SSA Acquires MAX Hoping To Leap From Its MIN

Event Summary

The vendor that many have long considered 'gone south' seems to be showing signs of resilience. SSA Global Technologies (SSA GT) is the result of the acquisition of former System Software Associates (SSA) and its BPCS product by Gore Technologies. SSA GT has long developed an extensive, worldwide sales channel of affiliates. This channel has been selling the BPCS product to the medium to large segments of selected enterprise applications markets. In a strategy designed to address a market not covered by its BPCS product, on April 2, SSA GT acquired ICL MAX International Limited (MAX International) and its product, MAX. This strategy attempts to leverage its existing channel to reach the small to medium enterprises (SMEs).

The MAX product has established itself in selected, mostly European markets, as a small to medium enterprise offering. MAX is currently installed in 450 small to medium manufacturing enterprises in the $10 million to $100 million revenue range across the UK, western and central Europe.

MAX will reportedly continue to exist as a stand-alone business operation within SSA GT with its headquarters in Bristol UK. It will attempt to leverage the existing SSA GT distribution channels, while its development will continue in Bristol. MAX and BPCS are positioned at different segments of the manufacturing marketplace with no overlap seen by SSA GT. Hence, no plans exist to merge the BPCS and MAX products or operations apart from products' distribution operations. Initial marketing plans call for expansion of the MAX effort within Europe with later expansion into South Asia and Latin America.

MAX is an integrated package of business systems, designed for companies in the manufacturing, contracting, service and distribution sectors. MAX includes e-Commerce with e.MAX linking e-Commerce with ERP and CRM. MAX is multi-company, multi-lingual, multi-currency, multi-warehouse, multi-location and has been installed in most types of manufacturing environments including mixed mode. MAX operates under Windows NT or UNIX and is continually developed to give industry leading RDBMS options, currently SQL Server, Informix and Oracle.

Market Impact

While mergers and/or acquisitions in the mid-market in the recent times are no surprise per se, SSA GT's action has an additional meaning. Although the acquisition of MAX by SSA GT should have minimal impact on the global market in the short run, it might have an important psychological effect on existing SSA GT's customer base. Former SSA has suffered, over the past few years, a tremendous loss of market share and customer confidence, while its channel also dwindled during the same period of time. As a result, the market has witnessed an array of competitors preying on its large, perturbed customer base. There have been ominous indications that many of BPCS users were at least considering migration to another provider, while many have already opted for it. To that end, the acquisition may be a sign of SSA GT's continued commitment to the manufacturing sector.

Incidentally, there are indications of SSA GT's success in shoring up its customer base, particularly in markets outside of North America. SSA GT has been focusing on keeping its large install base (more than 6500 implementations at over 18,000 sites in more than 90 countries) content and fine tuning its Portfolio marketing strategy - the integration of specialized 3rd-party applications into BPCS. Dealing with a single point of contact for most IT needs can be attractive to some manufacturers at the higher end of the mid-market and SSA GT's Portfolio strategy allows for this, with reseller agreements on a number of best-of-breed products (e.g., i2, Cognos, Business Objects, etc.) and an open architecture to make it feasible to interface and integrate. However, this strategy would not likely be attractive to smaller enterprises where MAX, with a broader native functionality footprint, may seem as much better fit. Therefore, we believe that in the intermediate term, MAX will begin to seek a position in the global market for small to medium sized manufacturing companies. SSA GT's success in this effort will be determined by its ability to leverage its existing channels.

These positive developments should be backed up with the continued commitment to development of the eBPCS product notwithstanding. The fact remains that SSA does not yet offer much more than its core, possibly outmoded ERP product in conjunction with assistance integrating extended-ERP software components from alliances. To that end, in addition to the value added by software partners, recently instituted R&D initiatives stemming from Customer Steering Groups' inputs rather than an 'ivory tower' development approach are commendable. The more aggressive interaction with the analyst community and more perspicacious explanation of its Semantic Message Gateway (SMG) technology would also be desirable.

We favorably regard the release of version 6.1 of eBPCS, which features long-awaited stability and better performance of eBPCS 6 as well as the support for Windows NT and Windows 2000. Also, SSA GT's established global infrastructure and customer base, strong core-ERP functionality with a sharp industry focus, strong multinational product functionality, and a relative ease of implementing eBPCS are some of the company's bargaining chips in the game of averting its customers from jumping the ship.

Still, SSA GT may have difficulties leveraging its existing client base and channel. SSA GT has yet to deliver Web-based, portal-style access to eBPCS, which makes it at least a year behind its competition regarding e-business capabilities, and consequently vulnerable to their attacks. Therefore, vendors who sell replacement solutions for the BPCS ERP system will see minimal impact from the above announcement in the short term. However, vendors who offer add-on products that satisfy the needs addressed by the plans involving the SSA GT Portfolio and who are pre-integrated will face a fiercer competition from SSA GT over time. These vendors must evaluate their relative position and rededicate themselves to the BPCS and MAX communities to be successful in this market.

User Recommendations

The SSA GT's moves should cause a sigh of relief from its existing BPCS customers. Less technologically aggressive companies may be better off by staying with BPCS for the time being. Nevertheless, be on high alert and develop medium- to long-term alternative plans for moving to a new technology. Identifying and approaching your local SSA GT sales representative and asking for assurances and firm commitment to future service and support would be the best course of action at this stage.

Until the new product strategy, particularly within CRM, e-business and Internet trade exchanges, is crystal clear and has been publicly committed to, we advise potential users to evaluate the product warily even within its automotive, consumer packaged goods, electronics, pharmaceutical and chemical industries sweet spots. Learning about new eBPCS features would be beneficial, at least for information and leverage against other vendors. We also suggest evaluating the bells-and-whistles, price, reference sites within your industry, and corporate viability of other vendors before making a selection.

For companies in the small to medium size range (under $100 million in revenues) European companies should place MAX on their long list. Companies not included in this group (larger or non-European) should not consider MAX at this time.

comments powered by Disqus