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Customers in the defence industry help steady Swedish enterprise resource planning vendor's business

Compared with many enterprise resource planning application suppliers, Swedish vendor Industrial and Financial Systems (IFS) has remained relatively unscathed in the economic downturn. In the six months from January to June 2009, it grew revenues by 6% year-on-year to SKr640 million (£58 million).

This result was due in part to flattering currency fluctuations, but it also reflects IFS’s customer base. “We sell to industries that work with constructing or maintaining big heavy assets: things like ski lifts, oil rigs, railways and power grids,” explains the company’s CTO, Dan Matthews. “Our product does well in areas with asset-intensive processes, such as building fighter jets.”

The company has a successful joint venture with BAE Systems to supply the US Department of Defense and the UK’s MoD, and counts Lockheed Martin and complex systems integrator General Dynamics among its customers.
So while it also supplies software to many manufacturing companies – which have as a rule been hit hard by the credit crunch – the long purchasing cycles that are common in the defence industry have cushioned the blow for IFS.

Supplying software to such markets comes with significant challenges, Matthews explains, particularly around security. “The number one demand on systems is security because many of our deployments operate on secure networks, or across a public and secure network,” he says. “Systems responsible for maintaining Warriors [military vehicles] or naval ships contain sensitive information and require a bunch of extra security requirements.”

Reflecting the move of the defence sector from a hardware manufacturing business to a services industry, military clients are increasingly deploying IFS applications in service-oriented architecture (SOA) environments to enable client self-service. Customers such as BAE Systems, for example, offer the solutions as a service – based on their own secure infrastructure – to different branches of the military “within an existing trust network”.

However, Matthews does not foresee IFS itself becoming a SaaS supplier, due to the nature of ERP. “There’s a lot of talk in the industry around how far SaaS can go,” he says. “From an ERP point of view, apart from components like recruiting, most of our customers have a lot of integration with back-end systems, a whole bunch of legacy systems, and a lot of things that make it difficult to host have data and back-end in a public cloud.”

Nevertheless, the company is making attempts to drag the IFS application – which has in the past met with criticism for being esoteric and complex – into the modern, usable age.

“There has been growth in the functionality of IT systems, but that has meant increased complexity”, he explains. “The IFS suite contains 10,000 tables and over 7,000 screens of functionality. But people are thrown around more, and are covering other jobs, so they don’t have time to train; they have to walk up and use the system.”

This was the impetus behind the development of Aurora, an entirely new and, the company says, more usable interface for IFS’s applications, and a continued drive to build its applications around more intuitive designs.
“We’re trying to build a love for the application into the product,” he says. “People like to use the iPhone, but when was the last time you heard that about an SAP implementation? What would that mean for user acceptance, speed of rollout and return on investment?”

But as Matthews acknowledges, this requires some fundamental changes that can take time, even for a software company like IFS that has broken its code base down into standards-based components. “It is not enough to make
it look pretty,” he says.