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Vendor Defends Its Strongholds with Focused Enterprise Resource Planning Solution

Written By: Predrag Jakovljevic
Published On: July 24 2006

Strategic Systems International: The Profile

The "biggest and the best" enterprise applications players will not necessarily have a cakewalk in some geographic regions or vertical segments, as demonstrated by the long existence and ongoing regional success of Strategic Systems International (SSI) (http://www.ssi-world.com). Since 1982, the UK-based company of about one hundred employees has been developing, implementing, and supporting business systems solutions that have been tailored only to a selected few industries, thus reportedly delivering tangible benefits for these targeted customers. SSI is a Chelford Group plc company, which has offices in Basingstoke (England), Darlington (England), and Glasgow (Scotland). Its client base of about one hundred almost entirely UK-based mid-market enterprises includes small companies and subsidiaries of multinationals and large independent companies, such as Allergy Therapeutics, Scottish Blood Transfusion Services, Almac Sciences, Shell, Adams Pork Products, Brintons Carpets, British Nuclear Fuels, G&J Greenall, Morganite, Rangemaster, Saxbys, Sony, Sundora, Tullis Russell, Turtle Wax, and CWV (formerly Vymura). Recent wins in the 2000s include Fox's Confectionery, Uniq, Inter Link Foods, Naturally Best, and Hamworthy Combustion.

Part One of the series Vendor Defends Its Strongholds With Focused Enterprise Resource Planning Solution.

SSI's target markets are process industry manufacturers, including food and beverage, mills (paper, textiles, primary metals, packaging, and plastics), chemicals, and pharmaceuticals, where ever-stricter regulatory compliance and legislation, integrated traceability, and quality management are mission-critical. The firm also sells its web-based TROPOS enterprise resource planning (ERP) solution to some discrete product manufacturers, where high volumes, quick-response short manufacturing cycles, mass customization, and demand-driven production planning are the modi operandi. These discrete manufacturers may also especially benefit from significantly reduced lead times by using the TROPOS demand-pull model, and all prospective customers may benefit from SSI's additional supply chain solutions, including inventory optimization, advanced planning, and data collection systems.

User enterprises are typically in the $20 million (USD) to $500 million (USD) revenue range, the 200- to 3,000-employee range, or similarly sized divisions within larger groups. On the services side, SSI provides consultancy, implementation and project management, development and integration, and support, as well as remote managed services and applications hosting, where at least a third of all of its customers take some form of managed services. As for the market position, SSI logically competes against the bigger and better-known names in the global process industry sector. Obvious competitors include Ross Systems/CDC Software, Infor Process Group (including recently acquired Geac System21, which had a large share of the UK food and beverage market), Oracle, SSA Global, SAP, and Intentia on the process side; but also Infor Discrete Group, QAD, Made2Manage Systems, Microsoft Dynamics NAV and AX (formerly Navision and Axapta), SoftBrands, SYSPRO, and so forth, in fast-response mid-market manufacturing, with the emphasis on real-time and process-centric manufacturing management.

Ownership Structure

Looking at the ownership structure, SSI is now a wholly owned subsidiary of publicly held Chelford Group plc, the specialist information technology (IT) solutions group headquartered in Basingstoke (UK). In August 2000, Chelford Group, a cash shell listed on the Alternative Investment Market (AIM), acquired SSI in a reverse takeover, whereby the board of SSI became the board of Chelford Group. The shell company is listed under the "CHR" ticker mark at AIM, which is the part of the London Stock Exchange that specializes in growing businesses. Chelford also operates to International Organization for Standardization (ISO) 9000-2000 standards, and the AIM listing gives the company access to capital for improving the products and services available to its customers and to support the expansion of its business. The company has annual revenues estimated to be in the region of over $30 million (USD), with SSI contributing a bit over a half of the total revenue.

The Chelford Group strategy is to grow both organically and by acquisition, to develop its competitive position in the markets it targets. The company has lately marshaled a product portfolio, and strong delivery and support capabilities, extending from ERP and wholesale and distribution implementations, through to full managed services.

Besides SSI, the Chelford Group consists of the following companies:

  • Chelford SAP Division, which has consistently been one of SAP's top two value-added resellers (VARs) in the UK since 1997. In 2002, Chelford Group acquired the assets of one of the largest SAP resellers in the UK, which now operates as the Chelford SAP Division, and focuses on the distribution and consumer packaged goods (CPG) markets. It provides SAP solutions and support services exclusively to mid-market companies, and internal competition with SSI is avoided by focusing on somewhat different and possibly complementary industries. The Chelford Group's goal is to become the leading supplier of supply chain management (SCM) solutions to the UK mid-market.

  • Agility Systems Ltd, which specializes in supply chain execution (SCE) and warehouse management systems (WMS), and asset-tracking systems integrating to leading ERP vendors and products, including Geac (now part of Infor), JD Edwards (now part of Oracle), and SSA Global within the CPG and transportation and logistics markets. In September 2005, Chelford acquired Agility, whose customers then included Exel Logistics, Morphy Richards, Sara Lee, Courtaulds, and BAE Aerospace. Prior to the acquisition, Agility had developed a significant capability in radio frequency (RF) data capture systems and in radio frequency identification (RFID) applications, particularly within asset tracking and SCM applications. The vendor is also a Premier Honours Partner of Intermec, the leading RF and RFID hardware manufacturer, and was Intermec's first RFID-approved partner in the UK. Agility's business complements Chelford's existing SSI and SAP divisions, and has added additional SCE, WMS, and RFID capabilities to the Group's existing product and service portfolio.

  • Shian Ltd, which is an IT solutions and technology services business focused on Microsoft and SAP applications. For Microsoft applications, Shian's principal markets are in the financial services and public sectors. The vendor is a Microsoft Gold Certified Partner, with competencies in data management solutions, information worker solutions, and Microsoft Dynamics AX. For SAP, Shian focuses on SCM applications, and customers include Hewlett Packard (HP), Black and Decker, Barclays Bank, Scottish Enterprise, and the Glasgow City Council. The October 2005 acquisition of Shian complemented Chelford's existing activities, as the Microsoft Business Systems (MBS) practice added to the Group's existing operations, while Chelford's SAP division has been strengthened by Shian's activities. Meanwhile, financial services and the public sector represent new vertical markets for the enlarged group, whereas the addition of an office in Glasgow should help in servicing Chelford's existing Scottish customers and extending its coverage in that area.

  • A new subsidiary, RFID Solution Centre Ltd, which was formed recently to develop the potential of Agility's RFID consultancy services and integration software, from environment applicability checks to full process solution design and implementation. In particular, there is a potential for developing Agility's RFID activities and the Intermec relationship, and for establishing the new RFID solution centre business as the RFID delivery arm for the Group's SSI and SAP divisions. The acquisition of Agility offered the enlarged Group the potential for further growth in new supply chain sectors, with the additional benefits of a strong position in the emerging market for RFID applications (see As Hype Becomes Reality, a Radio Frequency Identification Ecosystem Emerges) and cross-selling opportunities within the enlarged Group. The first RFID order has been received from GeoPost, the express parcels delivery service.

Early in 2006, Chelford provided a guidance update on its performance for the calendar and fiscal year 2005, within which it has continued to build on the strong progress of the previous two years, augmented by the acquisitions of Agility and Shian in the fall. In late April, it announced its audited results for the year to December 31, 2005, whereby all parts of the Group have reportedly made significant progress throughout 2005 in terms of turnover (a 22 percent increase) and operating profit (a 49 percent increase), significantly ahead of the prior year. Chelford remains debt free with year-end net cash of approximately 0.9 million (GBP) (compared to 2.1 million [GBP] in 2004), after investing 3.2 million (GPB) in acquisitions during the second half of the year. Both the SSI and SAP divisions achieved solid organic growth (there was good progress in building managed services within SSI), while the SAP division won its first major managed services contract. New contracts in SSI strengthened its position in the food sector, and included Dairy Farmers of Great Britain, Naturally Best, and Glisten. The SAP division improved its position in the wholesale and distribution area, adding Neopost, Supercook, and Findus to its customer base.

SSI TROPOS

Zooming into SSI's scope of products and services, its first product was PROTOS 2000 ("protos" meaning "first" in Greek), which was replaced by the first release of its now flagship product TROPOS in 1992. Since then, the product has been continually developed, with an open enterprise version on UNIX released in 1995, TROPOS for Microsoft Windows NT in 1997, and for e-business fulfillment in 1999. Today, the system supports the following operating systems and hardware combinations: HP-UX, and Windows, while the supported databases are Oracle and Microsoft SQL Server (the latter of which is becoming an increasingly popular choice).

TROPOS is a modular multicompany, multicurrency, and multilanguage (currently English, German, and French) extended ERP system covering virtually all the manufacturing business management aspects (such as sales order processing, production planning and management, purchasing, and so on), both within the four walls of the user enterprise, and for inbound and outbound logistics. Designed with online and real-time execution in mind, the system also encompasses forecasting, customer relationship management (CRM), warehousing and inventory management, quality management, plant maintenance, financials and accounting, and many other capabilities.

To complement its application solutions, SSI provides all the services required for the entire lifecycle support with a single point of responsibility, including project management, technical (tools) training, and application implementation and support. These services are backed by proprietary methodologies like Quickstart Plus, which includes business process reengineering (BPR), and Quickstart, which strives to provide a rapid return on investment (ROI) through implementation templates, managed services (including hosted application services, hosted Web collaboration, remote managed services, and so forth), systems development (including systems integration, package enhancements, and customized systems), and hardware and infrastructure design, supply, and support (including Web development, shop floor connectivity, mobile applications, and technical consultancy).

The vendor is relatively atypical for its one-stop-shop approach, and its depth of IT and scope of application and service is significant, given its relatively smaller size, as well as peer vendor offerings. Namely, SSI combines broadly packaged enterprise system authorship, systems implementation and integration, and managed services provision—as well as pragmatic coverage of the extended-ERP scope, including e-business, CRM, SCM, and so on. From the initial concept, TROPOS was designed to handle a user company's supply chain and trading partner business processes, and to increase the supply chain velocity. The vendor's management contends this has a lot to do with SSI's origins providing manufacturing resource planning (MRP II), bureau services, and custom-made solutions in the 1980s.

As for the presentation layer, TROPOS can be used with both browser-based clients or in an n-tier client/server architecture with fat/rich Microsoft Windows desktop clients, or a "thinner" Telnet client. The product also supports thin client operations on Citrix, while the business-to-business (B2B) e-commerce bits and pieces are based on several electronic data interchange (EDI) alliances, and on leveraging extensible markup language (XML) and Microsoft Biztalk.

In fact, this vendor, a combination of innovative software purveyor, pragmatic and wide-ranging system integrator, and consulting services provider, should stand out in its target market segment. Beyond this, it is distinguished by specialization in the process manufacturing sector: the vertical market specialization emanates from both the product's functional capabilities and the company's long-tenured and experienced people. The idea of such a sharp focus is to provide one standard out-of-the-box system to a marked customer, with no need for costly one-off modifications, which all eventually translates into lower risk, lower total cost of ownership (TCO), and no upgrade restrictions.

Moreover, the tools-based development and systems integration approach provides a vastly configurable system (but without pesky source code customizations), and self-sufficiency for the customer, if required. The customer has a notable choice in terms of technology, owing to SSI's open architecture and interoperability approach. The best-of-breed approach is also a choice when appropriate (see Best of Breed Versus Fully Integrated Software: The Pros and Cons and Single Source or Best of Breed—The Debate Continues). To that end, TROPOS features modular design and open architecture, which allows it to be interfaced to other applications, and to be updated if necessary to add functionality as business requirements evolve.

This market expertise in terms of uncompromising specialist applications and staff experience, bundled with the minimized risk for the customer (due to the single point of responsibility, or the "one throat to choke" principle), a wide scope of the complete solution (including applications, infrastructure, and services), and support throughout the entire lifecycle (from an applications help line to full solutions outsourcing), is yet to be matched in the target market. The SSI TROPOS philosophy is to support these manufacturing customers in their quest to become "better, faster, and cheaper" by delivering systems to support "my industry, my company, and my job." In other words, SSI emphasizes the fit of the TROPOS product to the customer at the three levels, starting with "my industry."

Know Thy Industry

Looking at the detailed functionality of the targeted industry verticals reveals a functional strength and a thorough understanding of the business needs of these process industries. Production, and supply chain and order management all show vertical-specific functionality, which compares well or even exceeds some of the aforementioned process enterprise resource planning (ERP) products. An evaluation of process manufacturing functionality shows depth and substance, with TROPOS addressing process manufacturing idiosyncrasies stemming from both material-oriented requirements (such as integrated quality management, potency management, shelf life controls, pallet and packaging management, item-level units of measure [UOM] control and conversion, and so on) and production-oriented requirements (such as bi-products, co-products, alternative materials, catalyst and waste product management, recycles handling, process and product yield, scheduling to the minute and sequencing, rate-based material call-off, flexible material backflushing, lot traceability including work in progress [WIP] traceability on a single manufacturing order, and the like).

For more information on the typical process manufacturing show-stopping requirements, see Process Manufacturing Software: A Primer and What Makes Process Process?.

The vendor especially exhibits a profound understanding of the food and beverage and fast-moving consumer goods (FCMG) manufacturers, which constitute about 60 percent of its install base. Manufacturers supplying the major supermarket retailers (whether the product is food, drink, personal care, cleaning products, or any other product stocked and sold by supermarkets) all share many common business challenges and a tough competitive environment. The customer (a huge, powerful, and demanding supermarket or retail chain) wants products manufactured to order, and with lead times often measured in hours rather than days or weeks. In fact, delivery lead times shorter than the time it actually takes to make the product are routine, often ironically bundled with highly variable forecasts.

For a specific discussion of the consumer packaged goods (CPG) industry see Yes, We Have No Bananas: Consumer Goods Manufacturers Serve Demanding Customers.

CPG manufacturers measure the most important metric of all: orders delivered on time, in full (see The Perfect Order—Inside-out or Outside-in?). Because supermarkets typically have no warehouses, all finished goods, whether perishable or not, have to be collected from the manufacturer and routed to the supermarket shelves within hours. And because there is no "finished goods" stock, the end of the production process becomes the loading bay. For this market, ERP systems should be able to deal well with continuous processes and high volume, rate-based manufacture (where one might manufacture to forecast, but will package to-order in a mass customization manner). Indeed, an ERP system designed for CPG manufacture has to support order-less, rate-based manufacturing, and still retain full traceability. CPG manufacturing is typically fast moving, high volume, and fairly simple manufacturing, with relatively low-cost ingredients. Nevertheless, full-quality control and lot traceability is essential, so it must be possible to use ingredients without the overhead of constantly having to record stock issues.

SSI offers several nifty capabilities to help CPG manufacturers with these requirements. For one, to drive forward planning and to deal with order expectations, TROPOS can manage forecasts from a number of sources (for example, these can be customer- or product-specific, for preproduction runs or for interplant or company demand). A distinctive feature allows the creation of a forecast at a lower level in the product structure than the top-level (finished goods) item. This lower-level forecast can be consumed by production (as with all forecasts), and its purpose is to support the volume manufacture of products where a wide variety of finished options is available, based on a standard base product. Potentially, the end product is made specifically to a customer's order—and the possible variations at the top-level saleable item are so great that forecasting at this level will always be very inaccurate. By forecasting at a lower level (sub-assembly or component) than the finished goods one (which is probably the more common forecasting level across a variety of products), a more predictable forecast can be maintained. This is due to the aggregated forecasts of the common components across various finished products' variants. Manufacturing, however, would go according to customer specific call-offs. Where this is planned into the product design and manufacturing planning, it is called "decoupled manufacturing" or "mass customization."

The production process in TROPOS is defined as a series of stages and steps, with resource and material input and output defined at the stage level. This is in addition to the versatile order fulfillment capabilities previously mentioned, along with support for decoupled manufacturing (which means managing a production plan at an intermediate or generic level, and netting off [deducting] or consuming actual sales orders for finished products), for an accurate definition of the production process concurrently with the rate-based specifications if required (with time traceability to minutes and seconds).

The control of output material means that complicated material process flows can be defined, including by-products, co-products, waste, scrap, yield, work-off, and feed-back, all which can then be inputs for other production stages on other processes, or into inventory. These inputs and outputs are included in the costing process as positive or negative contributions, which allows the definition of the production process in TROPOS to be a close description of the actual way products are manufactured.

This approach includes delivering material supplies to the production process in line with manufacturing requirements according to time and location, unlike the concept of kitting material (according to a list of discrete components or ingredients, called the bill of materials [BOM]) to a work order that is used by customary material requirements planning (MRP)-based systems. This approach emphasizes the importance of better timing within a production operation, since few successful manufacturing companies—in virtually any sector—have the luxury of just dumping a pile of raw materials into a machine and getting their products out exactly when the customer wants them. A major capability is the ability to spread demand across multiple production sites so as to increase resource usage, and minimize production and transportation costs. For companies that stock goods as intermediates (partially finished) or bulk goods (such as whisky distillers or chemical producers), both finished and partially finished goods can be accounted for.

For a case study of how SSI supports the whisky industry see Must-have Requirements for the Whisky Industry.

 
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