believed that we would see a cataclysmic impact on the business, and that we would be hunkering down for what would likely be six months. April was bad, and then people seemed to just shake it off and May and June were phenomenal again.”

He says some customers have shown more interest than before in moving to the cloud with their IFS applications because of Covid-19. “What you will have found is that there’ll be customers that were sitting with on-premise instances, and when Covid-19 hit and everybody was having to work from home, they didn’t necessarily have the processes and capability to run those solutions remotely. And even if they did, the things that they would have needed to do to run it remotely, they’ve recognised are not solutions going forward.

“So, when we sit in front of a customer now and we say, like we did before: ‘We’re super pro-choice. If you want to buy cloud, great, we have a world-class cloud offering and hundreds of customers running in the cloud. But if you want to run it on-premise, though, you can’. In today’s world, when you have that conversation with them, they’re saying: if there’s another pandemic, what are we going to do? Let’s go cloud.”

Roos took over as IFS CEO in 2018, with stints at Software AG and SAP in his background. He has, by his own account, standardised the Sweden-based supplier globally and built up its partner programme. Previously, the company had been run like a group of regional or national business units, with a good deal of autonomy.

It was also governed by the idea that only IFS could implement IFS, and so eschewed the ecosystem approach favoured by, for example, SAP.

Today, says Roos, Accenture, Capgemini, TechMahindra and TCS are among 400 partners globally that are implementing IFS’s enterprise resource planning (ERP) applications – and that is a change that he has wrought.

“Every prediction I made this year has been wrong. I am no Nostradamus”

Darren Roos, IFS

IFS, which stands for Industrial and Financial Systems, has been owned by Swedish private equity group EQT since 2015. Its software covers field service management and enterprise asset management as well as ERP. It focuses on five industries – aerospace and defence, engineering and construction, telecoms and utilities, manufacturing, and service.

In 2019 it had revenue of $668m, and Roos is confident that number will be closer to $800m in 2020. Still, that is not even close to Oracle, at $39.1bn, or SAP at €27.55bn in their latest fiscal full years.

Roos sees a market opportunity among those SAP ECC6 customers who are balking at the idea of moving to SAP’s S/4 Hana ERP system, which is based on the German supplier’s in-memory, columnar Hana database.

“We did a survey with IDC and found that nearly 50% of SAP ECC customers have no intention of going to S/4,” he says. “Now, among that 50%, not all of them are looking at IFS, clearly. But what we do know is that we are one of the big three beneficiaries of that decision-making process.

“So we see that, and we’ve won a large number of customers over the last 12 months. And frankly, that’s unsurprising, because, at the end of the day, whenever any vendor – this is not a thing on SAP – whenever any vendor says to a customer, ‘you have to do a reimplementation in order to move forward, and the skill set you require on the other end of that implementation is fundamentally different. In other words, you had an Oracle database, now you’re going to have to run Hana, and it’s going to require you to have the skills to run on that’, a proportion of those customers are just going to say, ‘look, this is not for me, I’m going to evaluate other options’.”