strange and things once considered unlikely can happen in the enterprise applications
market. It might even be quite ironic that, during these days of general lethargy
of the market, the rare upbeat pieces of news have been coming from some reformed
traditional enterprise resource planning (ERP) vendors. These very vendors not
that long ago exemplified failed business models, thus giving ammunition to
some pundits to announce the obsolescence of ERP. A vendor that many have long
considered gone south' seems not only to be shyly coming back onto radar screens,
but has rather noisily been re-creating a sort of an IBM eServer iSeries
(formerly AS/400) platform-based ERP empire, which was also
once considered vanishing like Atlantis.
October 28, SSA Global Technologies, Inc. (SSA GT), www.ssagt.com,
a worldwide enterprise solutions and services provider, announced it has entered
into an agreement to acquire 100% of the common stock of Infinium Software
(NASDAQ: INFM), www.infinium.com,
another like provider, although mainly within different industry segments. In
the agreement, each outstanding share of common stock will be converted into
the right to receive $7.00 per share in cash. The agreement specifies that the
transaction is subject to approval of Infinium's shareholders as well as regulatory
and certain other customary conditions. The transaction is expected to close
before January 1, 2003 at which time Infinium should become wholly owned by
To that end, on November 26, Infinium announced that the Department of Justice and Federal Trade Commission have granted early termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, in relation to the previously announced agreement and plan of merger providing for the acquisition by merger of Infinium by SSA GT. Termination of the waiting period was one of the conditions to consummation of the proposed merger, and Infinium will be holding a special meeting of stockholders on December 20, 2002 to seek stockholder approval of the merger.
Infinium acquisition comes at the heels of relatively recent SSA GT's acquisitions
of MAX International and of the interBiz'
division of what used to be Computer Associates' (CA) manufacturing and distribution
applications business (see SSA
Acquires MAX Hoping To Leap From Its MIN and CA
Unloads interBiz Collection Into SSA GT's Sanctuary), and supports SSA GT's
espoused growth strategy of rebuilding a leadership position by acquiring "high-value
brands that offer incremental value to customers' existing enterprise systems".
As a result of this acquisition, SSA GT should reportedly soon serve nearly
10,000 active customers worldwide.
is Part One of a three-part note on recent developments at SSA GT.
Two and Three will discuss the Market Impact.
Four will cover the Challenges and make User Recommendations.
Infinium Software, a provider of web-integrated enterprise business applications optimized for the IBM eServer iSeries, should complement SSA GT's extended enterprise application product suite with its industry-tailored solutions for certain markets. Its 1,800 customers are located primarily in North America and span a variety of industries including process manufacturing, gaming, hospitality, healthcare, transportation, retail, financial services and distribution. The company specializes in human resources (HR), payroll, financial management, CRM (customer relationship management) and materials management as well as core process manufacturing and business performance analysis software.
Both Infinium and SSA GT have applications that are native to the IBM eServer iSeries, which supposedly deliver low total cost of ownership (TCO) combined with high levels of reliability, scalability and processing speed. The pending acquisition should give SSA GT a deeper reach into the process manufacturing space and complement SSA GT's financial and HR product suites, while Infinium customers should be able to leverage SSA GT's e-business and extension solutions such as collaborative commerce, warehouse management and role-based portals.
Like its new parent, Infinium has lately been on an impressive comeback trail both in terms of improving revenues and profitability. On the day of the acquisition announcement, Infinium also reported financial results for the fourth quarter and fiscal year ended September 30, 2002. Total revenues for Q4 2002 were $16.4 million, almost flat compared to $16.7 million for the previous quarter, and an 8% drop compared to $17.8 million for Q4 2001. However, net income for the fourth quarter was $3.8 million, compared to $4.0 million for the previous quarter, and the net loss of $6.5 million for the fourth quarter of the prior year (see Figure 1). Software license fees for the fourth quarter were $2.7 million, a 10% drop compared to $3.0 million for the previous quarter, but a 17% increase compared to $2.3 million for the fourth quarter of the prior year.
Total revenues for fiscal year 2002 were $66.7 million, a 13% drop compared to $76.7 million for fiscal year 2001. Still, net income for fiscal year 2002 was $14.0 million compared to a dizzying net loss of ($24.3) million for fiscal year 2001, while software license fees for fiscal year 2002 were $10.7 million, a 3% increase compared to $10.4 million for fiscal year 2001 (see Figure 2). Infinium's cash, cash equivalents and marketable securities balance for the fourth quarter was $25.4 million, compared to $20.5 million for the previous quarter, and $17.5 million for the second quarter of fiscal year 2002.
that posting profits has not been happening at the expense of delivering new
products, in August, Infinium announced the next generation of its Infinium
Human Resources/Payroll solution that includes a modernized Web architecture,
Self-Service, and Recruiting Automation offerings. Aimed at reducing costs while
improving service to managers and employees, the next generation of Infinium's
fully-interactive, browser-based HR/Payroll solutions include: Employee Self-Service,
Manager Self-Service, and Benefits Self-Service. Infinium, in partnership with
eLabor, a leading workforce solutions provider, also offers
a Web-based solution that should automate the entire cycle of the recruitment
process, eliminate paper-based practices, and accelerate the hiring process.
Infinium Process Manufacturing
recently, mid-October, Infinium announced the general availability of Process
Manufacturing 12.0, the latest release of its process manufacturing
application, deepening its commitment to the process manufacturing industry.
Infinium reportedly tapped the real-world experience of its many process manufacturing
customers and prospects in order to provide a product that fits the way process
manufacturers do business. As a result, Process Manufacturing 12.0 reportedly
delivers more than 300 enhancements including those voted on by Infinium
UserNet, the independent Infinium user group. The primary goal of this
release was to enhance Infinium's support for the specific requirements of process
manufacturers. Infinium Process Manufacturing 12.0 includes enhancements to
Formula Management, Quality Control, Regulatory Management, Advanced Planning,
Manufacturing Control, and the overall product architecture.
Formula Management has been enhanced to address formula variations
commonly found in the process manufacturing market. Infinium customers and prospects
required the ability to define the multiple formulas that represent the reality
of their businesses. The updated formula capabilities allow manufacturers to
specify standard, target formulas for the enterprise. In addition, plant and
customer-specific formulas can be defined to address variations in production
capabilities across multiple locations. Additional enhancements to Infinium
Process Manufacturing 12.0 included:
Enhanced control of quality specifications
Improved Regulatory Management including updated material safety data sheet
(MSDS) and Superfund Amendments and Reauthorization Act (SARA) Tier I and
Strengthened Advanced Planning techniques to accurately plan for raw materials
Increased support for Manufacturing Control including enhanced yield management
and process costing
claims to have architecturally modernized both solutions, while preserving its
customers investments in its previous release versions, as its Web-integrated
business applications framework features a three-tiered architecture with an
applications/data services layer, a Web/applications service layer, and a client/presentation
layer, and it is based on commonly used Web standards such as IBM WebSphere,
Java 2 Enterprise Edition (J2EE), XML, and HTTP. Infinium believes its modern
architecture should allow customers to quickly integrate information across
platforms and applications using XML standards, facilitating Web connectivity
and enabling greater internal and external collaboration. In addition, this
new architecture provides for Web browser access to all Infinium solutions.
The improved look and feel of the Web user interface (UI) replicates the smooth
navigation and logical organization users have traditionally come to expect
SSA GT Strategy
Through the Infinium acquisition, SSA GT believes it is on a path to regain a leading position in its target markets by solving industry-specific business challenges and creating a heterogeneous application environment that works seamlessly with other back-office applications. The combined company will serve more than 10,000 longstanding, market-leading companies in over 90 countries from over 120 offices worldwide. Through the transaction SSA GT hopes to achieve the following:
Expand its commitment to deliver more opportunities for customers' e-business,
collaboration and role-based portal initiatives
Facilitate organic company growth and provide the critical mass to further
SSA GT's position as a leading vendor in specific
vertical markets including process manufacturing
Offer clients added support through an expanded global network; additional
resources to enhance research and development and expanded Global Guide Groups
to understand clients' industry and market demands
Leverage synergies between Infinium and SSA GT associated with the IBM eServer
Underscore its business model, and financial viability
SSA GT Financials
GT, on its hand also reported quite healthy year-end results. At the end of
August, it announced financial results for its fiscal year ended July 31, 2002.
Total revenues for fiscal 2002 were $187 million, an increase of 39% year-over-year,
while earnings before interest, taxes, and amortization (EBITA) were $35 million,
which represents 19% of total revenue. Although being a privately-held company,
SSA GT is working with its outside auditors, Grant Thornton,
to certify its financial statements under the Sarbanes-Oxley Act of 2002 in
light of recent widespread concern about corporate financial reporting practices.
Software license fees accounted for 32% of total revenues with the remaining
68% coming from maintenance and services. Geographic balance was almost equitably
maintained with revenues of 35% generated from North America, 33% from Europe
Middle East Africa (EMEA) and 32% from Latin America and Asia Pacific/Japan
regions, where new business reportedly continues to thrive in those emerging
experienced protracted languishing and eventual demise of SSA GT's former incarnation,
Software System Associates (SSA), a year ago,
its remaining customers demanded financial viability from SSA GT. Strong FY
2002 financial results should therefore confirm its renewed customer focus and
sound execution model, which has afforded significantly higher than industry
average growth in an extremely challenging economic climate. Mike Greenough,
chairman, president and CEO of SSA GT, in a bullish way projected before Infinium
acquisition, based, in part, on reportedly healthy pipeline and strong cash
position, next year's outlook to be again bright, with projected total revenue
growth of around 30% to $245 million with EBITA estimated at approximately $51
million, up over 50% from 2002. Also, according to Mr. Greenough, SSA GT's fiscal
2003 business plan contemplates meeting or exceeding financial projections via
an aggressive strategy that combines organic growth through increased customer
share fueled by extended e-Business solutions and new software sales worldwide.
Other SSA GT Developments
the past year, SSA GT has been reengineering its company to deliver a solution
strategy that involves e-commerce and collaboration with BPCS,
its venerable core ERP product. The company will apply its business model and
solution strategy to the newly acquired products. For customers utilizing the
interBiz brands, this strategy should supposedly give them new opportunities
to benefit from e-business and collaboration solutions. To that end, during
this year's Global Client Forum that took place in Las Vegas,
NV, on October 13 - 16, SSA GT also showcased its deliverable product roadmap,
which became quite more intricate following its recent acquisition of former
competitor interBiz and which will demonstrate continued momentum in its e-Business
extended enterprise solutions, including SSA GT's new enterprise portal solution.
in September, prior to its Forum, SSA GT announced the immediate availability
of PRMS Version 9.2. The new version reportedly includes more
than 40 enhancements that should provide users with a more efficient enterprise
information system (EIS), enabling flexible order fulfillment and systems control.
The improved functionality in PRMS Version 9.2 should lay the foundation for
customers to take advantage of e-business capabilities provided by best-of-breed
extensions to the core application. These include business intelligence (BI),
customer relationship management (CRM) and supply chain collaboration, while
PRMS' seamless integration with Warehouse BOSS should provide
best-of-breed warehouse management system (WMS) capability.
during its Global Client Forum, the company announced the availability of a
complete suite of business intelligence (BI) analytic applications for BPCS
called Enterprise Performance Analytics (EPA).
Powered by Cognos Analytic Applications, EPA unlocks application
data assets to form a business performance measurement (BPM) foundation that
should facilitate rapid, enhanced decision-making. The three new applications
for the EPA suite are Accounts Receivable, Accounts
Payable and Procurement Analysis, while Sales,
General Ledger and Inventory Analysis were
released over the past year. Furthermore, the company also unveiled role-based
portal solution that is designed to change how individual users view and leverage
company-wide information. SSA GT will deliver the first in a series of these
portals, Order Inquiry, in February 2003. The Order Inquiry
portal addresses the entire order experience by quickly and efficiently responding
to customer requests and inquiries in relation to the status of orders.
Touching all functional areas within an organization, future versions of the portal will include Customer Service Representative, Sales Representative, Material Planner, Transportation Planner, and Department Manager. SSA GT has reportedly developed an integration architecture that runs on a J2EE application server and provides common integration for portal applications to legacy applications. The infrastructure also enables integration to SSA GT extension products, other software solutions and to future SSA GT product acquisitions. This infrastructure includes the development of a Common Object Model, which normalizes the data across multiple applications and takes advantage of object technology. SSA GT will develop functional extensions which reference this Common Object Model. These so-called "wrappers" will be developed to expose data in the individual applications, to the Common Object Model, which will in turn facilitate the integration of these applications to newly developed functional extensions. These extensions, which are really composite applications, should allow customers to implement new functionality without the potentially massive effort of upgrading to new releases of deployed applications.
but not least, during the event, the company also announced the availability
of SSA GT MAX+, an enterprise-wide integrated business system
designed for single or multi-site manufacturing and distribution companies.
The product reportedly combines traditional ERP functionality with advanced
e-business capabilities such as BI, CRM, Advanced Planning and WMS solutions.
SSA GT MAX+ is designed for fast implementation and low TCO, in part due to
the flexibility and user configurability of the software. The solution reportedly
supports a variety of operational environments and platforms, including Windows
2000, SQL Server and UNIX operating
systems. Target markets include make-to-order (MTO), assemble-to-order (ATO)
and contract manufacturing, while industry standard interfaces and highly productive
development tools are also featured.
concludes Part One of a four-part article on recent developments at SSA GT.
Two and Three will discuss the Market Impact.
Four will cover Challenges and make User Recommendations.