This year’s IFS World conference was held in Boston and, with nearly 2,000 attendees, was significantly bigger than last year’s in Atlanta. It had a more corporate feel compared with the slightly quirky but endearing characteristic of previous years. This reflects the intent – announced by CEO Darren Roos – to become a $1billion company by 2021.
How will they do this?
- By focussing on the ‘Challengers’ – the theme of this conference. i.e. ‘Enterprise’ accounts above $300 million annual sales and ‘Strategic’ accounts above $2 billion that are challenging the dominant players in their industries.
- By developing the channel (ecosystem) globally for accounts below $300 million.
- By focusing on five sectors (see Figure 1 below).
- By providing a choice of platform (cloud and/or on-premise) .
- By maintaining the focus on service industries.
IFS’ growth has been running at 20% – three times that of its peers – and it claims leadership in field service management (FSM); its FSM business shows H1 2019 license revenues increasing by 119% compared to H1 2018. And this growth is organic – the acquisition of ASTEA, announced at the conference and completed in December 2019 – was its first in two years.
Observations and Analysis – Digital Transformation, OT, ET and IT
The keynote panel on Digital Transformation included Jim Heppleman of PTC – a pioneer of the ‘Smart Connected Product’. Jim made three important points about Digital Transformation project or applications:
- Must be core to the business – not ‘technology-led’.
- Must be achievable, in a realistic timeframe.
- Must be scaleable; ‘start small and scale’.
Jim also warned against pilot projects that are ‘too interesting to kill but not important enough to scale’. PTC is an interesting partner for IFS as it provides the ‘ET’ (Engineering Technology] responsible for initial product design, at the apex of the ‘ET/OT/IT’ triangle. As products – increasingly designed to be ‘connected’ – move into productive use, their connectivity comes into play; ‘IT’ (Information Technology) capability – for which IFS partners with Microsoft Azure – provides cloud-based information storage and analytics which can predict failure in complex assets. ‘OT’ (Operational Technology) from IFS, combined with its enterprise systems technology, provides the means to efficiently actuate the service response (such as preventative maintenance). This can, for example, prevent failure in a (connected) asset and increase up-time by avoiding unnecessary service visits.
We hear from customers that they would like more guidance on ‘what should be the first step’. A ‘proof of concept’ project doesn’t always secure senior management commitment as it may not be core to the business. But jumping in with a digital transformation project that disrupts the core business is high-risk and the outcomes or ROI are uncertain. IFS has some powerful, IoT-based, connected technology that – if packaged correctly and targeted at specific, repeatable applications in selected industries – could provide early pay-back with little disruption and risk.
Given IFS’ proven capability to deliver well-integrated, ‘servitized’ solutions – evidenced by presentations from Rolls-Royce (with ‘TotalCare’ for intelligent, connected engines), JOTUN (moving from selling paints and coatings to ‘hull performance’) and others – we believe it could take a stronger leadership position with its customers for IoT technology. It is critically important to define that first step and to provide packaged solutions that can easily be implemented, with relative certainty of business outcome. In the emerging world of IoT and Digital Transformation, these ‘packaged solution’ may cross traditional industry boundaries. For example, the same ‘Connected Production’ application might apply to companies from mining, agriculture and process manufacturing. And a ‘Connected Transportation’ application could apply to airlines, shipping and fleet management companies.
Observations and Analysis – BIM and AEC
Kenny Ingram, Global Industry Director, Engineering, Construction and Infrastructure, talked about the trend towards the off-site/modular manufacturing of buildings, referencing four sales by IFS this year. This will require the construction industry to introduce ‘modern manufacturing’ techniques such as ‘interchangeable parts’, ‘right first time’ quality and ‘just in time’ supply chain integration. This has major implications for efficiency and cost-saving: the EI engineering group (an IFS customer) quotes a 60% increase in on-site deployment speeds and an 84% reduction in on-site construction hours, using offsite manufacturing.
By adopting modern manufacturing methods, offsite production companies can utilise tried and tested IT technologies ranging from CADCAM and PLM at the design stage, through to ERP for project and materials management planning, and BIM (Building Information Modelling) at the construction stage. Industrial IoT technology can be deployed in the operations stage to monitor and control buildings and equipment, and also to facilitate the ‘digital twin’ concept, that has clear value in construction (the 3D design model can be used to ensure the build is precise and IoT sensors can be used to monitor the as-built status of the building and maintain it through-life).
IFS predicts that ‘within five years, 50% of all construction projects will use offsite manufacturing and/or 3D printing’ and they will experience ‘40% reduction in project delivery timescales and 35% reduction in project cost’.
For the underlying software technology, Cambashi estimates that the current TAM (Total Available Market) is $10 billion and that it will double in the next five years – see graphic below:
As well as applying these tried and tested ‘manufacturing’ techniques, the construction industry is also ripe for the application of 3D printing, IoT (Internet of Things) and blockchain which can assist in connecting up buildings, cities and supply chains.