IBS Picks Windows Instead of i as Strategic ERP Platform

September 29, 2008 Timothy Prickett Morgan

Swedish ERP software maker International Business Systems, a long-time supporter of the AS/400 and successor platforms, hired a new president and chief executive officer last week in the wake of a recapitalization earlier this year. And, to the chagrin of i enthusiasts the world over, the company also announced a new platform strategy that will see IBS push its IBS ERP suite on Windows platforms rather than on i 6.1 and its successors.

But don’t panic just yet, AS/400 folks. The majority of the 5,000 customers that IBS has are running RPG or Java versions of its eponymous ERP suite on one kind of i platform or another. And while the company is going to be pushing IBS ERP on Microsoft‘s Windows platform as it tries to push into new accounts, that doesn’t mean that AS/400, iSeries, and System i shops are going to be asked to convert to Windows–any more than IBS required customers with RPG versions of its software to convert to the Java version of its ERP code.

“We will continue to support our System i customers, with both the RPG and Java versions of our applications, for as long as they want,” explains Oskar Ahlberg, director of investor relations at IBS, which is headquartered in Stockholm, Sweden. This will come as a relief to those customers, to be sure.

The change in focus from i to Windows on the platform side is a reflection of market enthusiasm–really a lack thereof–in the Nordic countries and across Europe, where most of IBS’ customers are located, for the combination of the Java-based IBS ERP suite on the Power Systems i system from IBM. “We have seen System i sales drop off significantly in the past year, particularly in the last six months,” says Ahlberg. With Windows being more or less the default operating system for entry servers and an acceptable platform for midrange and even high-end platforms, you can’t blame IBS for shifting its focus to what is easier to sell.

You can, however, blame IBM. I do. User-priced AS/400, iSeries, and System i boxes would have gone a long way toward keeping the i platform competitive with Windows in the past decade. But, IBM had other plans, other strategies. To IBM’s credit, the company did eventually listen, and the Power Systems 520 running i is, as I showed a few weeks ago, absolutely competitive with Windows. The Power 550, as I showed a week later, is not competitive with Windows on OLTP workloads. (I am still working on comparisons for the Power 570s.) These boxes are the heart of the midrange, and have to compete dollar for dollar, transaction for transaction, with Windows on X64 iron.

The good news, for loose definitions of the word “good,” is that IBS didn’t make the total switch to the Microsoft stack. In terms of coding the IBS ERP suite, IBS is sticking with Java rather than go to the .NET runtime and related middleware stack and the C# compiler created for Windows. “We made the strategic decision a long time ago to go with Java because it gives us options, and we think this is still valuable,” explains Ahlberg. “By staying with Java, we can still support our System i customers, and should the Windows platform decline in the future or if we decide to pursue another platform, Java will give us options then, too.” And because IBS is absolutely agnostic about the Java application server that customers use on their servers, it means i5/OS and i shops will be able to run the suite on their boxes with WebSphere if they so choose. However, IBS wants to be clear: it expects to sell new customers Windows boxes, and that is where it will focus its efforts.

That change in platform emphasis comes just as IBS has hired a new president and CEO and its board of directors has charged that executive, Mike Shinya, to implement a restructuring of the company that goes beyond the platform shift from i to Windows. Starting October 15, when Shinya takes over the helm, he will focus IBS on the distribution segment of the economy, and will specifically put emphasis on electrical components, paper and packaging, and pharmaceutical distributors in the United States and Europe and automotive distributors in emerging economies. IBS is also looking at providing a hosted version of its application suite, a so-called software as a service offering, and is seeking to offer comprehensive IT services for its customers. (The partnership with Volvo IT, announced a few weeks ago and allowing Volvo IT to operate systems on behalf of IBS shops, is one example of the kinds of services IBS wants to do.)

Shinya is most recently the CEO at Sherwood International, a South African company that provides supply chain services for mining companies and relief and development efforts across the African continent. He was also chief operating officer at COBOL compiler and legacy application modernization tool supplier Micro Focus and the head of global sales at one-time high-flying Dutch ERP supplier Baan, which went nearly bust in 2000 and eventually ended up inside the Infor conglomerate in 2006 after being acquired several times by others. Shinya has been an executive at Oracle and IBM, too, before his Baan job. Shinya will report to Pallab Chatterjee, chairman of the IBS board who was CEO at supply chain specialist i2 Technologies, which was acquired earlier this year by JDA Software.

IBS said that as part of its restructuring plan announced last week, it will cut 500 employees, which includes employee removals through voluntary resignations, business divestments, country exits, and layoffs. The plan is expected to save 330 million Swedish krona (SEK) per year (about $50 million at current exchange rates with the U.S. dollar), and will result in charges of approximately 400 million SEK (about $61 million). The employee headcount change is huge, considering that IBS had just under 1,900 employees in 2007. The company is also warning that as it transitions its platform sales away from the Power Systems i platform and toward Windows boxes, its revenues relating to hardware sales will decline.

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