Comments from the CEO

Comments from the CEO

With the code as a base, we are now taking the next step towards the future

When IAR Systems was formed 36 years ago, our products were ready and waiting for digitization. Since then, digitization has changed everything from customer products to our day-to-day lives. Upon reflection, the change has been fast, but it has also taken time as a result of the adjustments that have been required.

IAR Systems has also changed during this time, and many events have taken place since the company was founded by engineer Anders Rundgren. Today, we are a company with a broad technological scope, a depth of competence and a global presence that has allowed us to obtain a market position that few have attained. Throughout all that has happened, our focus has remained on supplying our customers with the best possible products. 2019 was a year with a sharp focus on our new products.  

I have had the privilege of being a part of this evolution for almost a third of the period since IAR Systems was founded. Along with the changes in the market and to the products, there have also been changes to IAR Systems. For our shareholders, this has perhaps been most evident by our continuous growth, every year for the past ten years. This is a financial development that not many have had the opportunity to be a part of, never mind the opportunity to reflect on. I have had the benefit of learning a great deal from all that I have experienced during these ten years. Perhaps one of the most crucial things that I have learned is that, for a company to change, it needs to be given time.

We began the year with our largest ever focus on products for connected security, an offering that came about as a direct result of our customers’ need to protect their products. We have had a relationship with most of our 50,000 customers for 20 years, and together we have followed the digitization of their products. What may have started as a simple function is now often about how that function communicates with other products, something that is frequently done to increase the efficiency of or benefit more from the functions of digital products.

With the onset of the digital evolution, our customers have been left at risk when the software that the processor needs in order to function is exposed to threats such as theft or duplication. Such a threat could be costly to our customers and even negatively impact the brand if a stolen or duplicated product were to be used by other parties or not for its intended purpose. This threat provides us with an opportunity insofar as we are the only company with the ability to deliver a solution that implements security from the get-go. A solution that begins where we started, with code.

In 2019, we launched more products than we have launched in the past five years, with two products as well as a number of services within security. This is a significant change for us, since it is not just limited to new products, but also new technology, a new target group, and a change in market position for the company. The market also changed more noticeably in 2019 than in the past, with the new RISC-V processor architecture quickly being recognized as having major potential for the future.

Like Arm, RISC-V has revolutionized how processors for embedded systems will be developed. If I were to try to explain this change in a clear way to someone interested in technology, I would say that the technology of RISC-V is in demand primarily because of its flexibility. This demand for flexibility is perhaps a reaction to Arm’s attempts to impose a change from a leading market position – a change that their customers were not prepared for or interested in. RISC-V is a new, mainly open architecture, providing many players with the possibility to impact its development. 

This interest is naturally fueled by financial considerations, but also by the opportunity to create new technology with its origins in collective development. RISC-V, which was another product area that we launched during the year, is a highly attractive market from a security standpoint since it opens up many new opportunities, both in terms of technology and with respect to new geographical markets. However, the changes to our security offering represented an even more significant development than that of RISC-V, as this is the market that IAR Systems has operated in from the beginning, and one that focuses on the same target group as RISC-V. 

Our organization has grown substantially as a result of our focus on technology, and we have mainly recruited in the field of product development and, as a result, within certain support functions. With this comes a few growing pains, making our processes for maintaining and assuring product quality pivotal. Change was an important aspect of 2019, and this can be turbulent for a well-established company. Our customers continue to demonstrate that the changes we have implemented have been positive by choosing to increase the number of product users and confirming that they wish to continue to use our services in the future.

We have signed more strategic contracts with customers who are choosing to standardize based on our products over several years. We continued to grow throughout 2019, adding four more quarters to our long history of growth and bringing our total over the past ten years to 25 consecutive quarters of continuous growth. 

Looking forward also means continuing to change. Building companies takes time. 2020 will be about focusing on an increased presence among our customers. Not only will we have more employees focused on reaching out to our customers, we will also come closer to them through geographical expansion and take a more modern approach to our customer relationships. 

ustomer relationships. It is inspiring and extremely motivating to have the opportunity to use my passion to take us to the next stage of our development. A passion and a belief that ten years ago created the ambition to focus on IAR Systems. I now find myself reflecting on our development and success over the past ten years and preparing for the next stage of our journey – a stage that will reflect the soul of the software company IAR Systems. A soul based on code. With our perseverance, ambition and energy, we are now looking to the future together – a future in which we will follow, create and lead the digital evolution. Together with our customers, colleagues, partners and owners.

Stockholm, March 18, 2020
Stefan Skarin, President and CEO, I.A.R. Systems Group AB

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