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SSA Global Forms a Strategic Unit with an Extended-ERP Savvy Part Three: Challenges and User Recommendations

Written By: Predrag Jakovljevic
Published On: September 17 2004

SSA Global Forms a Strategic Unit with an Extended-ERP Savvy Part Three: Challenges and User Recommendations

Event Recap

On June 14, SSA Global, a Chicago, IL-based extended enterprise solutions and services provider for process manufacturing, discrete manufacturing, consumer, services, and public companies worldwide announced the completion of its acquisition of substantially all of the assets of Arzoon Inc. (www.arzoon.com), a San Mateo, CA-based privately-held provider of integrated logistics and global trade management (GTM) technology. Financial terms of the transaction were not disclosed.

Arzoon's unified supply chain execution (SCE) infrastructure, which is used to increase global supply chain velocity and performance, is envisioned to augment SSA Global's existing supply chain management (SCM) solution and strategy, which was, coincidentally or not, announced at the beginning of June as a result of SSA Global's ongoing commitment to address the extended enterprise resource planning (ERP) needs of its customers worldwide. To that end, SSA Global's SCM strategy is "to deliver robust solutions that address the key requirements of customers and prospects at a competitive price, while extending the value of their existing technology investments".

The recent SSA Global's moves may convince many doubters who still tend to dismiss the vendor's recently invented modus operandi of growth by acquisition and of subsequent secured installed base service and maintenance revenue as opportunistic (or even scavenging). Namely, through its recently formed Strategic Solutions team, SSA Global might be showing that it is not just an ERP collector that is living off milking its install base, but rather an extended enterprise applications provider that can appeal both to its current and new users.

This is Part Three of a three-part note.

Part One detailed recent events.

Part Two discussed the market impact.

Acquisition Challenges

However, SSA Global will still have work cut out for itself to create a truly integrated seamless supply chain suite, beyond mere unified SCM re-branding on paper (albeit one is to commend it for doing away with an overwhelming number of individual product brands such as BPCS, Ironside, iBaan, Infinium, CAS, KBM, MANMAN, Masterpiece/Net, MasterPiece/Net HRMS, MAXCIM, MK Logistics, MK Manufacturing, PRMS, SSA GT MAX+, EXceed, Arzoon, and Warehouse BOSS). With this variety of system architectures to be integrated, it will take some doing to even loosely interface these disparate systems—each with their own different data model and technology platform—via some plausible middleware technology strategy.

SSA Global's apparent strategy is to use its internal integration infrastructure, leveraging profusely the IBM WebSphere technology stack, to link these disparate systems together as a pre-connected suite, but also to allow them to run independently as best-of-breed. This integration architecture runs on a Java 2 Enterprise Edition (J2EE) application server and provides common integration for portal applications to legacy applications, while also enabling integration to SSA Global extended ERP products, other software solutions, and to future SSA Global's product acquisitions. This infrastructure includes the development of an integration broker, which provides an object model, transaction services, and connectors to multiple systems.

Still, recent SCM enhancements to many SSA ERP products might not take off in earnest in the short term until many cross-platform integration challenges are completely solved. Therefore, SSA has pursued a different path from most of its direct ERP competitors, choosing to buy best-of-breed products instead of building them from scratch in-house, with consequent tradeoffs in terms of more universal integration and architecture framework.

Given the fact that it takes excruciatingly painstaking efforts, industry domain knowledge, and resources (often estimated in hundreds of man-years) to devise and build an enterprise system from scratch, it is quite logical for SSA Global to surround its old ERP core products in a wrapper of newer technology, whose goal is to effectively obfuscate the old technology, giving it the latest graphical look, or providing an easier means to access the core business logic and data from other, more-modern systems, devices, or from the Internet. Still, although SSA Global has leveraged the economies of scale when extending several disparate ERP products at the same time (i.e., many steps in the software lifecycle other than actual programming in the source code language, such as design, testing, beta release, documenting, etc., can be shared across the board), adding new Java code around an old technology core inevitably comes with the downside of translation between the old and new layers, data typing, formatting, interface, and performance issues, version compatibility dilemmas, and other subtle problems. For a comprehensive discussion on the effort it takes to devise and build an enterprise system from scratch see "Rewrite or Wrap-Around Old Software?").

On one hand, the continued SSA Global's acquisition spree might result in many manufacturing and distribution global enterprises, currently using a plethora of diverse products, ending up or eventually dealing with virtually only one vendor. Still, the dichotomy is that SSA Global will still have a slew of disparate products in its fold, which are yet to start seamlessly "talking" to each other.

Consequently, SSA Global will sooner or later have to address technology and some possible vertical focus disparities before its users of multiple ERP systems can take advantage of the above SCM add-ons. While this strategy might enable its existing customers, irrespective of which SSA Global or other third-party ERP solution they already use, to utilize its newly added SCM capabilities, SSA must quickly further clarify a strategy for how it intends to rationalize its solution portfolio and how it plans to integrate process flows across its broad SCM applications set.

In any case, SCE installations are expensive investments that customers are loath to ditch 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 and transportation 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. Also, while packaged suites may come in handy for highly repeatable, conforming processes in the back-office, that is not necessarily the case for more fluid, customer-specific, distributed processes, like distributed order management across geographic boundaries, which comes into SSA Global's favor.

Still, while the Strategic Unit team formation should help SSA Global to figure out how to fully integrate organizational structure where employees are best integrated, service offerings best coordinated and cross-selling opportunities best tracked and pursued, the vendor must continue to clarify the position and integration of competing and complementary products in its fold, which gets complicated with every new addition to the family.

User Recommendations

The main point is that SSA Global should be treated as a serious SCM contender. In the short term, the vendor's recent initiatives should particularly be observed by its existing customers, and they should begin by considering whether the vendor's offerings address their extended-ERP needs. However, prospective customers might want to prod SSA Global about its architecture and integration framework, which might favor some of its ERP competitors with more unified offerings, although depth and more comprehensive functionality might soon begin to favor the SSA SCM portfolio.

Further, combined respective customers of Arzoon and SSA Global should consider the acquisition as a move toward a more viable position for their information technology (IT) investment, and treat it in a business as usual' manner but with keen interest. The mission for current and potential users is to discern SSA Global's product development strategy viability within the product line or industry in question. Users should vigorously question the management on how their product line will evolve in the future and investigate all alternative solutions now to fully understand their situation and options. They should become involved in the vendor's Global Guide Groups, Industry Advisory Boards, or so, since by voicing concerns and requirements that might have otherwise been overlooked by SSA Global they will be increasing the likelihood of their system's future enhancements. Some products will most likely not receive major functional enhancements owing to aging technology, and the users should especially help the vendor figure it out.

On a more general note, to know true total landed costs, ensure compliance with customs regulations and denied parties restrictions, and properly record the relationship between buyer and seller, source of supply, and product related restrictions, the ITL and GTM system should be able to track all the activities and incremental costs as the shipment is processed from point of origin to final point of receipt. Customs duties and tariffs, as well as associated rates of exchange and transportation costs should be available to accurately calculate total cost of goods, which requires a data model and integration at the product and item level between the ITL system and the order management, warehouse management, and transportation systems. As mentioned earlier on, hardly any vendor handles all the requirements of automating global e-business. While SSA Global stands a chance of achieving that down the track, all of the above issues and requirements should be taken into account during an ITL and GTM system selection, either stand-alone or within a broader SCM framework.

 
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