The Name and Ownership Change Roulette Wheel for Marcam Stops at SSA Global Part Five: Merger Impact and Challenges

Web Services Involved

SSA Global announced it has acquired Marcam, a provider of specialized, operational-level enterprise resource planning (ERP) solutions for process manufacturers, from Invensys plc, the global automation and controls group with headquarters in the UK, and from which SSA Global also bought Baan about a year ago.

Before we delve deeper into the merger's strengths and weaknesses, let us revisit what SSA Global hereby obtains. The acquired company, although constantly morphing from Marcam to IPS back to Marcam, has a good track record and a heritage of selling solutions to manage divisional or autonomous plant sites within selected process industries. (For details, see Parts Two and Three of this note) For an extensive discussion of the PRISM and Protean products, see Part Four of this note.

Therefore, SSA Global could benefit from maturing web services, since former Marcam had likely dealt with the pieces of the concept before the latest industry buzzword was even conceptualized. Namely, using objects (web services), Protean objects are driven by business processes, which, by the nature of encapsulation (i.e., making functionality known only by the interface it exposes), bode well for the ongoing product's instance agility. Web services and service oriented architecture (SOA), which have lately been on almost every vendor's lips, do have a potential of becoming the latest evolution of application integration technology or a revolutionary new web-based application design model by enabling developers to create or enhance applications by connecting granular components that are recognized and accessed via platform-independent web protocols.

While web services leverage the aged (and not well utilized) concept of objects' encapsulation and reusability, they may finally offer that extra mile by adherence to standards that are increasingly taking hold (see The SOAP Opera Progresses—Helping XML to Rule the World). Further, web services components tend to be simpler in their nature, partly owing to the Internet standards, and they also tend to be higher-level abstractions, which implies more likely platform independence and "mixing and matching" opportunity by developers.

Thus, the above changes in the market mindset should finally play to SSA Global' favor, and should mitigate Protean's functional incompleteness, which has plagued it in the past. While both Marcam products have been strong in plant level needs, they do not have a history of strength in non-plant-centric white collar' functions. They have always fared well in evaluation gigs where the enterprise was focused on a plant-level solution and poorly when the focus was more on administrative capabilities. Consequently, for the reason of not being regarded a comprehensive ERP product, Protean had initially been relegated to the plant and divisional operations of large enterprises and to mid-sized industrial-oriented process manufacturers that would not need complex distribution or financial management functionality.

On the other hand, as a relatively new product, Protean had required significant development funds and resources to make it a comprehensive ERP product, its research and development expenses had been high, resulting with numerous cost cutting moves, which had been at the expense of former Marcam's sales and marketing staff. As a result, even erstwhile Marcam Solutions had not been able to gain the market mindshare, and had sadly missed the Y2K compliance buying frenzy at the time that had benefited most of other vendors. Marcam Solutions had sought to alleviate the integration issue with partnerships with PeopleSoft and CODA for financials, and by pursuing the coexistence strategy with SAP, but only with measly success because the trend of most customers at the time was to buy a transaction foundation framework from a single vendor for a greenfield' situation.

While Marcam has lately bolstered Protean's financial management and order management capabilities, it still has a limited supply chain execution (SCE) offering that is particularly asked for in the order management needs of the process industries. While the customers have meanwhile become open to integration and composite applications, they still demand their vendors provide assistance with the management of enterprise supply and demand chain initiatives. To that end, Protean continued to trail its direct peers like Agilisys, which has long provided these functionalities natively (see Agilisys Continues Agilely Post-SCT) and Ross Systems, which found an answer with its recent alliance with Prescient Systems for the SCM offering (see Two Highly Focused Vendors Team For Their Markets' Good) and with Selligent for the customer relationship management (CRM) offering. Moreover, Ross' new parent chinadotcom has also acquired the long-struggling but renowned SCM vendor IMI and CRM vendor Pivotal, which may bode well for products' cross-integration and enhancements. Therefore, even within Invensys, the group had continued with the lingering period of financial distress and also limited product investments. While its products have deep operations management functionality, many of the must haves of today's extended-ERP market had thus belatedly been added to the product.

This is Part Five of a six-part note.

Part One provided background information.

Parts Two and Three discussed the marketing by Invensys.

Part Four detailed what SSA Global gets.

Part Six will discuss competition and make vendor and user recommendations.

Merger Impact

Namely, when Wonderware/Invensys acquired Marcam, the buyer at the time was rather hoping that Nestle would adopt the solution corporate-wide, which has never happened. NEC, who collaborated on developing the financial management applications for Protean, has meanwhile acquired the sole rights to the financial management modules and the source code to Protean 3.0, which it has since been selling as the FlexProcess product. Protean, a process ERP solution without financial management modules has always been a rather tough value proposition. However, if well integrated with the forthcoming SSA FM (financial management) product, which combines the strengths of former interBiz MasterPiece, and Baan capabilities, enriched with the Cognos CPM (corporate performance management) OEM-ed modules, IBM WebSphere-based portal, and many other new capabilities, look for a comprehensive process manufacturing ERP solution in the near future giving run for their money to the likes of SAP and Oracle.

Like previous SSA Global's acquisitions, this merger too seems aimed at enlarging the existing customer base, market share, and, more importantly, the predictably recurring support revenue and consequently larger R&D pool. The merger nears the new company slightly closer to the coveted landmark number of 20,000 active installed customers, rendering it possibly the largest ERP vendor focused solely on manufacturing, although at a possible price of stretching its R&D and service and support resources. But also, Baan and Marcam acquisitions should give SSA Global an equitable play across both process and discrete manufacturing hunting grounds.

One might notice the complementary nature of some of the common traits of Marcam and SSA Global in terms of customer bases with a wide geographic spread (particularly in emerging markets that have been much less affected by the arguably still ongoing recession). Marcam brings a customer base of process manufacturers including Kraft (with over 100 sites in North America), Gruppo Minsa, La Fabril, Brouwerij Martens, Macfarlan Smith, OmniChem, Sun Chemical, etc., which are evenly divided between North America and Europe. This somewhat resembles the SSA Global's customer base geographic spread (42 percent in North America, 38 percent in Europe, with the rest in Asia Pacific), which may result with significant savings due to offices and staff consolidation and sharing in many common markets, with the cross- and up-sell opportunities in the markets that would be new to the merging vendors (or, if once abandoned, this would mean another chance to penetrate the region).

Through its above-mentioned acquisitions, SSA Global has garnered an extensive inventory of applications which we expect to see made available to the Protean and PRISM customers. The vendor has invested in integration of various applications that it has acquired via the above-noted aggressive acquisition efforts into other product suites, but it has also invested in in-house development of new applications that are offered across the product lines. The Marcam acquisition comes at the time when SSA Global is in the process of repackaging and grouping these acquired products under a manageable few product brands—SSA ERP LN (based on the former Baan product) and SSA ERP LX (based on the BPCS product), in addition to earlier mentioned SSA FM.

This will not necessarily mean a dead end for existing customers, given SSA Global's no product sunset' stance, but rather the opportunity to keep the core of their existing solution enriched with new and complementary additions from the rest of SSA Global family. Given the earlier discussion, existing Marcam customers could benefit from leveraging SSA FM as well as the recently unveiled SSA CRM, SSA SCM, SSA SRM, SSA PLM (product lifecycle management) and SSA CPM components. The cross- and up-selling has been the name of the game and recipe for success for SSA Global lately, which has corralled a number of products in various functional areas, and which it has been selling to manufacturing customers and prospects that have little of these technologies installed.


However, Marcam's suitor still has work cut out for itself to regain the former Marcam glory, given a cultural mismatch and different winning and losing attitudes between merged vendors. 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 trade-offs in terms of more universal integration and architecture framework such as SAP NetWeaver, for instance.

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 life cycle 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 of 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 with 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. Further, Marcam still has a lot of housekeeping to do given it admits that many of its customers are still on several releases of old product instances, which have meanwhile been customized to a degree of non-maintainability by the vendor. Protean has been bought by customers for its strength in process manufacturing and inventory management. At least half of these customers had to invest in third-party financials prior to IPS' delivery of Protean's own capabilities, which are still not overly competitive in the market.

Another challenge comes from the fact that Marcam ERP products have always been at different phases of their functional life cycle. Although Protean has robust process manufacturing, cost control, and inventory management capabilities, it is still an incomplete and evolving ERP product, whereas PRISM has hardly had any enhancements because its basic technology has been all but stabilized' and Marcam had placed its emphasis on Protean.

Moreover, the vendor has not been able to leverage PRISM's large installed base because of the "clean sheet" product design strategy used in Protean, which did not provide a clear and easy upgrade path. Actually, the migration from PRISM to Protean would not be different from a new installation because Protean has significantly different data models and business processes than PRISM. Even erstwhile Marcam Corporation had toyed with an idea of developing conversion tools and commingling the products at a functional module level to ease migration. However, other than occasional PRISM Order Management module integration with Protean (whose equivalent capability was only in development at the time), using PRISM's Enterprise Manager, a store-and-forward integration mechanism, not much has ever happened on both fronts.

The sort of irony might be that due to PRISM's inferior functional enhancements of late and due to its architectural similarity, the PRISM team might offer its existing users more incentives to eventually migrate to SSA ERP LX. On the other hand, while leveraging Protean's above-mentioned superior functional nuggets is tempting for both SSA ERP LN and SSA ERP LX camps, the product's proprietary technical framework might not make it an easy feat. For the above reasons, many of the long-term implications of the acquisition remain vague. Namely, at this stage, SSA Global will most likely offer multiple alternatives for customers without defining a single recommended path for process manufacturers.

This concludes Part Five of a six-part note.

Part One provided background information.

Parts Two and Three discussed the marketing by Invensys.

Part Four detailed what SSA Global gets.

Part Six will discuss competition and make vendor and user recommendations.

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