IBS ANNUAL REPORT 2007 IBS AB, P.O. Box 1350, SE-171 26 Solna, Sweden.
Visitors’ address: Hemvärnsgatan 8, Solna.
Tel: +46-8-627 23 00 info@ibs.net www.ibs.net
A N N U A L R E P O R T 2 0 0 7
IBS in brief 4
2007 in brief 5
President’s comment 6
IBS mission, objectives and strategy 8
Article: Improved effi ciency with new global organization 9
IBS market 10
IBS business model 11
IBS business software 12
IBS product development 14
IBS industry-specifi c software 15
IBS employees 16
Article: Successful establishment of resource centers 17
IBS processes 18
IBS in the world 19
Area analysis 20
The IBS share 30
IBS fi ve-year summary 32
Key fi gures and data per share 33
Corporate governance of IBS 34
Board of Directors’ report 37
Financial reports 44–70
Consolidated income statement 44
Consolidated balance sheet 44
Consolidated change in equity and cash fl ow analysis 45
Parent company income statement 46
Parent company balance sheet 46
Pledged assets and contingent liabilities 46 Parent company change in equity and cash fl ow analysis 47
Accounting principles 48
Notes to the accounts 56
Audit report 71
Financial defi nitions 72
Glossary 72
IBS Group Management 74
IBS Board of Directors and Auditors 75
IBS history 76
Annual General Meeting 77
Reporting dates 77
Addresses 78
Content
International installations with local presence
IBS distinguishes itself from other suppliers through offering total solutions. This means that we provide everything that is needed for business systems, including software, consulting services, servers and other infrastructure, as well as outsourcing, maintenance and fi nancing.
Through our offi ces in 22 countries and partners in several more, we offer international installations and maintenance of business systems with a local presence.
IBS solutions are designed for mid-sized and large companies, as well as subsidiaries of international groups. More than 5 000 customers currently rely on business solutions from IBS, including
such companies as Bahco, Cramo, Hitachi Maxell, Map Merchant Group, McGraw-Hill, Miele, PaperlinX, Rexel, Scania, Seco Tools, SKF, Univar and Volvo.
Specialist in selected industries
IBS business systems are customized to meet the requirements and demands of distributors and manufacturers in a number of industries. In addition to specifi c software functionality, our offering to companies in these sectors includes specialized knowledge and experience from other installations in corresponding industries.
Examples of industries in which IBS works are pharmaceutical distribution, automotive, electronics, paper and publishing, as well as a number of local niches.
IBS is a world-leading supplier of business systems and supply chain management solutions to distribution and manufacturing companies.
We generate measurable value by helping our customers utilize our solutions for distribution, warehouse control, manufacturing, supply chains and inventory management.
IBS in brief
SUMMARY – Financial data
2007 2006 Change
Software licenses (SEK m) 490 512 -22
Professional services (SEK m) 1 186 1 218 -32
Professional services margin % 22% 23% -1 p.p.
Total revenue (SEK m) 2 260 2 278 -18
Earnings after fi nancial items (SEK m) 27 -6 33
Earnings after fi nancial items** (SEK m) 31 113 -82
Net profi t for the year (SEK m) -4 -7 3
Equity to total assets ratio % 45% 42% 3 p.p.
Number of employees at year-end 1 754 1 851 -97
** Excluding capital loss from sale of operations SEK -4 m during 2007 and excluding restructuring costs of SEK -120 mkr as well as capital gain from sale of subsidiary by SEK 1 m during 2006.
›› Total revenue amounted to SEK 2 260 m (2 278).
›› Net profi t amounted to SEK -4 m (-7).
›› Earnings per share amounted to SEK -0.04 (-0.09).
›› Earnings after fi nancial items totaled SEK 27 m (-6*).
›› Several large license deals were signed with customers, among them the international media company Pearson Education and Swedish food distributor Servera.
›› Go-live of the fi rst installation of IBS Enterprise Financials in a Windows version at a customer in Sweden.
›› During the fourth quarter 2007, IBS initiated a new global re-organization with the aim of improving profi tability and adjusting the internal organization to the international customers’ needs. The new organization was fully implemented during the fi rst quarter 2008.
* Comparative fi gures for 2006 include restructuring costs of SEK -120 m.
Market conditions for new sales of software were positive during the year and demand for professional services remained favorable in most markets, particularly in Northern Europe. 2007 ended with strong license sales with several large contracts.
0 20 40 60 80 100 120
2007 2006 2005 2004 2003
SEK m Earnings after financial items excl. capital gain and restructuring costs
0 500 1000 1500 2000 2500
2007 2006 2005 2004 2003
SEK m Distribution of revenue streams
Software licenses Professional services Hardware and other revenue
2007 in brief
Many of our customers conduct operations in several countries, which places high demands on us as a supplier of total solutions.
During the year, we made excellent progress in terms of being able to offer uniform products and services, standardizing procedures for how we sell, install and support business solutions and establishing a uniform IT infrastructure for the operation of customer installations and support for our own operations. These measures have created the necessary conditions for increased customer service and competitiveness in the future.
Attractive offering to international customers
Despite a weak start to 2007, the year ended with strong license sales during the fourth quarter, including several major customer contracts. Market conditions were relatively positive throughout the year, despite variations within different geographic areas and industries. In Germany, we signed a number of new contracts with customers within pharmaceutical distribution, which was a strategic breakthrough for IBS in a strong and signifi cant market. We also reported positive trends in the Nordic region, including a major new cooperation agreement with food supplier Servera. At the same time, sales in North America, France and southern Europe were lower than in the preceding year.
We have a highly attractive offering for international customers and many of the measures we are carrying out aim to further strengthen this offering. An example of a customer care activity introduced during the year is our Global Account Management program, which aims to further develop our partnerships with international customers. A team of employees from different countries is responsible for leading and improving cooperation with our major international customers. Within the framework of this program, we signed a key installation agreement in 2007 with international media company Pearson Education concerning the installation of IBS business systems in a number of European countries.
New global organization generates many advantages Net profi t for the year was lower than in the preceding year due to a combination of increased expenses and decreased revenues.
The measures we implemented in 2007 initially resulted in high costs for such activities as the establishment of new development resources in Portugal and India. We also had a high level of activity in terms of developing new products, which were charged against earnings in 2007. In addition, salary increases for the year
were higher than expected, particularly in northern Europe.
Slightly lower sales of software and consulting services also contributed to earnings being lower than planned.
In view of this, the IBS Board of Directors and management have decided on further measures to improve the company’s profi tability during the coming years. In early 2008, a new global organiza- tion was introduced that will generate major advantages for both our national and international customers. This change will allow us to better apply the right resources from the entire IBS organiza- tion. It will also result in standardized procedures for our work in customer projects, from pre-studies to implementation, training and support.
At the same time, the new organization will create the necessary conditions for increasing internal effi ciency. It will allow us to better allocate resources and measure and follow up on capacity utiliza- tion, billing ratios and other key fi gures on an international basis.
Use of programming resources in mid- and low-cost countries will also become easier because we will have a better overview at Group level of how we conduct offshoring work in various customer projects. During the year, the amount of development resources increased in mid- and low-cost countries.
Further actions for increased effi ciency and profi tability Historically, IBS has been decentralized with strong national organizations. This has been advantageous because responsibility and authority remained in close proximity to customers in the local markets. To reduce the cost structure, increase international cooperation and improve coordination of the Group’s operations, we are now implementing a new global organization that will create the necessary conditions to provide an even higher level of customer service, while simultaneously lowering costs in such areas as administration. During the fi rst quarter of 2008, we decided to reduce the number of non-billable employees by slightly more than 100, to lower the Group’s costs. At the same time, we are continuing to develop our consulting organization and further improve our key fi gures for billing ratios.
In 2006, we allocated a restructuring reserve of SEK 120 m to enable us to implement measures to increase profi tability and competitiveness. During 2007, we used approximately SEK 40 m of the reserve to reduce the number of offi ces, relocate certain programming to low-cost countries and for other measures to
In 2007, we implemented a number of measures to internationalize the company and increase its effi ciency. Continued internationalization is a central part of the IBS strategy for being a leading global supplier of supply chain management solutions.
President’s comment
enhance effi ciency. At the beginning of 2008, the remaining reserve amounted to SEK 51 m, which will be used for continuing restructuring work during the year.
Continued focus on selected industries
IBS derives its key competitive edge from being able to offer industry- specifi c software combined with a high level of competence and extensive experience within a number of industries. We are represented in more than 40 countries, which is particularly important for customers who require installations in several countries. Our business model of offering complete solutions is unique. Few business systems suppliers are as capable of delivering complete solutions on an international basis. For our customers, this creates an opportunity to have one contact network instead of several, resulting in simpler and faster business cooperation and increased control before, during and after the installation of the business system.
During 2007, our activities within product development were extensive. Prioritized development projects included creating new functionality for a number of industries, such as paper distribution, electronics, machinery rental, pharmaceutical and publishing.
In addition, we worked intensely to complete and test the IBS Enterprise business system in a Windows version. The fi nancial part of the business system was deployed by a customer in Sweden in December 2007. The other parts of the system will be tested and installed in one or more client companies during 2008. Being able to offer business systems for different platforms is strategic- ally important since this allows IBS to grow within its areas of specialization. We expect to be able to introduce a complete Windows version of IBS Enterprise during the second half of 2008, which will gradually generate a positive effect on our license sales in the coming years.
Valuable complementary operations
We are also continuing to develop complementary operations within IBS. A signifi cant part of IBS comprises local niche opera- tions with cutting-edge solutions in the areas of fi nance, HR and warehouse management systems, as well as customized software solutions, particularly in the Nordic region, the Benelux countries and southern Europe. These niche operations became part of the IBS Group through acquisitions carried out in the past few decades and will be developed individually to utilize their potential.
Hardware sales are also a key aspect of the Group’s operations and a central part of our turnkey offering.
IBS is active in reducing negative climate effects
There are a number of future challenges that IBS, like many companies, must take into consideration, such as continued internationalization, offshoring and climate changes. Supply chains are becoming increasingly longer and more complex.
Adjusting to a new reality of increased transport costs and intensi- fying demand from consumers and authorities will be a major challenge for the business world, particularly distributors. We have a relatively small direct effect on the environment. Through the process solutions we deliver to our customers, we can contribute to minimizing the environmental impact of various client companies and ensuring long-term sustainable solutions and competitiveness.
Positive market, but with increased uncertainty
The market outlook for 2008 remains positive in most geographic areas, with a certain amount of weakening in the US market.
However, uncertainty concerning a possible economic downturn has increased due to the weaker investment climate. Today, it is clear that most investment decisions by client companies pertain- ing to new or upgraded business systems are preceded by careful analysis of the expected repayment. Investments are being made based on multi-year plans to ensure the long-term competiveness of the companies. Opinions concerning the role and signifi cance of business systems in carrying out the overall strategy vary within different countries, industries and companies. However, as long as automating large parts of the supply chain creates distinct business potential, investment inclination will remain strong.
With over 30 years of experience in helping companies boost their profi tability and competitiveness through powerful and reliable business systems, IBS has established a large customer base and extensive portfolio of solutions. We will continue managing and developing the trust our customers instill in us, which is the basis for creating value for our shareholders.
In conclusion, I would like to thank all of our customers, employees, shareholders and suppliers for your contributions to the continued progress of IBS.
Erik Heilborn
President and CEO
Mission
IBS’ mission is to help our customers increase profi tability and customer service through solutions and services that improve business processes and deliver measurable business value.
Vision
IBS’ vision is to continue to strengthen our position as a leading international supplier of integrated IT solutions within supply chain management and other selected market segments. IBS will be the supplier of choice for large and medium-sized companies that operate in the areas of IBS’ specialization.
Objectives
IBS’ overall objectives are to create value for customers, share- holders and employees. IBS’ long-term fi nancial objective is to achieve an operating margin of at least 10 percent.
Strategy
IBS is focused on large and medium-size companies, as well as subsidiaries of corporate groups, and bases its strategy on the following cornerstones:
›› Specialization in market segments in which IBS can attain a leading position, deliver high value to customers and thus achieve satisfactory profi tability.
›› Emphasis on international industry solutions targeted at industries such as pharmaceutical distribution, automotive, electronics, paper, publishing and other wholesale operations, plus a number of other niches in local markets.
›› Delivering open business systems for platforms such as i5, Windows, Unix and Linux.
›› Global market presence to serve international groups.
›› Continued sales via indirect sales channels.
›› Improved international coordination to increase effi ciency for both income and cost-generating activities.
›› Fully utilizing cost advantages in medium- and low-cost countries, with emphasis on product development and major customer modifi cation projects.
›› Offering one-stop-shop solutions, based on software, professional services, hardware, network solutions and fi nancing.
Our overall goal is to create added value for our customers, shareholders and employees.
IBS mission, objectives and strategy
As a result of its increased internation- alization, IBS introduced a new global organization during the fi rst quarter of 2008. The objective of the organization is to deliver the industry’s best customer service and effi ciency in all aspects of our operations.
This new international organization derived from a thorough analysis of current and future customer demands.
The aim is to increase effi ciency, thereby improving profi tability, and to adapt the organization to the requirements of international customers.
By identifying areas in which synergy effects can be utilized and improvements made, IBS will develop its organization and processes to ensure a long-term competitive edge in the global market for business systems.
The new organization, implemented in early 2008, clearly refl ects the extensive range of solutions offered by IBS – some global and others customized for local market niches. The most signifi cant change involved the introduction of two new global business areas: Sales &
Marketing, which is responsible for all sales and marketing activities, and Professional Services, which is responsible for all aspects of delivery and customer support. IBS will also continue to expand its range of local software and services,
which are customized to meet the needs of local markets.
GLOBAL, CUSTOMER-FOCUSED ORGANIZATION
The new organization and business lines refl ect the manner in which the customers’
organizations are structured in inter- national projects. This change will allow us to better apply the right resources from the entire IBS organization. It will also result in standardized procedures for our work in customer projects, from pre-studies to implementation, training and support.
Following its business model for total solutions, IBS is able to offer powerful business systems through a single point of contact – IBS international project managers. Few other suppliers can offer their international customers such service.
Increased internationalization of resources and processes enables our customers to benefi t from IBS employees’ high level of expertise. IBS is assuming a larger role, not only as a technology supplier, but also as an advisor to our customers concerning their business processes. This, in turn, allows IBS employees to gain more expansive and diverse experience and improves opportunities for career and skills development.
HARDWARE AND HOSTING AROUND THE GLOBE
Our supplementary range includes hardware, hosting and related technical services. These are important parts of the IBS offering. The new structure will place more focus on these areas and improve international coordination, while the company will continue providing customers with a total offering. This will facilitate efforts to achieve more global sales of hardware and technology, and will allow the company to optimize future business models with its partners.
The new organization will also generate opportunities for purchasing hardware capacity as a service.
LOCAL BUSINESS NICHES In addition to offering international supply chain focused ERP solutions, IBS has a number of strong niche businesses in the Nordics, Spain, Portugal and the Benelux countries. These business niches include best of breed HR and fi nancial solutions, local ERP software and locally adapted consulting services. Each business area will become more visible and be developed according to its specifi c potential to ensure continued revenue and customer growth and
increased profi tability.
Improved effi ciency with new global organization
In 2007, IBS was one of the top ten international suppliers of supply chain management solutions in a stable market. New technological developments in such applications as SOA and SaaS achieved major breakthroughs and will generate increased market opportunities for IBS.
Market outlook
IBS targets the market for mid-sized and large distribution and manufacturing companies, with a focus on selected industries, including the automotive, electronics, paper, pharmaceuticals, food and publishing industries. At the local level, IBS conducts operations within a number of additional industries and selected niches, such as HR and fi nancial solutions and other specialized areas. These operations primarily take place in the Nordic region, the Benelux countries and Iberia (Portugal and Spain).
According to Gartner analyst group, the global market for supply chain management systems (SCM) is expected to continue the stable growth trends reported during the past few years. The market is expected to grow by approximately 7 percent in 2008.
SCM sales are expected to total about USD 6 b this year.
However, we anticipate that the effects of a general economic downturn will lower the growth rate in comparison with 2007.
The market outlook for hardware appears more cautious, with an expected decrease in the inclination to invest in IT infrastructure.
This is due to increased use of hosting and rented software solutions, known as Software as a Service (SaaS), combined with a weaker economic climate, particularly in North America. IBS is well-positioned to adapt to a weaker market for IT infrastructure by offering hosting solutions and concepts for renting business systems, particularly to smaller customers. The IBS growth forecast in terms of software sales will benefi t from the introduc- tion of business systems for Windows planned for the second half of 2008.
Adapting to new requirements and globalization
Software based on Service-Oriented Architecture (SOA) will also be in demand within SCM because this type of solution is fl exible and cost-effective. All companies seek ways to reduce their costs for IT and, at the same time, to benefi t from the support provided by their business systems. As a result, service-
oriented and outsourced IT solutions are attractive to companies that strive for the lowest total cost for IT support, which is in line with our portfolio of solutions.
Globalization and consolidation have driven companies to install business systems that provide them with competitive advantages in relation to their competitors. Powerful business systems enable companies to adapt quickly to changing market conditions.
Business systems, such as IBS Enterprise, must empower client companies to cooperate with customers and suppliers globally. In adition, the systems must integrate information from internal and external sources, communicate quickly, optimize clients business processes and adapt the business system to new requirements and conditions.
Intense competition requires continued specialization IBS competes with a number of different suppliers of supply chain management solutions, both locally and globally. Its competitors include SAP, Microsoft, Oracle, Infor and Lawson. At the local level, IBS also faces competition from companies that specialize in certain industries, regions or application areas. Although continued consolidation has transformed the industry during the past few years, the market for SCM solutions remains fragmented.
According to Gartner, the top ten SCM suppliers account for approximately 55 percent of the market.
The IBS competitive edge derives from our capacity to provide specialized expertise within various process areas, industries and technologies, delivered with a high service level and with a strong local presence. This is combined with an ability to offer develop- ment, installation and support at the global level through our total offering. Our long-term competitiveness will be strengthened through a continuing focus on selected industries and the gradual introduction of IBS Enterprise for additional IT platforms.
The 12 leading global vendors of supply chain management solutions, revenue share, 2006
Others, 42%
SAP, 20% Oracle,
15%
JDA Software, 3.5%
Infor, 3.5%
Ariba, 3%
i2 Technologies, 3%
Manhattan Associates, 2.5%
IBS, 2%
Microsoft Business Solutions, 1.5%
Vastera, 1.5%
Red Prairie, 1.5%
Lawson, 1%
Source: Gartner, 2007
0 1000 2000 3000 4000 5000 6000 7000 8000 9000 10000
2010 2011 2009 2008 2007 2006
Total SCM software revenue and growth, 2006-2011
Source: Gartner (August 2007) 0%
10%
9%
8%
7%
6%
5%
4%
3%
2%
1%
Millions of dollars Growth
Total software Annual growth
IBS market
IBS offers products that help companies achieve their strategic objectives. Through long-term partnerships with our customers, we help them improve their business processes and gain a competitive edge.
Business systems that improve transactions
IBS products support a broad spectrum of customers that benefi t from IBS solutions automating and integrating their business processes. We supply general business systems and specially designed solutions for specifi c industries. We also operate web- adapted Software as a Service (SaaS) solutions at a low cost.
Regardless of which IBS products our customers select, they use the information and functions provided by the software to perform transactions, measure and analyze business results and plan for future development. IBS business systems are often offered in combination with IBM’s intermediate software, IBM WebSphere, and Cognos 8 solutions for decision support.
Consultants with extensive experience and knowledge IBS consultants offer a broad range of business and industry expertise, combined with specialized knowledge within informa- tion technology. Our professional business consultants help
customers improve their processes throughout their operations.
IBS consulting services are conducted by our own personnel, regardless of where our customers’ operations are located. Local IBS personnel in 22 countries are supported by a global organiza- tion and international projects can involve consultants from a number of different countries. IBS business partners also provide consulting services in several other countries. A typical project may include everything from pre-studies, process charting, installations and programming a specifi c functionality, to training, maintenance and support.
Hardware, networks, hosting and fi nancing
IBS remains a leading supplier of IBM servers and other hardware in many European countries. Our operations are expanding throughout the world within the areas of hosting, system main- tenance and customer support for systems administration and maintenance.
Our complete IT solutions also include fi nancing solutions for IBS products and services.
Our complete IT solutions comprise more than integrated software.
We also offer servers and other network equipment, consulting services, outsourcing, maintenance and fi nancing.
IBS business model
Solutions that meet current and future supply chain requirements
Today’s companies are expanding to include markets and business partners at all levels: locally, regionally and globally. IT solutions for supply chains must be more cost-effective than ever, but they must also enable companies to link their internal and external systems and organizations. At the same time, they must integrate, analyze, measure and automate information and transactions for all parts of the supply chain.
IBS has over 30 years of experience in offering supply chain expertise concerning the development, installation and support of business solutions. A 2007 global report from the analyst company Gartner indicated that IBS has maintained its ranking among the top ten suppliers of business systems for the entire supply chain.
User-friendly and fl exible technology
IBS Enterprise is our main product. It offers cost-effective and complete supply chain management and control – from integration, automation and fi nancial control to follow-up. IBS Enterprise enables our customers to integrate systems, processes and informa- tion throughout their internal and external supply chains.
Multi-platform solutions expand IBS customer base During 2008, IBS will launch a Windows version of IBS Enterprise.
This Java-based application will allow us to offer cost-effective business solutions – previously only available for the IBM i5/OS operating environment, these solutions will include Windows, Linux and Unix platforms. IBS will continue developing and supporting i5 solutions, while simultaneously facilitating a simple and fast transition to IBS multi-platform solution for these customers – without them risking the loss of earlier IT investments or previously developed functionality.
First-rate supply chain functionality
IBS business systems offer our customers complete supply chain integration and visibility. We provide our customers with fl exible IT systems that generate business value and expand cooperation
and integration with the companies’ internal organizations and external business partners. The system also provides functionality for analysis and measurement, as well as effective decision support.
Our business software is based on open standards, combined with tested business methodology and industry expertise and backed by a stable global organization with local knowledge.
Our solutions are the result of our long-term initiatives in IT and provide such benefi ts as:
›› Enabling faster installation of business software that offers fl exibility for changing environments and requirements
›› Meeting the operational needs of global organizations, while taking into consideration local requirements concerning laws and regulations, language and business culture
›› Generating business value through effi cient systems and process integration, automation, measurement, planning and visibility
›› Presenting a fl exible user interface with a focus on functions that automate and improve business processes
›› Providing fast and measurable returns on IT investments.
IBS Enterprise offers a broad range of functionality for meeting the requirements of organizations through a number of process solutions:
Supplier relationships and procurement management IBS business software is designed to enable effi cient procurement of the right goods at the right price and to provide tools that help build effective relationships with suppliers. This integrated solution facilitates cooperation with suppliers, while reducing lead-times, production costs and purchase prices and increasing quality.
Manufacturing and assembly
IBS supports demand-driven manufacturing, which briefl y speaking entails conscious control of lead-times and buffers so that production can be governed by actual customer orders, rather
IBS business software is designed using IT profi ciency and industry expertise to help companies integrate, analyze, measure and automate their processes to improve profi tability.
IBS business software
than forecasts. IBS solutions include such process-oriented functions as cover-time planning with priority analysis that allows autonomous groups to react quickly to changes in demand.
Logistics and inventory management
IBS software for logistics is designed to shorten lead-times and increase the level of service by receiving, storing and delivering goods in a high-quality and cost-effective manner. Functions such as bar coding and radio frequency identifi cation (RFID) are built into the systems to allow customers to manage large volumes and make optimal use of warehouse space. IBS software shows inventory levels throughout the supply chain and optimizes effi cient transports.
Customer and order management
IBS Enterprise includes solutions that provide our customers with support to help them identify and focus on their most valued and profi table customers, handle campaigns, generate future customers and individualize customer relations. The software also lends support in managing customer orders with contract prices, electronic catalogues, automated high-volume ordering using EDI and XML, online self-service for customers and automated delivery planning.
Service and maintenance management
Using this inclusive service solution, our customers can plan and carry out installations, preventive service and acute maintenance internally and out in the fi eld. The solution includes contract and warranty management, resource planning, fl exible pricing and advanced communication.
Business analysis and evaluation tools
IBS business systems include built-in value measurements for the entire value chain. The company’s business intelligence solution maximizes profi t and monitors crucial success factors by analyzing key fi gures from internal and external sources and following up on investment return, level of service to customers and suppliers, operating costs and productivity, decision support and automatic message handling systems. The business system uses the Supply
Chain Operations Reference-model (SCOR) to support fi nancial follow-up of the company’s operations.
Financial management
IBS fi nancial management system includes functions for book- keeping, customer and accounts payable ledgers, strategic economic analyses, fi nancial planning and decision documenta- tion. Using highly automated processes, IBS fi nancial manage- ment system can perform fi nancial services quickly and easily, which decreases the need for personnel and reduces the number of mistakes. The system is developed from an international perspective, which allows for completely fl exible currency manage- ment.
Integration and cooperation
By enabling faster communication fl ows and expanded coopera- tion between companies, integrated information is a distinct competitive advantage. IBS business system offers effi cient systems integration and include XML, EDI and web-service communica- tion, together with e-commerce and Internet-based solutions. IBS Integrator is an EAI application with complete links to the most popular databases that can read, process and send data to and from various systems, regardless of the operating system or platform.
Planning and forecasting
Capital tied up in material fl ows plays a key role in client companies’
profi tability. To reduce warehousing while maintaining a high level of service to customers, effi cient warehouse control is necessary.
Using IBS planning and forecasting tools, our customers can deliver orders on schedule, reduce lead-times and streamline processes, while keeping inventories at cost-effective levels throughout the supply chain.
Project management
A project’s key parameters are defi ned as quality, time and resources, which must be monitored and adjusted continuously. IBS software for project management is a complete professional services automa- tion (PSA) solution.
IBS XT and multi-platform solutions
IBS XT technology uses Java and an object-oriented structure based on open source code. XT provides the technical foundation for a new user interface for IBS Enterprise, which contains graphic components independent of the underlying IT platform. XT-adapted systems also offer users considerable fl exibility to develop new functionalities using open code or purchased components. The solutions include the latest 64-bit technology and new database functionality for SQL servers, DB2, Oracle and others.
In response to market requirements for faster installations and more fl exible solutions, we plan to launch an IBS Enterprise multi- platform solution in 2008. This version was developed with the help of IBS XT, which created entirely new opportunities for cooperation by linking internal and external parties in the supply chain. This, in turn, increases the capacity to handle high trans- action volumes.
IBS Enterprise for i5 – and for Windows, Linux or Unix One of the high points in the development of the IBS Enterprise multi-platform solution was a successful pilot installation during 2007. In 2008, IBS will launch ERP solutions for customers that prefer Windows, followed by Linux and Unix, while maintaining our well-established customer base for IBM System i5.
The multi-platform version of IBS Enterprise will offer existing System i5 customers a simple way to migrate to other environments, while enabling them to maintain any product modifi cations. The use of IBS Integrator and a combination of System i5 and Java components enables i5 platform users to utilize the IBS Enterprise multi-platform solution without jeopardizing previous IT investments and modifi ed solutions.
SOA continues to increase business opportunities
As part of our commitment to utilize leading technology, IBS has used Service-Oriented Architecture (SOA) for some time as a development concept for IBS Enterprise and other solutions.
Using SOA for our software development allows us to offer fl exible
and quickly installed solutions that are easy to integrate with the help of IBS Integrator, Web Services, open platforms and open source code technology.
SaaS
A growing number of customers are now using IBS Enterprise in the form of Software as a Service (SaaS), which involves IBS operating web-service solutions remotely. SaaS is particularly attractive for customers in the small and mid-sized business market (SMB) that want to benefi t from more economical ERP solutions.
Continued focus on industry-specifi c solutions
In 2007, IBS further strengthened its focus on industry-specifi c solutions by offering specialized versions of IBS Enterprise for the electronics and paper industries. These solutions include such fi rst-rate, industry-specifi c functionalities as “IBS Electro”, featuring functionality for cable spool management, which helps electrical wholesalers become more effi cient and profi table.
IBS is also developing a new industry-specifi c solution for companies in the rental industry. This solution is being developed in close cooperation with Cramo, one of the leading companies in the industry. Development of the Rental industry solution includes extensive improvements to procedures for service, plant and inventory accounting, and purchasing.
Centralized resources and offshore development
Offshoring has enabled IBS to utilize its centralized resources in Sweden and other locations more effi ciently in terms of research and development, design and user interfaces. IBS’ low-cost centers in India, Poland and Portugal now contribute signifi cantly to our product development, with an emphasis on programming (for further information about our resource centers, see page 17).
IBS develops business systems in close cooperation with customers, using support from leading technology and cost-effective development processes.
We utilize stable, tested technology to provide our customers with the best possible value, while minimizing risk for their IT investments.
IBS product development
Pharmaceuticals and healthcare products
IBS Pharma is specially designed for companies that distribute pharmaceuticals and healthcare products. Our list of international customers includes such pharmaceutical distributors as Alloga, Galexis, Krieger, Itriafarma, Oriola and Sigma, as well as distributors of veterinary pharmaceuticals, such as Alcyon. Our customers focus on more effi cient purchasing and careful warehouse control with the aim of optimizing accessibility and inventory investments.
They must be able to provide fast and reliable deliveries, while complying with various rules and authority requirements.
Paper, packaging and offi ce supplies
IBS offers global industry solutions for advanced wholesale opera- tions with high transaction volumes for local, regional and inter- national companies, including PaperlinX, Map Merchant Group, Victory Packaging, Corporate Express and Macfarlane Packaging.
Automotive industry
IBS supplies business systems with specifi c functionality for vehicle importers and the distribution of materials and spare parts for manufacturers, importers, suppliers and distributors, such as Volkswagen, KIA, Mitsubishi, Alfa Romeo, Subaru, Porsche, MAN Truck & Bus, Scania, Lear Corporation, US Tire & Exhaust, Meca and IAC.
Publishing
IBS Bookmaster generates measurable value by enabling our customers to benefi t from our solutions for publishing, inventory management and warehouse and fi nancial control. Customers include such global publishing companies as Pearson Education, Reed Elsevier, McGraw-Hill and HarperCollins.
Electronic products
CBC Europe, Hitachi Maxell, Rexel, Scribona, Fogliani, Franchini, Casa das Lampadas, Tai Sin Electric Ltd, Expert, Electrolux, Elektroskandia-Hagemeyer, Atea and other manufacturers and distributors use IBS solutions for managing the distribution, purchasing and rapid delivery of electronic products.
Food
Companies such as Begro, Everfresh, Republic Beverage, Servera, Spendrups, Sardus, Menigo and other players in food production, wholesale operations and distribution rely on IBS solutions for high-quality storage and distribution of large volumes.
Machinery and equipment
Cramo, AxFlow, System 3R, Fricke, Honeywell Aerospace and Micronic Lasersystem are examples of IBS customers that manu- facture, distribute or lease machinery and equipment. Technology, functionality and cost advantages are important reasons for their choice of IBS software solutions.
Consumer durables
IBS enables AM Appliances, Miele, Roland, New Wave Group, Orrefors, Turnils, Gense and other companies in the consumer durables market to meet seasonal variations through integrated business systems.
Industrial supplies
Manufacturers and distributors, such as Carl Kammerling Interna- tional, EnerSys, Teamvise, SKF, Tyco Thermal Controls, Ascom, Seco Tools, Momentum and parts of Axel Johnson International, use IBS software to enable them to plan effi ciently, produce reliable forecasts, automate order processing and integrate information.
Rental
The concept of renting is growing in many industries, particularly within the construction sector because construction is expanding signifi cantly worldwide. IBS is developing a new industry-specifi c solution for companies within the rental industry that require a fully integrated logistics solution. This solution is being developed in close cooperation with Cramo, one of the leading companies in the industry. Development of the Rental industry solution includs extensive improvements to procedures for service, plant and inventory reporting, and purchasing.
IBS solutions are also used in a number of other sectors, such as forest products, chemicals and other process-oriented industries.
With our expertise, experience and industry-specifi c functionality, IBS can deliver integrated solutions focused on selected sectors.
A common denominator for these solutions is the ability to handle large trans action volumes with high operational reliability.
IBS industry-specifi c software
CUSTOMER FOCUS
OPENNESS
Organization
To better satisfy customer needs, IBS continued its efforts in 2007 to improve the global coordination of its operations (for further information on the new organization, see page 9). As a result of these initiatives and because management of the organization is based on geography and industry, IBS is able to meet the demands and requirements of international and local customers.
Recruiting and employee development
In 2007, IBS developed and implemented several global processes in the HR area. The objective of these processes is to ensure profes- sional, structured and effi cient work methods for such activities as recruitment, introduction and personnel development. The process for career development aims to provide all employees with individual goals connected to the company’s overall aims and an individual development plan.
Leadership, commitment and responsibility
IBS conducts an annual employee survey upon which the company’s empowerment index is based. The survey, which is aimed at all employees worldwide, provides support for management and serves as a tool for improving the operation. In the survey, employees respond to questions pertaining to such issues as leader- ship, commitment, competence and responsibility. Based on the results of the survey, each unit is responsible for producing an action plan for the continued development and improvement of the operation. In 2007, the positive trend continued and the company’s empowerment index improved further. A comparison with other companies in the IT industry revealed that IBS results were well above average.
Competence development
IBS Global Education conducts global internal and external training for customers. Internal and external experts are retained and training is carried out in various forms. A major Nordic training
project was launched in the second half of 2007 and will continue until mid-2008. The project will allow selected employees to undergo training in areas ranging from logistics and business plans to negotiation techniques. The venture is a pilot project that is planned to be developed and expanded in the IBS Group in the future.
Attractive employer
It is vital for IBS to be an attractive employer, for both present and future employees. Work at IBS shall be stimulating and provide opportunities for professional and individual development. Being able to offer an excellent work environment, characterized by openness, participation, respect and confi dence in the individual, is essential. IBS also strives for an equal and multicultural organi- zation.
IBS CORE values
Our core values are Customer focus, Openness, Respect and Excellence – CORE. These core values are a natural part of intro- ductory training, career-development and salary reviews.
Personnel structure
IBS had an average of 1 815 (1 873) employees in 2007 and 1 754 (1 851) employees at year-end. The Group has employees in 22 different countries. Of the employees in the Group, 29 percent (29) are women. The total number of consultants at year-end was 981 (1 057). During 2007, IBS had a personnel turnover rate of 14 percent (17). The level of education among IBS employees is high and approximately 80 percent have a university education.
Our employees’ expertise and ability to create superior solutions based on customer needs is crucial to the success of IBS. We create value for our customers through employees with extensive industry experience and specialized knowledge of business processes, system development and information technology.
IBS employees
Division of job categories
Consultants, 56%
Sales and marketing, 13%
Product development, 13%
IT, 3%
Finance, 5%
Other administration, 10%
Motivated + get support + have authority
+ take responsibility + professional
competence Motivated
+ get support + have authority
+ take responsibility Motivated
+ get support + have authority Motivated
+ get support Motivated
0 10 20 30 40 50 60 70 80
% 2007 2006
Empowerment Index for 2006 – 2007
External benchmark, IT-, telecom- and service companies
RESPECT
EXCELLENCE
In 2007, IBS established three new resource centers to optimize the company’s operations.
Three resource centers are currently in operation in Portugal, Poland and India. The choice of these locations was based on a number of criteria, such as how easy it is to recruit highly qualifi ed, young local academics. The reduced costs facilitated by these centers have also generated benefi ts for IBS customers.
Under the leadership of the IBS consulting organization, Professional Services, these resource centers receive assignments from the product develop- ment division and various customer projects within IBS. Coding, program- ming, technical design and adaptations are performed in accordance with specifi cations and then thoroughly tested. When a product is complete, it is delivered to the responsible IBS offi ce for further testing. This step is carried out to ensure that the product complies with IBS standards and that it functions
correctly together with other IBS Enter- prise modules.
SPECIALIZATION
The offi cial opening of the Portuguese resource center took place at the new premises in Porto. The center, which has approximately 70 employees, is responsible for IBS Enterprise-related coding and technical design. Like the other resource centers, its capacity utilization is high. Because the resources are used for coding and technical design, the company’s more specialized program- mers, in close cooperation with customers, are able to focus more intently on testing and functional design.
Like the Portuguese unit, IBS in Poland has long been involved in the adaptation and design of IBS Enterprise modules. Today, the center has more than 20 employees.
In India, IBS has an experienced internal partner, FDS Infotech. Approximately 30 of the company’s employees are allocated to IBS-related development. Of these employees, 20 focus on IBS Bookmaster,
an industry-specifi c solution for the publishing industry. A large portion of the technical work for this application has been relocated from Australia to India.
SYNERGIES
These resource centers will gradually assume more responsibility for docu- mentation, development of user inter- faces and support. This will help IBS become a globally integrated company and contribute to improved processes that are fully integrated throughout the world and comply with the standards established by IBS. Anders Dam Bruun, Global Resource Center Director, says:
“We are extremely impressed by how fast our resource centers were built and how quickly the programmers learned the necessary skills and gained experience in using IBS software. These centers have already generated excellent opportunities for IBS to increase its rate of delivery of customized solutions.”
IBS resource center in Porto, Portugal
Successful establishment of resource centers
IBS resource center in Wroclaw, Poland
Effi cient processes and powerful tools are crucial for our long-term competitiveness and ability to create high value for customers, shareholders and employees. During 2007, efforts to further develop and internationalize IBS key processes continued.
The overall mission of IBS is to help our customers increase their competitiveness. To support this strategy, IBS uses a well-defi ned process, IBS Value Delivery Process, to identify improvement areas and business system solutions for client companies’ sales, inventory management, procurement, logistics, service, fi nancial control and other important operations. IBS also utilizes well-developed internal processes to support its operation of a globally integrated and effi cient business.
Tools for measuring and achieving results
IBS focuses primarily on large and mid-sized companies. With powerful analytical tools based on established standards, such as the DuPont model and SCOR, we are able, in cooperation with our customers, to identify possible improvement areas using software solutions from IBS. The tools are used for identifying, securing and following up on attainable results. The IBS Value Delivery Process also assists in the evaluation and identifi cation of appropriate goals, improvement potential and risks connected with projects. In addition, the work methodology contributes to creating an ongoing dialogue with IBS customers concerning the further development of their competitiveness and profi tability.
Fast and cost-effective installations
The Implementation Control Process (ICP), a special process for establishing goals, monitoring costs and managing activities necessary for ensuring a successful installation, is used during installation, testing and implementation of IBS business solutions.
ICP is used for installing software solutions for IBS customers throughout the world and the process is continuously developed based on the experience provided by each new project. Each new installation is followed up to ensure that the set goals are realized.
The work methodology focuses on establishing long-term partner- ships with our customers and includes regular analysis of ongoing and completed projects.
In 2007, IBS implemented a project to further develop the ICP process based on the experiences gained through the application of the ICP model worldwide. The results were documented and have become part of an upgraded ICP process that will be used in future installation projects. During 2008, IBS consultants will undergo training in the new features of the installation method- ology.
To create conditions for effi cient implementations, IBS also develops express versions of business systems that are adapted
and preconfi gured for a certain industry, such as the pharma- ceuticals industry. Creating various forms of packaging for our business systems to simplify and streamline installation will be a priority area for IBS during the next few years.
Globally integrated company
During 2007, IBS worked to establish a new IT infrastructure, uniform processes and agreements that provide support for IBS operations in various regions. This was an important improvement to ensure internal effi ciency and enable the company to offer expanded and internationally harmonized operation and support, primarily for international customers. In 2007, IBS also worked to develop the necessary IT infrastructure and process support to relocate its operations to mid- and low-cost countries, and to conduct product and program development at its own development units in Portugal and Poland and through partnerships in India.
The new organization, which was introduced during the fi rst quarter of 2008, will increase global coordination through such initiatives as implementing global business units for marketing, sales and consulting operations. The changes will result in new international processes for marketing and sales activities, as well as the coordination and control of consulting operations. In addi- tion, Group-wide processes will be implemented for support functions, such as fi nancial control, competence and contract law.
The IBS Value Delivery process includes:
›› A marketing process that involves identifying and attracting client companies in specifi c, selected industries and markets in which IBS software solutions create the greatest value
›› A sales process designed to evaluate, demonstrate and establish mutual understanding of measurable business benefi ts
›› An installation process, ICP, for ongoing delivery of solutions that fulfi ll customers’ requirements and goals
›› A development process aimed at continuously fi nding new opportunities to further expand mutual value- enhancing cooperation with our customers.
IBS processes
With offi ces in 22 countries and partners in several more, IBS is able to offer international implementations and business system maintenance with a local presence.
IBS is an international group with a strong local presence in Europe, North and South America, Asia and Australia. Today, approximately 5 000 customers in 40 countries use IBS solutions as support for their businesses. Using IBS business solutions and other software as tools, IBS consultants help companies become faster, more cost- effective and more profi table.
Professional services
IBS has approximately 1 700 employees, including about 1 000 consultants. While the role played by consultants varies from project to project, approximately half of them are technical and half are business consultants.
IBS professional services cover all aspects of a company’s IT require- ments, including:
›› Analysis of business processes
›› Requirement analysis and design of IT strategy and infrastructure
›› Installation and implementation
›› Customer training and ongoing support
›› Development of customized and supplementary systems
›› Project follow-up and results analyses
›› System operation and maintenance
›› Project management.
IBS in the world
New sales
A more positive market attitude in the Nordic region during 2007 resulted in an increased inclination to invest in new or upgraded IT solutions. Several agreements were signed within IBS primary industries of focus – the electronics, pharmaceutical, food and wood industries.
Agreements were signed with such companies as Servera, Plannja and DollarStore in Sweden, Kirudan in Denmark, Hafnor in Norway and Normet in Finland. The Normet agreement comprised a global installation, including subsidiaries in Europe, Australia, Asia and North and South America. Two of the largest hardware contracts in the history of the IBS Group, with Sandvik and Handelsbanken, were also implemented in 2007.
Customer projects
During the year, IBS Nordics also conducted several important customer projects for Hobby Hall, Menigo, Cramo, Medeco and Selga (Rexel). Another signifi cant milestone was the fi rst installa- tion of IBS Enterprise Windows Edition, which was carried out at Varbergs Bostads AB.
Strategy
IBS competes with global and local players and distinguishes itself through a unique business model in which IBS assumes overall responsibility, offering everything from software and services to hosting and fi nancing. IBS Nordics has 30 years of experience in industry-specifi c customer processes and similar installation projects, combined with extensive knowledge about IBS products.
Nearly 600 employees serve customers through a network of offi ces throughout the Nordic region.
Market and competition
Competition in the Nordic ERP and SCM markets resembles the conditions in the rest of the world. IBS competes with such global
players as SAP, Oracle and Microsoft, as well as local suppliers. IBS leads the Nordic market for IBM i5 platforms, with a market share of more than 60 percent in Finland and Sweden.
Several IBS customers expanded their operations to Russia, partly thanks to IBS Enterprise, which is fully adapted to local conditions and translated for the Russian market. Along with IBM, IBS now has two additional business partners in Russia – Cinimex in Moscow and Astrosoft in St. Petersburg.
Signifi cant events
As a market-leading retailer of IBM i5, IBS Nordics was named 2007 “Cross Selling Partner of the Year” in Sweden by IBM.
The new IBS Nordics organization, which was introduced in 2006, better refl ects customer organizations and offers improved service in the areas of sales and consulting. As a result, the Nordics organization has generated distinct synergy effects by more effi ciently utilizing our qualifi ed resources within consulting operations, sales, infrastructure and technical consulting services.
Effi ciency enhancements were also implemented within admini- stration and support. Consulting utilization, billing ratios and profi t margins were favorable compared with 2006.
Market growth for IBS Nordics
IBS Nordics
The market economy in the Nordic region remained positive during 2007, which contributed to continued market growth for IBS Nordics.
IBS Nordics in brief
SEK m 2007 2006
Total revenue 937 885
Operating profi t* 96 91
Number of employees 569 581
* Excluding restructuring costs
Plannja, one of Europe’s leading brands of thin steel sheet construction products, has made a strategic switch to demand-driven production with the help of IBS Enterprise.
Plannja, a company in the SSAB Group and a leading manufacturer of quality Swedish steel, wanted a demand-driven system to replace its outdated production- driven system. The company turned to IBS for the top supply chain manage- ment solution. The system not only needed to meet the company’s own needs, but also the needs of its customers.
“When we integrated and imple- mented a new production system in 2003, we replaced our old customized system with a standard solution from IBS,” says Plannja’s President Anders Berg. “We were looking for a customer- driven pull system for our supply chain processes. Since IBS Enterprise supports the pull function extremely well, we are now able to manufacture on demand.”
PRODUCTION OPTIMIZATION The IBS system has helped Plannja to successfully handle the increased volumes of the past few years. According to Berg, the company would not have managed as successfully as it did without the IBS solution.
Like many other companies, Plannja wants to increase its long-term profi t- ability and Berg hopes to do so together with IBS.
“The best thing about IBS Enterprise is that the system focuses on supply chain management and the solution’s pull strategy is superior to that of the competitors.”
RELIABLE SYSTEM
Plannja has used IBS business software for the past ten years, with modules for sales, warehouse management, purchasing and other functionalities added about seven years ago.
“We continue to have a strong relationship,” Berg says. “It is an excel- lent supply chain solution, but the key thing is that IBS understands manufac- turing and how the system should per- form. Since I believe that our IT system is the foundation for our entire operation, I have to trust that it actually works – and I really do trust IBS personnel and products.”
OPTIMIZED PROCESSES
Berg is positive when it comes to continued cooperation with IBS. “Eventually, we want to run an integrated, common IT platform system within the entire Plannja
Group.” The Group comprises three companies in Sweden and companies in Poland, Denmark, Norway, Finland and Germany.
“Our overall goal is to create an effective solution that strengthens the Group’s position and optimizes its pro- cesses. If we switch to IBS Enterprise within the entire Group, we will be able to utilize such tools as Balanced Score Card (BSC) and Key Performance Indicators (KPI) to achieve this goal in the future.”
PLANNJA IN BRIEF
Region: Head offi ce in Luleå and two production subsidiaries in southern Sweden, sales offi ces and production in Denmark, Finland and Poland, sales offi ces in Norway and Germany, and sales agents in several other European countries.
Operations: One of Europe’s leading producers of thin steel sheet construction products.
Products: Thin sheet products and product systems made from quality Swedish steel and aluminum.
Customers: Construction projects, construction trade, sheet-metal shops and industrial construction.
Number of employees: 580 Revenue: Approximately SEK 1.5 b.
Website: www.plannja.se
Demand-driven future using IBS Enterprise
Text: Joanie Rafi di Photo: Plannja
New sales
Despite increasingly diffi cult market conditions, key agreements were signed with such companies as Pearson Education, Hubo, Krieger, IT Staffi ng Group, Press-Shop, Gangolf, DSV and Thebe.
Customer projects
IBS Central Europe continued its European installation at Paper- linX, which is now in operation in Ireland and the UK. Activities are in progress to expand rollout throughout the region.
The organization also carried out installations for such customers as Fricke, Gangolf and Krieger in Germany, Fruiter and Press-Shop in Belgium, Elektroskandia in Poland and PON in the Nether- lands.
Strategy
IBS Central Europe continued its initiatives to improve market penetration within selected industries. Focus on the development of the UK as a European competence center for Publishing – from which to furter develop European business – has been successful.
In Europe’s German-speaking countries, similar developments occurred within the automotive and pharmaceutical industries.
The successful introduction of the IBS Electro industry software also resulted in an expected increase in transactions within the sector.
Market and competition
Competition among the major ERP players is intense. Therefore, IBS Central Europe is focusing on strengthening its industry-
specifi c product offering. Since ongoing consolidation of the market is exerting continued pressure on many small local com- petitors, these competitors tend to use pricing as a competitive tool.
In 2007, Europe’s German-speaking countries, in particular, reported improved profi tability, with increasing revenue and margins.
This improvement was achieved through stronger license sales, increased capacity utilization and higher consultant fees.
Signifi cant events
IBS completed its divestment of Infor (formerly BPCS) in France.
This change resulted in a transfer of 23 employees to Infor’s offi ce in the Garches area of Paris. The sale was part of the IBS strategy to focus on international supply chain solutions and local offerings and will enable IBS to maintain a market-leading position.
Solidity for IBS Central Europe
IBS Central Europe
Overall, IBS Central Europe performed favorably during the year. Europe’s German-speaking countries, in particular, reported improved profi tability, with increasing revenue and margins.
IBS Central Europe in brief
SEK m 2007 2006
Total revenue 834 815
Operating profi t* 83 125
Number of employees 483 532
* Excluding restructuring costs
