Although a small player, CMS Software competed well in the global marketplace prior to its merger with XKO Software and their re-branding as Solarsoft Business Systems in early November 2007. The features and functions of the former CMS's enterprise resource planning (ERP) solution seemed particularly adaptable to manufacturers' current demands, with electronic data interchange (EDI) allowing for more accurate, punctual, and traceable delivery. New tools, such as the White-Board Scheduler, enable alternative production scenarios, adding value to an already highly flexible solution.
For more background information, see A Quiet Software Vendor Merger That's Worth a Closer Look and The Sweet Spot of One Merging ERP Vendor.
Overcoming Some Longstanding Hurdles
The recent merger of these two ERP vendors does present some challenges to the newly merged company. In addition to low brand recognition and being confined (until recently) mainly to Canadian and US Midwest markets, the former CMS Software's opportunities have long been constrained by its support for IBM Server i5 (formerly AS/400 and iSeries). Despite the reliability and lower total cost of ownership (TCO) of IBM System i5, as well as IBM's notable forays into rejuvenating the platform (see Server Platform Revitalization in the Enterprise Applications Space), the platform suffered for a lack of new user acceptance, being considered “less sexy”(exciting, attractive) than Microsoft Windows.
Indeed, as CMS began competing with more Microsoft-based products, the versatility and look of the user interface (UI) became a greater decision point for prospective clients (in addition to function, value, reliability, and the vendor's viability, among other considerations). This forced the vendor to commit to transforming its solution, separating the presentation layer (the UI) from the business layer (the System i5 RPG ILE [report program generator integrated language environment] code).
Early 2006 thus saw the culmination of 600 man-years worth of development effort to transform CMSi5's 10 million lines of code and 2,500 menu options. As a result, by rewriting the entire CMSi5 infrastructure, CMS ensured that the solution now displayed much more flexible and adaptable screens, allowing users to customize the layout and presentation of the information on their computers without impacting the underlying code in any way. This new interface, called CMSi5 jGORich, changes the playing field significantly for CMS, as it can compete not only with ERP solutions operating on System i5, but increasingly with those operating on Microsoft Windows-based solutions as well.
Solarsoft CMSi5 uses a so-called model-view-controller (MVC) architecture to allow complete separation of the presentation layer from the business layer. Model here stands for the business layer, or the foundation in RPG ILE with the same trustworthy reliability, enterprise scalability, and security iSeries users have come to expect. View stands for the presentation layer (the user experience), with a Java/XML-based intuitive and customizable rich-client interface, providing users with improvements in flexibility, efficiency, and portability. Finally, controller, or the gatekeeper layer, allows access to the model layer as directed by user actions at the view level, while safeguarding the integrity of the data. The flexible workflow model supported by jGORich was reportedly much more impressive during recent sales presentations. Also, customers seemed to be much happier, because their learning curve became shorter, and as they now enjoyed the ability to truly customize the interface, CMS's support role was lessened.
Going Microsoft's Way Too
Nonetheless, the former CMS went a step further, in the spirit of “if you cannot beat them, join them,” by also developing a Microsoft-centric ERP product. CMSm5, officially launched in June 2005, was the culmination of a four-year, multimillion-dollar effort to provide the Microsoft .NET community with one of the first ERP solutions conceived and developed specifically to exploit the capabilities of that framework (see Microsoft .NET-managed Code Enablement: Examples and Challenges). As a result, the vendor was awarded a Microsoft Gold Certified Partner designation.
CMSm5 was not simply a ported version of CMSi5 onto the .NET Framework, as 100 percent of the today's Solarsoft CMSm5 code was written in C# and VB.NET from the ground up (though CMS leveraged the functional expertise it has gained over the past 20 years of developing ERP software for its niche markets). This is owing to the fact that, regardless of platform, the business demands faced by small and midsize companies—and their desire for an integrated, lower TCO ERP solution that meets those challenges—are nearly universal. While Solarsoft CMSi5 remains a more mature and functionally broader solution, functional parity between the two ERP products is soon to be reached.
“MES-ing” with the Shop Floor
To deliver solutions that are even more integrated, thus reducing the user's need to buy, integrate, or maintain third-party solutions (as well as for in-house staff requirements and a single software provider to hold accountable), the former CMS announced mid-2006 the purchase of Mattec Corporation, a provider of manufacturing execution systems (MES).
Mattec was a well-known supplier of real-time production and process monitoring systems for plastics injection molding, extrusion, blow molding, metal stamping, and other industries. The ProHelp EPM real-time production and process monitoring system is a Microsoft Windows–based system that uses the Microsoft SQL Server database. The system monitors every cycle of every connected machine in a processing plant, and alerts users to critical changes in process conditions, such as speeds, temperatures, or pressures, so that the process can be corrected before bad parts are produced. Through machine-interface units (MIUs) on the plant floor, operators can log reasons for downtime, scrap, or maintenance labor, giving management a more complete picture of production and productivity.
The move was thus seen by CMS as a critical and strategic step in achieving industry leadership in ERP-MES integration, and in setting new standards for enterprise control within manufacturing (see Manufacturer's Nirvana—Real-time Actionable Information and The Challenges of Integrating Enterprise Resource Planning and Manufacturing Execution Systems). The resulting whole integration between CMS's solutions and Mattec's ProHelp EPM is intended to provide manufacturers with enhanced real-time machine-monitoring capabilities on the shop floor, and to seamlessly feed resource performance measures into either of CMS's two ERP solutions, CMSi5 or CMSm5.
Integrating the Mattec production-monitoring system with CMS ERP products was meant to make both systems more powerful. Now users can now download job and process standards, production schedules, and other information from CMSi5 or CMSm5, while the ProHelp EPM monitoring system provides production data, scrap reports, and machine downtime information directly to the ERP system. This should eliminate redundant data-entry operations, reduce the likelihood of errors, and make more data available to more people, more quickly.
Nonetheless, the two companies have since continued to maintain distinct marketplace identities, as well as sales and support infrastructure. Today, Mattec ProHelp production- and process- monitoring systems operate in nearly 700 manufacturing plants in 17 countries worldwide, with a base of customers that connects Mattec systems into many different brands of ERP systems.
Initiatives—Gut-wrenching, but Necessary
Although the bold and resourceful moves noted above have made CMS much more competitive, they have also stretched the vendor's limited resources, given that even much wealthier companies would be hard pressed to support all those initiatives concurrently. Also, the competition has been intensified across the globe lately, despite the initial effects of some competitors' demise. Namely, the former MAPICS, Lilly VISUAL, Brain AG, and SyteLine have come back with a vengeance under Infor, their $2 billion (USD) parent company. Made2Manage and Intuitive Manufacturing Systems have done the same under Consona Corporation (formerly M2M Holdings), while other independent incumbents in the automotive industry, like QAD, Epicor, Softbrands, and IQMS seem to be doing quite well. Need we also mention the market clout of the likes of SAP, Oracle, or Microsoft?
Along similar lines of value proposition and competitive position is the formerly named XKO, although this UK counterpart shows more orientation to the wholesale distribution side (versus manufacturing) and offers a number of vertically oriented solutions (e.g., distributors of consumer goods, apparel and footwear, food and beverage, industrial goods, builder merchants, print and packaging, chemicals and pharmaceuticals, etc.).
The wholesale distribution industry has seen extensive changes over the last couple of years, owing to the pressures of consolidation, increased competition from third party logistics (3PL) providers, and increasing retailer power. These factors have all combined to decrease profitability and influence for distributors, which in turn have to provide customer satisfaction, yet control operating costs and capital employment. XKO's solutions aim to ensure that growth is controlled and profitable; the vendor's customers report better customer service, a reduction in capital tied up in stock, improved margins, improved credit control, and abundant sales and management information.
While the merger is a significant step forward for XKO and CMS (owing to the potentially larger scale and the local presence of the combined business), the down side is that XKO's diverse multi-platform, multi-language solution portfolio, with a proprietary XKO fourth generation language (4GL) environment, is not as coherent as CMS's. Time will only tell whether (and how) the recently minted Solarsoft Open Systems Architecture (SOSA) framework will bridge these technological products' disparities.
The picture is additionally muddled by some of XKO's divisions that still sell potentially competitive products (at least in light of the CMS merger), such as Microsoft Dynamics NAV, Microsoft Dynamics AX, Sage Adonix X3, and infrastructure technology provisions. Also, in addition to competition from the “usual suspects” (long-time competitors), XKO had seen fierce competition in the UK from fellow local vendor SSI-World (see Vendor Defends Its Strongholds with Focused Enterprise Resource Planning Solution).
This merger of equals, with Rudy Joss, founding partner and president of CMS Software, to chair the combined board, and Shawn McMorran from XKO to be chief executive officer (CEO) of the enlarged Solarsoft business, seems like a good fit, as the two firms have minimal operational overlap. This means avoidance of both a harrowing product integration effort and the pain of appropriately positioning the respective product lines within different target markets. Furthermore, it is unlikely that the respective direct sales forces or channel partners will face conflicts in terms of market overlaps or traditional “devotee” association with a certain product line, regardless of whether that product line is the best fit for a certain sales opportunity.
Some Typical Pitfalls Are Unavoidable
The two product lines focus on different industrial and geographical markets, and with different tools and platforms. Given this, it is currently difficult to see many potential “low-hanging fruit” (easy-to-reach opportunities), cross-sell synergies, or research and development (R&D) economies of scale (in other words, the quick integration of some useful “functional nuggets” [software components] via Web services). An additional hurdle to clear involves the necessary effort of cross-training, in case staff and resellers are willing to forsake their attachments to certain product lines.
Another possible concern stems from the past moves of financial backer Marlin Equity. In late 2006, the firm acquired Intuitive Manufacturing's cutting-edge Microsoft .NET-based offering (see Intuitive Manufacturing Systems Shows Maturity in Adolescent Age) and UNIX/Java-based Relevant Business Systems (see Smaller Vendors Can Still Provide Relevant Business Systems), with the intention to merge the two complementary products into a business with more scale. However, a few months later, Marlin sold both solutions to Consona in fast-track fashion; the products have since been positioned well within Consona, but on distinctly separate tracks.
The similarity of the CMS and XKO merger to Marlin's earlier acquisition mentioned above is striking, although Consona is not a very interested buying party this time (given a number of overlapping competitive products in its fold). There is no intended implication here that Marlin Equity is “flipping” (buying to resell for a profit, with dubious improvement investment) Solarsoft too, but no one can be blamed for being somewhat cautious.
Recommendations to Users
While it is believed that this merger will be synergistic in the long run, and that customers of the former CMS and XKO should view this event as a move toward a more viable position for their IT investments (given the likely growth in the combined company's R&D pool and sustained support for ongoing product development), enterprises should nevertheless monitor the consistency between the announced strategy and ensuing actions in the midterm.
If the investor is truly committed, the business will at least remain as usual, if not much improved. Consequently, until the merger is consummated (in other words, the merging parties thoroughly review the combined operations and declare a new strategy blueprint), cost-conscious, prospective users evaluating the individual products should exercise moderate caution, remain informed, and consider generally available (GA) Solarsoft functionality only, which has been proved within industrial sectors mentioned previously.
A final word of advice: existing users of CMS and XKO ERP products should have their support status clarified, as well as the long-term product development strategy with the new management.
This concludes the series A Quiet Software Vendor Merger That's Worth a Closer Look.
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