10 November, 2011
90% of users affected by M&A’s in ERP industry have concerns, IFS study reveals
The majority of Enterprise Resource Planning (ERP) users have been directly affected by heavy merger and acquisition activity in recent years, causing concerns for the ongoing desirability and stability of these products, a study released today by ERP vendor IFS reveals.
The study is based on a survey of more than 200 manufacturing and other executives, and the data was analyzed by Cindy Jutras of analyst firm Mint Jutras, Boston. The data indicates that the majority of respondents, 54 percent, say they are running ERP or other enterprise software from a software vendor that has been recently acquired. Among respondents with companies running products affected by M&A activity, 90 percent indicated that they had concerns over negative effects their business could realize of the products they were running. Concerns that the enterprise software product their company is running could be discontinued by the vendor that acquired it, or the new owner may not continue to invest in the enterprise software product going forward, were the most frequently reported concerns.
Most of these respondents – 31 percent – said they report they were already running their enterprise software when their software vendor was acquired, while 23 percent had selected an enterprise software product after the vendor had been subject to M&A activity. Acquired products were not necessarily viewed unfavorably by respondents as a whole, in part because when a small or struggling software vendor is acquired by a larger one, it may be viewed as a way for the vendor’s products to continue into the future. In some cases, when a vendor acquires enterprise software products that are complementary or can extend their current offering, customers may actually benefit.
“We found this study interesting as it reinforces IFS’s global acquisition strategy, as well as our devotion to a single enterprise software product with a solid roadmap for future development,” IFS North America President and CEO Cindy Jaudon said. “Our strategy has been to offer a single product that is our only focus for research and development efforts. Our customers can feel secure that there are no other application platforms that might cause us to divert resources that would otherwise be used to evolve IFS Applications to meet their future needs. Our recent and planned acquisitions are focused and complementary to IFS Applications, allowing us to better serve our existing customers and broaden our capabilities and markets. This makes us a stronger and more attractive vendor to do business with.”
A complimentary copy of the study, How M&A Activity Affects ERP Users, can be downloaded from http://download.ifsworld.com/Studies
IFS is a public company (OMX STO: IFS) founded in 1983 that develops, supplies, and implements IFS Applications™, a component-based extended ERP suite built on SOA technology. IFS focuses on industries where any of four core processes are strategic: Service & asset management, manufacturing, supply chain and projects. The company has 2,000 customers and is present in approximately 60 countries with 2,700 employees in total. Net revenue in 2010 was SKr 2.6 billion.