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SSA GT Beefs Up BPCS V8 Through Partnerships' Spree Part 2: Market Impact

Written By: Predrag Jakovljevic
Published On: January 4 2002

SSA GT Beefs Up BPCS V8 Through Partnerships' Spree

Part 2: Market Impact

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Event Summary

SSA Global Technologies (SSA GT), the reincarnation of the erstwhile high-flying and subsequently bankrupt ERP vendor (see Another One Bites the Dust - SSA Gored to Death), Systems Software Associates (SSA), has been focusing its internal development and astute partnership striking and/or renewing activities to address collaborative commerce, e-procurement, customer relationship management (CRM), factory optimization and business intelligence (BI). The company also intends to increase these efforts in its traditional industry markets, including automotive supply, consumer electronics, consumer goods/food and beverage, pharmaceutical/chemical and general manufacturing.

This event note concerns the following recent announcements by SSA GT:

  • OEM agreement with Logility

  • Agreement with REALTime Data Collection Solutions

  • OEM partnership with Applix

  • OEM agreement with Digital Union

  • Availability of BPCS enterprise Performance Analytics

  • Continued support of BPCS versions CD (4.05), BPCS V6, and BPCS V8

  • To provide backward compatibility to BPCS eCommerce, ERM and collaborative commerce solutions

These announcements are part of a new solution strategy for the BPCS product.

This is Part Two of a two-part event note. Part One contained the announcements. This part discusses the Market Impact of these announcements and makes User Recommendations.

Market Impact

This 'back from the verge and on a comeback trial' tune - a dj vu scenario of some once high-flying and then almost deceased ERP vendors, brings to mind the following articles concerning other vendors:

Nevertheless, one should hold his/her horses in the SSA GT's case. It may seem cynical to object to SSA GT's returning to profits by severely trimming fat and milking revenue from the existing client base only; the fact that the vendor had reached its near extinction point lends its positive results more than mere a psychological gravity. The face value of the indisputably impressive SSA GT's marketing rhetoric must be seen in the light of the recent demise of many other software companies.

To be fair, SSA GT has mostly achieved its most imminent and important goal of enticing existing BPCS customer base to stay on their maintenance contracts. With over 1,700 accounts having signed up for continued support so far, SSA GT has secured a sound revenue base, although that might not sustain it while keeping BPCS abreast of the latest technology and functionality scope. Therefore, the above product strategy blueprint is sound given the hiatus the company has been in for some time, provided the new management team continues with an established good track record for on-time delivery of promised functionality.

The company has established partnerships to expand the BPCS footprint to envelop the vastly more comprehensive applications' functionality scope beyond core ERP, which is however available nowadays as a matter of course by many. The company seemingly intends to achieve its all-round product portfolio and implementation approach through in-depth strategic partnerships with specialized application providers. The result should be a functionally rich core manufacturing ERP product, with best-of-breed, industry specific add-ons, and systems delivered by professional service teams drawn form its target industry sectors.

The above announcement indicates SSA GT's determination to shore up its customer base, as it has been focusing on keeping its large install base content by offering them incremental value proposition extension through its SSA GT Portfolio (a.k.a. 'Open eRP') marketing strategy - surrounding BPCS with a slew of horizontal and vertical industry software, and with SSA GT's lean manufacturing methodologies toolkit. Dealing with a single point of contact for most IT needs could indeed be attractive to some manufacturers at the higher end of the mid-market.

Additionally, SSA GT's established global infrastructure and customer base (over 6,500 installations and operations in more than 70 countries), strong core-ERP functionality with a sharp industry focus and regulatory compliance, strong multinational product functionality (support for 20 languages), and a relative ease of implementing BPCS are some of the company's bargaining chips in the game of averting its customers from defecting and of giving other intruding competitors run for their money. Actually, vendors vying to be replacement solutions for the BPCS ERP system could be in for a bigger hurdle than expected as the SSA GT strategy might resonate with manufacturers that have been happy with BPCS and that are reticent to replace functioning ERP system deeply embedded in plants worldwide, particularly in these days of reduced budgets.

However, these positive developments should be backed up with the continued more aggressive commitment to expanding the native BPCS product scope internally. Although BPCS V8 is an ERP suite that can accommodate different manufacturing environment such as discrete lean manufacturing, assemble-to-order (ATO) and make-to-order (MTO) operations, and process manufacturing too, the fact remains that SSA does not yet offer much more than its traditional ERP product in conjunction with bundling extended-ERP software components from alliances.

In terms of product scope, it is mainly in the realm of manufacturing management (MRP II, JIT, repetitive discrete and some process industries), supply chain management (configurable order management, logistics and warehousing), financials, quality management, business intelligence (through Cognos) and some e-commerce. Supported platforms are the IBM AS/400 (now eServer iSeries), HP Unix/Oracle, and also from very recently, Windows NT on IBM Netfinity.

Contrast to Competitors

Moreover, contrary to Baan and Ross, SSA GT has not been able to cite a slew of new customers, except for some minor new accounts in the Asia-Pacific market. The management's rhetoric might even suggest that SSA GT is banking its future solely on its installed client base. The possibly insufficient revenue stream might, therefore, require some additional downsizing in the future as well as the R&D cutbacks. Any attempt to increase revenue by, e.g., bloating significantly support & maintenance fees, may backfire in customers' defections to preying competition.

In another contrast to Baan or Ross, SSA GT has an inordinate scope of functionality to cover through external partnerships, as seen from the above press blitz. While the best-of-breed approach has its merits and is a necessity for some plant-level applications that ERP vendors do not typically provide (e.g., data acquisition), it inadvertently leads to additional integration costs and complicates service & support arrangements. Interfaces between disparate applications like ERP, CRM and/or e-business usually require significant tailoring. This can be a barrier to future changes as further modifying already modified code is notoriously time consuming, costly, and risky. Also, the profit margins for third-party products are typically lower than for natively provided functionality, which again lessens the bottom line.

Challenges

More importantly, except for Cognos and SynQuest or Manugistics (for an advanced planning & scheduling (APS) product add-on), the above partnerships, which have certainly made a splash, are either in their infancy or are just another bite at the cherry. For partnerships to solidify and result with a true commitment and solid products, one needs time and significant user acceptance (read sales), both of which have yet to happen in earnest. There are the indications that SSA's sales force has sternly resisted some previous management's attempts to sell partner products in the past, which has resulted with faltered alliances.

Also, while embracing the IBM WebSphere platform for e-procurement, CRM, and other components integration strategy cannot be debated, the caveat lies in the fact that the company has done it only very recently. To that end, much more aggressive interaction with the analyst community and more perspicacious explanation of positioning of its Semantic Message Gateway (SMG) and Direct Data Gateways (DDG's) interconnectivity technologies would be important. There have been indications that SMG's had exhibited poor performance, hence the addition of DDG's. However, the DDG's have reportedly only been tested once for an adapter for SynQuest integration. There are no performance statistics available, and there have been no other DDG's officially announced.

While SSA GT plans to keep previous BPCS versions (e.g., V4.05CD) alive was prudent and necessary as to avoid an adverse revenue shortfall, the need to make any new functionality backward compatible and to devise an enterprise architecture to tie multiple versions together with a common portal (and even as a commercialized Private Trading Exchange (PTX) further in the future) will likely impede the speed of delivering these. The story seems to be quite compelling although one should be cognizant of the magnitude of the efforts to execute it. This may also mean that users of the most current product versions will see their annual maintenance revenues being dissipated to enhancements for V4.05CD and not to the current versions.

SSA GT is also burdened with the immaturity of some products and/or low traction issues. The V8 product could have used a longer beta testing phase, while the NT product released at the end of 2000 has reportedly resulted only in a handful of new licenses. Furthermore, the company's silence about MAX product it acquired not so long ago (see SSA Acquires MAX Hoping To Leap From Its MIN) might indicate that it was an impulse purchase and that the company has not many ideas as what to do with it, since MAX essentially competes with its own BPCS NT product.

The above challenges may impede SSA GT's ability to leverage its existing client base and channel, as illustrated in the fact that more than 3,000 BPCS users have yet to be possibly reinstated within maintenance contracts. Also, SSA GT has only recently delivered a Web Browser Interface that is not fully browser-based, which makes it quite behind its competition regarding e-business capabilities, and consequently vulnerable to their attacks. As a summary, while the company's gallant attempt to regain credibility in the industry is noteworthy, unlike Baan, it seems to have much more catching-up to do, with the market keeping a close eye on its execution..

User Recommendations

The above SSA GT's moves should be welcomed by existing BPCS customers that have been yearning to rejuvenate their almost outdated technologies in place. Less technologically aggressive global companies and/or their divisions with an inclination towards lean manufacturing philosophies may be better off by staying with BPCS for the time being. Nevertheless, keep a close eye on the company's moves and develop contingent plans for moving to a new technology if need be. Identifying and approaching your local SSA GT sales representative and vigorously negotiating assurances and firm commitment to future product roadmap, and service and support would be the best course of action at this stage.

Until the new product components, particularly through the above-mentioned partnerships, have been officially delivered and put through their paces by reference customers, we advise potential and current users to evaluate the product cautiously even within SSA GT's automotive, consumer packaged goods, electronics, pharmaceutical and chemical industries sweet spots.

Learning about BPCS V8 features would be beneficial, at least for information and leverage against other vendors, but bearing in mind the product's maturity. There are the indications that the real benefit and maturity of the Lean Manufacturing module will likely come with its next release presumably in version 8.1, scheduled for release only some time in 2002. We also suggest evaluating the bells-and-whistles, price, reference sites within your industry, and corporate viability of other vendors before making a selection.

 
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