Will V8 Help SSA GT Regain Lost Ground?

Will V8 Help SSA GT Regain Lost Ground?
P.J. Jakovljevic - September 10, 2001

Event Summary

SSA Global Technologies (SSA GT), the ERP provider launched in August 2000 from remnants of the former Systems Software Associates (SSA), when a private investment group recognized the latent potential of the company's global reach, software assets and personnel as a basis for profitable growth, celebrated in August its first birthday with the following accomplishments:

  • Attained revenues of $140 million for the fiscal year ended July 31 and fourth quarter net revenue per employee approached $150,000. SSA GT remains a global provider with revenue split equally between the Americas, Europe and Asia Pacific/Japan. Also, it gained six new installations in the last six months, all exceeding $1.5 million in software sales. SSA GT's maintenance revenues have increased with more than 1,000 multi-year contract renewals signed during the year, possibly indicating revived customer confidence.

  • Introduced new products and services, including the June release of version 8 (V8) of its flagship manufacturing software product, BPCS (Business Planning and Control System). BPCS is installed with more than 6,500 customers in more than 70 countries, and SSA GT's global support group currently supports 3,500 clients.

  • Realigned operations to maximize SSA GT's worldwide sales and marketing, services, and customer care, and adopted a strict cash management approach to insure the company remains on a solid financial footing. Also, appointed Michael E. Greenough, a leader and turnaround specialist in the software industry, as chairman, president and CEO, and reorganized the senior management team.

  • Purchased MAX International Ltd., an ERP software and services provider that serves the manufacturing, contracting, service and distribution sectors (see SSA Acquires MAX Hoping To Leap From Its MIN).

"Bring on the birthday cake," said Greenough. "The last 12 months have seen a tremendous turnaround - and most importantly, SSA GT has turned profitable and is generating positive cash flow. Our employees should be proud of that fact and of their performance. I am grateful to all the customers, staff and investors whose patience is now being rewarded. Rolling out new products and initiatives in a challenging economy while restructuring the company demonstrates our reenergized bias for change."

SSA GT is reportedly focusing its development and partner activities to address collaborative commerce, electronic procurement, e-sales, customer relationship management, factory optimization and business intelligence. It plans to increase these efforts in its traditional industry markets, including automotive supply, consumer electronics, consumer goods/food and beverage, pharmaceutical/chemical and general manufacturing.

SSA GT also continuously improves its interoperability with other software applications by adopting XML standards and reengineering its gateway technologies. V8 includes over 100 significant functional, technical and vertical enhancements, each comprising many individual components. The vertical enhancements were developed in partnership with SSA GT's clients and follows earlier accomplishments of the releases of BPCS for Microsoft Windows NT/Windows 2000, a Web Browser Interface and the SSA GT's Process Manager.

Market Impact

Strangely enough, some vendors have faltered during the heydays of ERP (see ERP Belle poque Officially Ended With the Demise of Baan and SSA) only to make their comeback bids during much more adverse economic times (see Baan Achieves A Speedy Recovery Despite The Tough Times). SSA GT seems to have assembled a seasoned management team and to have solid plans to raise itself from the rock bottom. It has removed redundant infrastructure and thereby pared the burn rate down to be in tune with the current company revenue and to result in a positive cash flow. The logical current focus is to retain its extensive installed base. With over 6,500 installations and operations in more than 70 countries, as well as support for 20 languages, SSA GT has a big foothold to bounce from.

The above announcement indicates SSA GT's success in shoring up its customer base, particularly in markets outside of North America. SSA GT has been focusing on keeping its large install base content and fine tuning its Portfolio marketing strategy - the integration of specialized third-party applications into BPCS. Dealing with a single point of contact for most IT needs can be attractive to some manufacturers at the higher end of the mid-market and SSA GT's Portfolio strategy allows for this, with reseller agreements on a number of best-of-breed products (e.g., i2, Cognos, Business Objects, etc.) and an open architecture to make it feasible to interface and integrate.

These positive developments should be backed up with the continued commitment to development of the BPCS product though. Although BPCS V8 is an ERP suite that can accommodate different manufacturing environments such as discrete and lean manufacturing, and assemble-to-order (ATO) and make-to-order (MTO) operations, the fact remains that SSA does not yet offer much more than its core ERP product in conjunction with bundling extended-ERP software components from alliances. To that end, in addition to the value added by software partners, recently instituted R&D initiatives stemming from Global Industry Guide Groups' inputs rather than an 'ivory tower' development approach are commendable.

A more aggressive interaction with the analyst community and more perspicacious explanation of its Semantic Message Gateway (SMG) and Direct Data Gateways (DDG's) interconnectivity technologies would also be desirable. We favorably regard SSA GT plans to keep previous BPCS versions alive, to make any new functionality backward compatible (partly through a delivery of SSA GT Process Manager, a business process optimization tool), and to devise an enterprise architecture to tie multiple versions together with a common portal (and even as a commercialized Private Trading Exchange (PTX) further in the future).

The story seems to be quite compelling although one should be cognizant of the magnitude of the efforts to execute it. Additionally, SSA GT's established global infrastructure and customer base, strong core-ERP functionality with a sharp industry focus, strong multinational product functionality, and a relative ease of implementing BPCS are some of the company's bargaining chips in the game of averting its customers from ship and of giving other intruding competitors a run for their money.

Still, SSA GT may have difficulties leveraging its existing client base and channel, as illustrated in the fact that more than 3,000 BPCS users have yet to be approached about reinstating maintenance contracts. Also, SSA GT has only recently delivered a Web Browser Interface, a portal-style access to BPCS, which makes it quite behind its competition regarding e-business capabilities, and consequently vulnerable to their attacks.

However, vendors who sell replacement solutions for the BPCS ERP system could be in for a bigger hurdle as the SSA GT strategy might resonate with manufacturers that have been happy with BPCS and that are reticent to replace a functioning ERP system deeply embedded in plants worldwide, particularly in these days of reduced budgets. Further, vendors who offer add-on products that satisfy the needs addressed by the plans involving the SSA GT Portfolio and who are pre-integrated will face fierce competition from SSA GT over time.

User Recommendations

The above SSA GT's moves should cause its existing BPCS customers to breath a sigh of relief. Less technologically aggressive companies may be better off by staying with BPCS for the time being. Nevertheless, remain alert and develop contingent plans for moving to a new technology. The best course of action at this stage would be to identify and approach your local SSA GT sales representative and vigorously negotiate assurances and a firm commitment to future service and support.

Until the new product strategy, particularly within CRM and e-business, is crystal clear and has been publicly committed to, we advise potential users to evaluate the product cautiously even within SSA GT's automotive, consumer packaged goods, electronics, pharmaceutical and chemical industries sweet spots. Learning about BPCS V8 features would be beneficial, at least for information and leverage against other vendors. We also suggest evaluating the bells-and-whistles, price, reference sites within your industry, and corporate strategy and viability of other vendors before making a selection.

comments powered by Disqus