Please enjoy my High Priority Column in the February 2007 issue of Customer Interaction Solutions Magazine.
IFS: Another Hat In The CRM Ring
The world of software is succumbing to a few forces which seem to be operating in stark contrast to one another. In most industries where we see consolidation, it is due to private equity reasons. There are hundreds of billions of dollars being thrown around, and if your company wants to make an acquisition, there may be a waiting list of private equity firms that will want to give you money to make the deal happen.
In addition, the appeal of being a public company has faded for the moment and, as a result, some of the money in the industry has been spent on taking public companies private. One example is the purchase of Aspect by Concerto, creating Aspect Software.
One strong force is that of consolidation which, ironically, in the CRM space is being driven more by Oracle than by private equity companies. Larry Ellison has done what few have been able to do and that is acquire successfully time and time again. In fact, the choices in the enterprise software market are dwindling, leaving many organizations with a few choices such as Oracle and SAP. Recently, a rumor has been circulating that Oracle will soon make a bid for SAP, as well.
For those of you who paid attention in school, you remember that for every action there is an equal and opposite reaction. In this case, the opposite of consolidation is a move to open-source software. While the open source market hasn’t grown very quickly in the CRM space, the size of the threat does continue to grow.
Of course, Oracle has recently gotten into the open source business as well, which is a good hedge for them as they will soon be able to help companies regardless of their needs. But for those organizations looking for choice in the software market, I bring them some hope in the form of a company many readers may never have heard of: IFS (www.ifsworld.com/us). The company’s software solutions are optimized for enterprise resource planning (ERP); enterprise asset management (EAM); and maintenance, repair and overhaul (MRO). IFS also has a focus on CRM and, as such, I thought it would be interesting to readers to share a recent interview with IFS’ Jorge DeFreitas, product manager of CRM for the company.
RT: Tell me about IFS.
JD: IFS develops and markets IFS Applications, a suite of enterprise applications used by 500,000 users at more than 2,000 companies worldwide. Our global headquarters are in Sweden, but we have 79 offices in 54 countries — with our North American headquarters in Schaumburg, Illinois.
IFS focuses on the needs of middle market companies; that is, companies with about $100 million to about $2 billion in revenue. We further target companies in some specific manufacturing and asset-intensive industries, including utilities and telecom, process industries, service and facility management, aerospace and defense, industrial manufacturing, high-tech and medical devices and automotive. In short, IFS thrives in complex environments and in businesses that must adapt to rapid change.
RT: How do your software offerings differ from the larger players in the market?
JD: First of all, we are an independent software vendor, and after years of merger mania, we are one of the few ISVs left in the enterprise application space! From a product differentiation standpoint, IFS pioneered and is still the leader in mid-market applications built on a service-oriented component architecture (SOCA). This method of building applications gives end users unprecedented flexibility and allows our customers to implement a small segment of functionality or a comprehensive suite. This means customers can realize a return on their investment more rapidly. Our modular product structure allows customers to phase implementation, addressing their business needs in priority order and avoiding the “big bang” implementation. Oracle and SAP are still trying to catch up with us on this score.
RT: How do your products integrate with customer CRM needs?
JD: Our customers are looking for an enterprise application that allows efficient support for the customer and product lifecycle. This means that while we have an application module designed to manage customer contact information, our application suite is flexible enough to allow you to view virtually any data — from sales contact information to production to aftermarket service to revenue history — by customer.
IFS CRM enables full customer lifecycle and covers the three main CRM-related processes: marketing, sales and service. IFS CRM falls under the category "Enterprise Application Suite Vendor" as opposed to, e.g., Salesforce.com — best of breed. Our view of CRM involves very deep and dynamic connections to back-office functions. This is what allows us to give our customers such a penetrating view into their customers’ activities and business patterns.
RT: What is the future of enterprise software as it relates to CRM and ERP?
JD: These two disciplines need to become more and more intertwined. Most people and probably most CRM application vendors take a very narrow view of the discipline, and this necessarily limits the effectiveness of customer interactions. Obviously, CRM is often used as a term in the context of a single application, though it is more complicated than this. Technology can be a tool to facilitate the CRM strategy and process. For the most part, CRM represents software and online tools that face outward in three areas: marketing, customer service and sales. But the more data — better data — you can pour into those outward-facing applications, the more powerful your CRM tool will be.
In the real world, CRM ranges from niche tools (for example, tools that perform simple things like personalizing corporate Web sites for certain customers) to a large-scale application that captures myriad interactions with all customers, analyzes them with sophisticated reporting tools, and connects to other major functions such as supply chain management and ERP.
For instance, consider the situation faced by a company that sells and services complex industrial machinery. As the company’s call center takes service and repair request calls from their customers, it helps if they can access information on which other customers had purchased similar or identical equipment, and whether any of those customers had reported similar problems. Better yet, it would be beneficial if the call center could access the maintenance records for that equipment to determine how those problems were solved. Or, if in the course of repairing a customer’s piece of equipment, modifications or alterations were made, that information may also be important to a service crew, as they may need to bring different equipment with them on the customer call.
RT: What is your take on hosted versus in-house software?
JD: It is important for IFS to be able to offer customers both options when desired; thus, the versatility and agility in our product offering. We have delivered IFS Applications in a SAAS environment, but it is not something we see much of a call for. Narrow product offerings like Salesforce.com may be more popular in this configuration. But it seems like middle market companies like the ones we serve want to be more hands-on with their enterprise application. To a certain extent, an in-house implementation may cause a company’s management team to take the type of ownership that can lead them to maximize the possibility of their enterprise application.
RT: What can we expect from IFS over the next five years? Can you look out farther than that?
JD: IFS’ CRM strategy is to continue enhancing our solution, both feature- and technology-wise, based on market and customer requirements/needs. We will make sure we continue to have a very competitive, out-of-the-box and fully ERP-integrated in-house CRM solution.
To a certain extent, our CRM solution will become more and more powerful, along with the rest of our application suite — as the very back-office functions that make up a quality ERP solution. One of our main challenges will be to raise awareness of the fact that CRM is mainly ERP information organized by customer. It takes a true twenty-first century enterprise application — which un-silos information from throughout a company — to deliver on this promise. And this is the point we need to make more clearly in the market.
RT: Thank you for your time, Jorge.
In the future, the CRM wars may be won by the company that demonstrates not the largest or most "brand name" offerings, but the most flexibility to customer needs, not only in terms of the manner of delivery (premise-based, SaaS or a mix of both), but in terms of functionality, scalability, pricing and ease of integration and administration.