The Name and Ownership Change Roulette Wheel for Marcam Stops at SSA Global Part Two: Marketing By Invensys

Invensys Forms Process and Regulated Industry Products Group

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.

But then, given early in 2003 Invensys yet again put all its assets and investments under the magnifying glass, it then allocated the PRISM and Protean products into their own profit-based division, called IPS, which was to be responsible for the development, marketing, sales, and support of the Protean and PRISM process ERP software solutions and the Invensys Validation Technologies. By joining the Invensys Validation Technologies group with PRISM and Protean, IPS has aimed at being able to offer enhanced regulatory compliance solutions for the process and regulated industries, in a turnkey manner.

Validation Technologies has been a part of Invensys Pharmaceutical Solutions, another group within the Production Management Division (PMD) of Invensys, and one of the leading suppliers of validation, pharmaceutical, engineering, and regulatory-compliant solutions. Founded in 1994 and with over 110 dedicated consultants, the group has been one of the largest suppliers of regulatory-compliant solutions in North America and Europe, dedicated to the pharmaceutical, biological, biotechnology, and medical devices industry.

As the Baan product line has traditionally focused on the discrete and hybrid (with only simple process requirements) manufacturing sectors, this move was to enable both organizations to fully leverage their strengths in their respective industry sectors. Under the new setup within Invensys PMD, well over 80 percent of revenues was hoped to then come from process industries, since, in conjunction with solutions provided by sister Invensys companies such as Wonderware, Avantis, Foxboro, Eurotherm, APV, and Powerware, IPS would also provide a broad set of capabilities for the process sector requiring regulatory compliance, deep production costing capabilities, and shop-floor integration, albeit with the caveat that larger companies would still require enterprise-wide integration to a full-fledged ERP suite for financials and supply chain management (SCM), which PRISM and Protean have sorely lacked.

This is Part Two of a six-part note.

Part One provided background information.

Parts Three will continue the discussion of the marketing by Invensys.

Part Four will detail what SSA Global gets.

Part Five will cover the merger impact and challenges.

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

IPS Market Strategy

The IPS group had at the time a new enthusiastic leader, approximately 270 people, and a sharpened focus for the above reasons and facts. The group's strategy was to capitalize on the historic strengths of its PRISM and Protean products in combination with the services offered to assist regulated industries with validation needs. Today, the regulated industries mostly include life sciences (e.g., pharmaceuticals) but the company rightly believed that the regulations from the US Food and Drug Administration (FDA) and the World Health Organization (WHO) would soon extend into the food and beverage industries.

Therefore, in 2003, IPS was to focus on the plant management needs of food and beverages, life sciences, and specialty chemical industries, since many pre-Y2K regulated process manufacturing companies have invested heavily in ERP systems, with the aim of running their businesses using a single, integrated application from top to bottom. However, a great part of them have found difficulties in achieving that at the plant level. In total, PRISM and Protean were at the time installed in nearly 1,500 sites (spread over nearly 600 corporate customers) with 100 percent of the sites being in the process industries. The breakdown by industry was as follows:

Food and Beverage 40%
Specialty Chemical 22%
Life Sciences 21%
Other Process 17%

The validation services business was to bring experience in the needs of life sciences companies, including detailed knowledge of its regulatory environment, and thereby complete the solution. Thus, the key to IPS' future was indisputably its install base, and the group was focusing on adding value to these customers through services and adding additional functionality to its products. For existing customers requiring validation, both regulatory-oriented development within Protean and the existing regulatory functions within PRISM, with the addition of validation services, was to be a welcomed and plausible situation of a turnkey solution for enterprises seeking the services from a single company to implement a business solution for regulated industries and create the necessary processes to achieve FDA certification.

Because of the growing regulatory requirements, enterprises with legacy ERP instances have been demanding that their vendors extend their depth in areas such as 21 CFR 11 Part 11, which was introduced to anticipate the effects of electronic technology' on the drug discovery, development, and manufacturing processes. Accordingly, FDA regulations focus on two areas:

1) electronic records (i.e., ensuring accuracy, reliability, consistency, and visibility to changes in records, with time stamped audit trails) and

2) electronic signatures (i.e., authorized on-line signature that is legally binding).

To that end, both future releases of Protean at the time (4.1) and PRISM (7.2), which were committed to be respectively released mid-2003 and at the end of 2003, would feature the above regulatory compliance in full.

Building on Marcam's Reputation

IPS was hoping that Marcam's early product vision and venerable reputation in the process manufacturing market for providing plant-centric ERP solutions might finally play well to capturing the marketing opportunity. The regulated industries require both pure operational compliance and control, and cost containment, both of which IPS seemingly had answers to. First, it had long established compliance with Current Good Manufacturing Practices (CGMP)-based implementation methodology that is aimed at aligning tools, policies and procedures, making Protean suitable for regulated environments and adding adherence to FDA requirements. Some of these CGMP features include electronic quarantine; location classifications (which let users create various types of inventory states and control the availability and usage of resources); drug and hazardous material reconciliation; and quarantine release by user and material type. Second, as for cost containment, the patented Production Model, which will be explained below, would allow users to calculate, track, analyze, and control costs through unique activity-based costing (ABC) capabilities.

With operational compliance and control mastered during 2003, Invensys undertook development to integrate the plant solution into enterprise backbones and plant-level manufacturing executions systems (MES) and production control systems, whereby sales and consulting groups were to be ramped up to serve the existing customers and its target market. While all of these were strong points, from hindsight, however, it appears that the intense Invensys corporate activity of the last several years delayed the implementation of a sound product strategy for IPS, and has challenged it to follow through on its seemingly well-thought-out plan and on delivering tangible results as quickly and efficiently as possible.

In other words, while Invensys was still trying to hang onto Protean's process manufacturing capability to remain at the heart of the Wonderware's vision of "Sensor to Supply Chain", long forgotten and neglected during Invensys' stint with Baan, IPS was faced with an insurmountable dilemma— deciding whether to rebuild momentum and profile as a full-fledged process ERP vendor, or to re-launch Protean as an operations management system that would integrate with other ERP platforms. Namely, on one hand, IPS could no longer bet on its patented Production Model functionality to distinguish itself in the process manufacturing ERP arena, where many vendors such as SAP, Oracle, Ross Systems, Infor (formerly Agilisys), Adonix, SSI World (in the UK), Intentia, PeopleSoft, etc. have caught up significantly (if some have not even overtaken it) in functionality, even as they have expanded the breadth of their extended-ERP application portfolios.

On the other hand, IPS attempted to target operations management with Protean 4.1, which apparently had a new aim at delivering the US FDA compliance and control systems to process manufacturing industries, by adding the 21 CFR Part 11 electronic signature and audit control capabilities, whereas the ISA-95 standard for web services would link Protean to shop floor execution systems. Developed by the Instrument, Systems, and Automation Society (ISA), and arguably one of the most important for manufacturing companies, the ISA-95 Control to Enterprise Integration standard is a multipart international standard, which defines the boundary conditions between a manufacturing and a business system, the touch points between them, and which data elements should be transferred.

Further, as mentioned earlier on, Invensys PMD still had many complementary products and technologies in its other product families that gave it credibility in the emerging operations management market, but Protean's production model strengths in costing and scheduling had yet to be integrated with these systems, a colossal (and seemingly never accomplished) feat. Consequently, IPS' loss of momentum in ERP after the sale of Baan and a protracted neglect of Marcam has become all but irretrievable, while Protean's future as an operations management product required committed marketing and investment in integration within Invensys PMD's own product portfolio, as well as to third-party products.

This concludes Part Two of a six-part note.

Part One provided background information.

Parts Three will continue the discussion of the marketing by Invensys.

Part Four will detail what SSA Global gets.

Part Five will cover the merger impact and challenges.

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

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