SSA GT Challenges
August 18, SSA Global Technologies (SSA GT)
(www.ssagt.com), and EXE
Technologies, Inc. (NASDAQ: EXEE) announced the signing of a definitive
agreement under which SSA GT will acquire the embattled global supply chain
execution (SCE) provider. Under the agreement, a subsidiary of SSA GT will merge
into EXE Technologies and all holders of EXE Technologies outstanding common
stock will receive $7.10 per share in cash, which represents an 18 percent premium
over EXE Technologies' closing market price on August 15, 2003.
one hand, SSA GT's acquisition spree might result in many manufacturing and
distribution global enterprises that currently use a plethora of diverse products,
ending up eventually dealing with virtually only one vendor. Still, the dichotomy
is that the vendor in this case, SSA GT, will still have a slew of disparate
products in its fold, which are yet to start seamlessly talking to each other.
That is where the cultural difference comes to light—while SSA GT's CEO Mike
Greenough considers underlying technology a plug-and-play commodity that does
all the integration behind the scenes and is transparent to the user, Baan's
continued excruciating efforts (i.e., time, money, and human resources-wise)
and other recent delays to deliver its next-generation Gemini
product and OpenWorldX integration framework, to be rolled
into the future SSA GT Enterprise Integrator platform (not
to mention SAP's colossal task to deliver the still evolving
NetWeaver platform) certainly shows that we are not there yet
Wrong With Enterprise Applications, And What Are Vendors Doing About It?).
Thus, SSA will have its platter full attempting to integrate EXE, as well as its other recent acquisitions while maintaining and improving customer support for EXE's two main WMS products. It certainly cannot postpone the strategy roadmap delivery indefinitely, and we certainly do not envy the VP of solutions positioning on his or her impending daunting task. Good luck to anyone trying to rationalize and produce a standard price and discounts' list that would take care of what goes with what and in which order (and particularly what cannot go together) for new users, and of existing customers' requests for special (often bordering on blackmail) incentives' to remain within the SSA GT's fold.
On the other hand, SSA GT with Mike Greenough at the helm, has many times surprised even the biggest skeptics by turning around seemingly non-viable vantage products (which iBaan, EXE, and Ironside certainly are not) and ailing vendors (which Baan and EXE have been). In any case, WMS installations are expensive investments that customers are loath to ditch, add, or switch particularly during a tight economy. The market is seemingly not yet ready to just abandon well-crafted SCE components for one-size-fits-all suites, for a number of reasons. One would be the mere complexity of warehousing operations, which has demanded serious customizations of earlier generations of WMS, making upgrades almost impossible. Further, despite the efforts of companies to integrate their supply chains, most still have functional silos between planning and execution, manufacturing, accounting, and logistics. The reality is that logistics cost data and constraints are required to develop truly optimal financial and manufacturing plans. Packaged suites may come in handy for highly repeatable, conforming processes in the back office, but that is not necessarily the case for more fluid, customer-specific, distributed processes, like distributed order management across geographic boundaries.
It is quite likely that SSA GT will at least do enough not to push existing EXE customers to unwillingly jump ship. But, only time will tell whether SSA GT will embrace the grandiose agent-based collaborative vision of current EXE leaders or if it will stop short at delivering merely tactical, manufacturing-oriented SCE chunks of new functions. We might be able to discern more of the strategy after the next acquisition, likely in the not so distant future.
This is Part Four of a four-part note.
One detailed the event and the Market Impact.
Two covered EXE.
Tree discussed the impact on SSA GT.
This is indisputably great news for long disconcerted EXE customers, as revival efforts by a relatively new CEO Joe Cowan were taking longer than expected, and possibly for some users within the SSA GT's fold (all on the condition that the deal goes through). Thus, combined respective customers should consider these events as a move toward a more viable position for their IT investment, and treat it in a "business as usual manner" but with open eyes. The mission for current and potential users is to discern SSA GT's product development strategy viability within the product line/industry in question. EXE's grocery retailers and 3PL customers should strongly demand from SSA GGT to clearly articulate its vertical strategy, while existing and prospective non-SSA GT manufacturing users of EXE products should try to discern whether the vendor will pay adequate attention to the requirements coming from outside its installed base.
Users will benefit from approaching SSA GT and informing themselves about what the company plans for future service and support (or discontinuation and/or product stabilization?) of its individual products are, and what would the ramifications of migrating (or not) to its new product offering be. Users should vigorously question the management on how the product line will evolve in the future and investigate all alternative solutions now, to fully understand the situation and options.
Users in the retail, wholesale distribution, manufacturing, and third party logistics (3PL) businesses with sophisticated warehousing requirements should give EXE a prominent position on short lists, especially those using an open n-tier architecture. Users in grocery retail and automotive aftermarket segments may want to include EXceed 2000 in selections over the short term (12 to 24 months), but should be aware of the extent of modifications needed to make the product fit their needs. Also, they should not be terribly surprised to see SSA GT scale down its enhancements of the product in favor of EXceed 4000 or Warehouse BOSS. In any case, prospective customers should expect tactical, manufacturing-oriented WMS functions from SSA GT in the short and medium term, and the customers that need these capabilities today should evaluate EXE's 4000 offering, which will most likely survive in the long run under SSA GT. Customers should ask about the company's plans for technology rewrites and integration with other SSA applications. Customers evaluating WMS applications should consider what SSA offers but should monitor how SSA addresses the transition of EXE's products into its target verticals.
Become involved in SSA GT's Global Guide groups and EXE's Industry Advisory Board, since by voicing concerns and requirements that might have otherwise been overlooked by SSA GT you will be increasing the likelihood of your system's future enhancements. Some products will most likely not receive major functional enhancements owing to aging technology.
the new product strategy is crystal clear and publicly committed to by the new
owner, we advise potential users to warily evaluate the products even within
their vertical sweet spot. (Of course, learning about new features and attractive
pricing would be beneficial, at least for information and for leverage with
other vendors.) We suggest evaluating the bells-and-whistles, price, reference
sites within your industry, and corporate viability of other vendors as well,
before making a selection. Current SSA GT customers with OEM-ed components from
many partnerships such as Logility, Applix,
or Digital Union should clarify any ramifications of the above
recent acquisitions on their current IT investment.