New IFS CEO talks next phase of growth for ERP provider

Mark Moffat replaced Darren Roos as CEO of ERP provider IFS this month, a change that is expected to drive the company's increasing focus on industrial AI applications. Moffat was the chief customer officer at IFS since 2022, following a career at PwC.

Roos, who was appointed CEO in 2018 and is now chair of the IFS board, led IFS' transition from an on-premises ERP provider to the cloud-based IFS Cloud platform. Revenue from recurring cloud contracts rose from 36% in 2018 to 79% currently, according to the company. During that time, IFS also honed its product focus to six industries: aerospace and defense; energy and utilities; construction and engineering; manufacturing; services; and telecommunications.

The IFS Cloud platform has undergone significant change in that time, integrating enterprise applications that expanded the scope beyond ERP, such as field service management (FSM) and enterprise application management (EAM). Many of these applications came through acquisitions, the latest being Poka for connected worker capabilities and Falkonry AI for industrial artificial intelligence capabilities. IFS also introduced IFS.ai, an industrial-focused architecture that integrates AI throughout IFS applications.

In this Q&A, Moffat discusses the transition in leadership at IFS, the evolution of the company's technology to become more AI-focused and the growth of the business.

Editor's note: This Q&A has been edited for clarity and conciseness.

What has the transition in leadership been like, as you have assumed the CEO role and Darren Roos has become chair of the board?

Mark Moffat

Mark Moffat: Over the last six months, [Roos] and I have been in transition, mostly behind closed doors, but it's been a smooth transition that allows the company and me to get the benefit of [Roos'] experience. [IFS] gets an opportunity to bring fresh leadership, a new energy, a different team as we contemplate what's next for IFS. Because whilst we've had an incredible run, growing on average 30% compound over a five-to-six-year period, and with a budget this year of about $1.5 billion top-line, this company is not done. There's such a growth potential for us, and we're going to be looking to $5 to $6 billion. What it's going to take to get there will be very different from what we've done in the past.

IFS originated as a provider of on-premises ERP software for manufacturers and moved into industry-specific cloud systems over the last few years with the IFS Cloud platform. What's the next step in the IFS evolution and how much of it will focus on AI?

It just so happens that in the last 12 months, the world has gone nuts for AI. So it's a logical progression from a product roadmap perspective [to be more AI-focused].

Moffat: There's a constant evolution from a technology standpoint. It just so happens that in the last 12 months, the world has gone nuts for AI. So it's a logical progression from a product roadmap perspective [to be more AI-focused]. [IFS] is in a strong place in that regard because we've got an outstanding AI-based solution, particularly in the planning, scheduling and optimization space. We got a bit of a head start, and the continued penetration in our chosen segment is mission No. 1. We still have an addressable market that's in excess of our market share now. So it's about increasing penetration in our chosen industries, in our chosen segment, which we describe as the intersection between assets and service.

Then, of course, there is the product roadmap from an AI point of view, which also fits well with where we want to be as a brand. We want to be the reflex response for a CIO who is replacing legacy technology for the functional area of the asset, in the same way the reflex response would be SAP for finance, arguably; Workday for HCM; or Salesforce for CRM.

Equally [important], we need to take the next step with our partner ecosystem. Five years ago, we didn't really have any partners, and now we've got 400 partners and an active ecosystem. Then there's the need to ramp up the brand profile. For example, we've become a technology partner for the Big Ten [NCAA athletics conference], which is the hottest property in college sports now. That's a big investment for us, and it's about raising the brand profile.

IFS has made several acquisitions in the last few years. Are more coming, and if so, where in the portfolio will you be looking to add?

Moffat: We have a serious appetite for M&A. [Roos] plans to spend a disproportionate amount of his time [as chair] looking at the overall strategic shape of the business and potential bolt-on acquisitions that either extend the functional footprint of our solution or extend us into [geographic regions]. But it will all be in our chosen industries that help support the development of asset service. Falkonry is a great example of that. It has some market-leading AI anomaly detection [for] aerospace and defense manufacturing. Poka is a little bit different because that's connected worker [technology], but for manufacturing shop floors. [We'll also consider] where there's a return to be had. Certainly, 18 months ago, there were a lot of overpriced assets. It's changing now, but there's not many people who are willing to sell them at these depressed prices. We're waiting for the market to come back a bit. [M&A] is resolutely a core part of our focus, but we're not going to throw money after expensive assets.

What do EAM and FSM really mean and how does that work specifically? For example, could EAM systems have helped avoid the Alaska Airlines incident with the door flying off midflight?

Moffat: We have one of the industry's leading [maintenance, repair and overhaul] solutions. It just so happens that it's not used by [that airline]. That solution does cater to, amongst other things, AI-based maintenance with routines that include photography. We're still waiting to get all the details [on the incident], but you can imagine a routine where engineers are checking plane parts and they're photographing key parts of a bolt that's exposed. And if the naked eye can't detect [anomalies], then there may be some machine aspects that can.

What's the plan for moving IFS forward in the next few years, and what will we see in ERP or the industrial software industry?

Moffat: I think we'll have cornered the market for industrial AI in the intersection of our chosen industries -- we're right on track to do that. ... We'll open up new revenue streams, because one of the things that's a real objective for IFS is how we look at the B2B2B market or the B2B2C market. For example, one of our customers is interested in making our software available as part of a bundled service -- anomaly detection, machine learning -- where they could effectively charge their customers for an AI-based 'insurance.' They see examples where some of their machines are down and it's costing significant amounts of money. If our anomaly detection and maintenance AI capabilities can help cost avoidance by anticipating failures, then there's a real premium that they can charge their customers. That opens up a gigantic new revenue stream for us.

Jim O'Donnell is a senior news writer who covers ERP and other enterprise applications for TechTarget Editorial.