Post pandemic challenges driving standardisation, asset management, servitisation

The global pandemic has caused many businesses to adjust in their approach towards implementing and using business applications. In some areas they have accelerated their initiatives, where they had once just begun. Global software vendors have also had to adjust their approach in engaging with end customers and how to deliver their projects.

Reflects IFS’ CEO Darren Roos, that historically this used to be a face to face, time consuming activity, flying to the customers destination and doing workshops into what their processes would look like.

A key part of the discussion used to be on how to customise the IFS application to suit the end customer’s needs. “It was always, from our perspective, a pretty painful thing to do. Because frankly, we have spent nearly 40 years building our technology, and we know what best practice looks like,” explains Roos.

Time to value

However, in the post pandemic phase of things, end customers have developed an urgency to get to value. “It is a bit of a revelation, to be honest. Customers are much less inclined to want to customise their applications. They are much more inclined to go fit to standard, because there has been an urgency to get to value,” he says.

Pre-pandemic, in the absence of current restrictions, end customers may have taken up to six months to get their applications up and running. “Now we are doing it in three weeks instead. That is a good example of how things have changed and applies to everything,” continues Roos.

In the past end customers used to talk about time to value being an important principle. But in the present situation, end customers have to follow time to value in order to ensure their business is continuing to work. End customers have fundamentally changed the way about how they will do things in the future, feels Roos.

However, on the flip side, every implementation, depending on the size of the end customer involves some degree of customisation. As long as software vendors like IFS deliver a fit to standard solution without customisation, they can be cost effective. This is now being recognised by top end customer executives, who equate fit to standard as also delivering time to value.

In the past, because businesses had months to do the implementation, so what could be done in weeks took months. “And now because you do not have months to do it, it does not take months. And there is a much greater commitment to getting it done,” he explains.

“But where it tends to go wrong is when you go to the users, and users are looking for what they had in the past. And there is significant resistance to change. So, the change management requirement has not gone away,” points out Roos.

End customers are now questioning the reasons why the IFS solution needs further customisation, and why the embedded best practices from IFS cannot be adopted. This causes customers to ask, why not this way?

Arrival of the cloud

Global enterprise application vendors like IFS need to stay focused on what their end customer are looking for, and not go with the tide. Now there is a much greater focus on subscription and cloud. With the slowing down of liquidity in the markets, end customers are increasingly moving towards a commercial model of subscriptions.

IFS develops enterprise application software for customers who manufacture and distribute goods, build and maintain assets, and manage service-focused operations.

As an enterprise application vendor, IFS offers its customers the choice of adopting a subscription model. “Over half of the customers that we engage with today have chosen a subscription model,” says Roos.

IFS’s enterprise application suite is hosted on Microsoft Azure. “We absolutely believe that customers should deploy in the cloud,” says Roos. And the reason that Roos advises his end customers to adopt cloud is because IFS can provide a standardised application, that can be updated and maintained by the vendor.

“We also believe from a security and resilience perspective, that running in the cloud is the right way to do it,” he adds. However, IFS continues to provide its customers the choice of running IFS from on-premises, from the public cloud, from a private cloud in their datacentre, or as a node with their cloud service provider.

Roos points out that running the IFS application suite from the Microsoft Azure platform is not necessarily the challenge. “It is not the application itself. It is about tooling, automation, security, interoperability, integration, all of the capabilities around the application itself,” he says.

If IFS were to host its solution on all available platforms, including AWS, GCP, Ali Cloud, that complexity would cost the vendor, and therefore the end customer as well. By hosting only on Microsoft Azure, IFS needs to manage the cloud tools only on one platform.

IFS uses an architecture, that takes advantage of containerisation and Kubernetes to provide an extension of its cloud in the customer’s own environment, and functions as a node.

Some end customers based in global markets such as aerospace and defense, operate based on their jurisdiction, and prefer to manage the IFS cloud environment on their own. Other end customers may choose to do it for regulatory reasons or for data stewardship reasons, or for the maturity of their solution. These choices need to be made available to them.

With full functional parity, IFS allows this portability from one type of cloud to the other. IFS can support end customers in deploying as an on-premises solution, as a private cloud, treated as a node of its own cloud. Or, as an interim step in their journey towards the public cloud.

“We still have customers that simply choose to do it that way. Even if it is not the most elegant, but that is their choice. We see customers that might want to deploy initially as a product in their own datacentre, and then at a later stage, move to the cloud,” says Roos.

“We always get caught in the middle of trying to do what is best for the customer, and, what we legitimately believe is best for the customer. At the same time not being overly prescriptive,” reflect Roos, about the multiple roles that IFS needs to play to enable the cloud journey of its end customers.

IFS provides an end-to-end ERP experience and its ERP solution provides visibility across customers, people and assets. Whenever a customer of an IFS’ end customer engages, called a moment of service, the solutions can orchestrate across all the three. “Providing an outstanding moment of service is something that these solutions are built to do,” says Roos.

“We continue to push ourselves to make the applications easier to deploy, and easier to use. There is a significant orchestration of capability, which is required to create that outstanding moments of service. We all understand the number of things that have to come together to provide outstanding moment of service,” he says.

Darren Roos, CEO IFS.

Key takeaways

  • Customers are much less inclined to want to customise applications.
  • Customers are more inclined to fit to standard, because of an urgency to get to value.
  • In the past what could be done in weeks took months.
  • Now because you do not have months to do it, it does not take months.
  • Where it tends to go wrong is when you go to users, and users are looking for what they had in the past.
  • End customers have to follow time to value in order to ensure their business is continuing to work.
  • Over half of customers, we engage with today have chosen a subscription model.
  • We absolutely believe customers should deploy in the cloud.
  • What we see is an opportunity as economies diversify in the region.
  • We actually started in asset management and it is our roots.

Market volatility and growth

Globally, IFS operates across five major market segments. This includes aerospace and defense; engineering, construction and infrastructure; manufacturing; service industries; and telecommunications, energy, utilities and resources.

Historically, IFS is a significant player in the commercial aviation space, where large commercial aviation companies use IFS for their maintenance, repair and overhaul solution.

“That sector has been under enormous pressure in 2020, and is likely to be for the foreseeable future. The other area is, oil and gas on the back of the challenges that sector had, earlier in 2020. We have certainly seen a slowdown in that area,” points out Roos.

Despite these global slowdowns, IFS was still able to experience double digit growth in its software revenue, because of acceleration in other industries and markets. Remote services and support, like IFS remote assistance, which enables customers to leverage augmented reality, to drive remote servicing of assets, saw growth in 2020.

“We have been fortunate in that the business has been resilient throughout. Our business was never focused on one sector. We only operate in five industries, and those five indices are pretty dispersed, which means that we have held up well,” Roos explains on how IFS managed to pull through the challenging year of 2020.

IFS has been operating in the Gulf region for 17 years and has offices in UAE and Oman, and is in the final stages of opening its office in Saudi Arabia. IFS has end customers in Kuwait, Egypt, Bahrain and Qatar, amongst others. The largest airline, largest telecom, largest utility, largest shipyard, largest aviation MRO, are IFS customers.

“I think the region is certainly well positioned. I think they have dealt with the pandemic incredibly well. What we see is a significant opportunity as the economies diversify and grow in the region. These include energy, telecom, aerospace, and defence,” points out Roos.

Boosting efficiency and productivity

The pandemic has also increased attention on how organisations can boost their efficiency through remote teams using various digital management services such as asset management and servitisation.

Asset management is a systematic approach for the realisation of total value from tangible and intangible assets, over their complete life cycles. And servitisation is a service concept where industries use their products to partially sell outcomes as a service rather than capital expense, one-off sale.

Says Roos, “We actually started in asset management, and it is our roots. We then branched into ERP. So, asset management has always been part of the core solution and does not require any incremental deployment.”

“I think that it is becoming more kind of du jour, because ultimately, understanding your assets in the context of servitisation is becoming significantly more important. I think that is what we see today, and the example that I use all the time is the Peloton bike,” he adds.

Peloton, a US based exercise equipment company, offers an exercycle and treadmill on a monthly subscription basis, including remote streaming fitness classes. Roos also cites the example of Rolls Royce, an IFS customer, who is a global manufacturer and supplier of aircraft engines. “They just do not do that anymore. The way that they do it now is they sell hours of operation.”

That is the big change. In order for businesses to be able to sell hours of operation, they need to have a very good understanding of their assets. Asset management needs to be tightly integrated into the enterprises business.

Enterprises can build sustainable revenue streams, around assets produced and sold, and outcome-based services or servitisation. For this they need to understand their assets through total data management, have devices to monitor asset performance, deliver the right service remediation when required, through the right technician, with the right skill set, and with the right components, to service the asset on-site. “That is where the margin comes from,” Roos points out.

“We see a number of customers, across all of those industries that we operate, that servitisation has a much faster growing trend. And asset management is intrinsic to that,” concludes Roos.

Chocolate production line in industrial factory. Automatic process in production line