The Name and Ownership Change Roulette Wheel for Marcam Stops at SSA Global Part Four: What SSA Global Gets

What Does SSA Global Get?

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.)

The products are very strong in plant level management functionality, given the progenitor, former Marcam Solutions, headquartered in Newton, MA, was one of the first global providers of ERP and enterprise asset management (EAM) software exclusively for process manufacturing enterprises and large corporate divisions. Marcam Solutions was created after the 1997 breakup of Marcam Corporation, a company that had struggled to manage the business of two product lines that targeted the two completely different markets of discrete and process manufacturing. Namely, the dissolution of Marcam Corporation had then created two new ERP software companies, Marcam Solutions and MAPICS Inc. (NASDAQ: MAPX), the latter of which is still going strong in its original form and within the discrete manufacturing market.

Paul Margolis and John Campbell founded Marcam (a name derived from their last names) back in 1980 to provide then IBM-owned MAPICS ERP product installation and customization services. In 1983 Marcam began developing its own planning and control software for process manufacturing companies such as food, chemicals, and pharmaceuticals. The result was PRISM, which was first licensed in 1987. Marcam went public in 1990 and acquired ShawWare (maintenance management applications, whose Avantis product is now a part of a different unit within Invensys) in 1991, and the MAPICS product line from IBM in 1993. Marcam launched Protean ERP software in 1994, and during 1995, it all but halted major development of a client/server version of PRISM to focus on its similar but technologically more advanced and seemingly more prospective Protean line.

The PRISM and Protean software suites both automate tasks such as resource planning, production model development, and quality control management. Marcam sold its product primarily through its direct sales force in close to twenty offices worldwide. The Company also partnered with a number of industry-leading vendors including Hewlett-Packard, NEC (as a reseller and a developer of earlier versions of Protean in the Japanese market), IBM, and PeopleSoft, to name some. Marcam Solutions had approached its financial management functional gap by partnering and offering warranted integration to major financial applications such as SAP R/3, PeopleSoft, and CODA. By 1999, the Company had approximately 1,400 customer sites in over forty countries before it was acquired by Invensys' Wonderware division.

As mentioned earlier, the PRISM product is a veteran of the process ERP market with many considering it the pioneer in this segment, and it can arguably be called the most widely installed plant-level process ERP product available. The company claims that all of its 1,200 sites (i.e., with its own server unit) are running plants, with many installations running multiple plants, given these sites originate from little over 450 corporate customers. IPS' management estimated in 2003 that PRISM then had over 85,000 users worldwide, out of total 100,000 users for both products together.

This is Part Four of a six-part note.

Part One provided background information.

Parts Two and Three discussed the marketing by Invensys.

Part Five will cover the merger impact and challenges.

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

PRISM

PRISM boasts deep manufacturing, financial, and distribution functionality for process-oriented manufacturers and the quality advantage of decades of use by customers. However, its sales order management module has worked well mainly for environments with medium complexity of order management. PRISM's main liability though has been its reliance on the dependable but lately less trendy IBM AS/400 (now IBM iSeries) platform. The product was written almost completely in IBM RPG (Report Program Generator) aged language, with only a very limited number of C++ functions on the client side. Unlike Protean, which was envisioned as a product of the future and thus had the vast majority of development resources from its inception, PRISM had long received only limited enhancements that focused mainly on customer-requested functional, but not technological, changes in the product.

The most significant recent enhancement to PRISM was possibly for Y2K compliance in release 4.3, which shipped way back in 1996. Thus, it continues to have quite limited success in IBM AS/400-centric process manufacturers and generates the bulk of its revenue from a large installed base. The large installed base in turn means that niche independent software vendors (ISV) with add-on enhancement systems that address the needs of the process market have had increased opportunities over the last several years, and possibly going forward (see Stratyc's Laser-Sharp Focused Tools Retrofit Legacy Systems and MAPICS XA Expands BI Offering Through Partnership With Vanguard). Thus, much of SSA Global's recent expertise in supporting also aged and the IBM AS/400-based PRMS and BPCS products might be useful to unrelenting PRISM's customers, while, on the other hand, these SSA Global products can "borrow" some still unrivaled process ERP capabilities of PRISM. Given the products' platform, architecture, and functional similarity, one should envision a viable migration path for PRISM users to SSA LX, which will feature an IBM WebSphere-based thin-client user interface (UI) and many extension modules, such as supplier relationship management (SRM) or e-commerce engine originating from former Ironside.

Protean

Protean, on its hand, claims much of the same functionality as PRISM with some functional enhancements on UNIX or Microsoft Windows platforms. Its major modules would be: production modeling, formula management, planning and scheduling, inventory management, product costing, asset management, customer order management, procurement, and financials. It has a deep functionality for batch-based hybrid (i.e., both process and some discrete repetitive) manufacturing such as for food and beverage, pharmaceuticals, and consumer packaged goods (CPG) enterprises, as well as capabilities for complex process manufacturers requiring some continuous process capabilities, recycling and recurring materials (e.g., catalysts), and product characteristics-based planning capability, as in the case of some chemical companies.

Marcam's motto has long been that reality that cannot be modeled, cannot be managed either. To that end, Protean's above-mentioned patented Production Model was devised to model, plan, cost, and analyze reality. It differs from almost all other ERP suites that have to tweak bill of material (BOM)-based systems (which are perfectly suited for discrete manufacturers), by uniquely dealing with process manufacturing realities and by avoiding so called software "fatal flows" (see What Makes Process Process? and The Fatal Flaws for Process Manufacturers) such as

• Many parts make many end items (not only one, like is often the case in discrete manufacturing), requiring all shapes of BOMs (i.e., the traditional "A" shape for discrete manufacturing, but also "V" shape or "inverted BOM", and their variations like "X" and "I" shapes)
  
  
• Model the process rather than the product (again, the latter which is typical of discrete manufacturing practices)
  
  
• Quantity and quality of the production are highly unpredictable and variable
  
  
• The products are seldom made the same way, given differences by season, raw material, available production line, etc.

To that end, with its pivotal module, Production Model, Protean considers both the resources (e.g., primary and secondary materials, electricity, water, etc.) and the processes (e.g., routing steps, machines, labor, etc.) that work together to make a final product, as well as the elements that come out of that production process (e.g., co-products, by-products, waste, etc.), which is in a sharp contrast to a standard discrete' BOM recipe-like approach to production. The Production Model enables organizations to define the steps involved in making a product, but at each step, they can identify all the requirements, such as raw materials, water and energy resources, packaging, labor, machines, and all other elements affecting value and cost of the product. This information is then used by Protean in other modules or interfaced applications, including production scheduling, production planning, costing, and analysis, to provide a more accurate picture of the production process and promote better, more-informed business decisions.

Closely related to Production Modeling is the Cost Modeling application, which manages costs (such as fixed or variable overhead rates, co-product and byproduct, and the effect of recycled materials and waste) and margins across the supply chain, and allows users to perform what-if analyses for simulations and analysis for different strategic business scenarios. It also calculates costs of all resources used in the manufacturing process, and identifies the cost elements contributing to total resource cost, using activity-based costing (ABC) principles.

Other Protean Strengths

Also a landmark strength of the product is its process industries-oriented purchasing and inventory management, since users can track inventory by special characteristics down to the lot and sublot level throughout the life cycle of the product, even for recyclable materials. Moreover, not many peer products will offer an inventory inquiry capability that allows users to locate data at such a granular levels, as lots and sublots can be recorded and tracked with every inventory movement—from vendor receipts or raw material during a production process to the delivery of finished goods.

For each lot and sublot, the software tracks inventory information, such as quantity, classification, availability, and multiple dates, such as expiration, manufactured, retest, shelf life, and user-defined aging dates (e.g., best sold by, ship by, etc.). The application can track, move, and control inventory at the unit level (i.e., pallet, drum, slip sheet, etc.), with each unit having a unique system identifier. Multiple unit-of-measure (UOM) quantities are available when potency or catch weight control is required for some industries, resulting in a UOM conversion by lot. Location classifications are also available so that users can create various types of inventory states, such as inventory in quality control, in transit, on the loading docks, etc.

Also impressive is Protean Planning module, whose Quick Scheduler enables organizations to incorporate vital capacity data into the production planning run to shorten and speed planning cycles, since it addresses production resources and capacities in one planning pass. A Power Pegging feature allows organizations to view all demands affected by an interrupted supply or by changing production conditions, while one can view the production status for an order at the customer's request or notify the production floor of the impact when a customer order is canceled or changed.

Protean is used at approximately 250 sites from over 100 corporate customers, since, owing to its original owner's protracted difficulties in the late 1990s, when Marcam Solutions was only able to close less than a dozen Protean deals on a quarterly basis, with most of its revenue coming from the PRISM part of business. The product also claims technological advantages including an ability to change flexibly (since much of the configuration can be modified in operation by users and does not require domain experts), quick implementations and rapid implementations of new releases.

Protean was one of the first ERP applications developed exclusively using object oriented technology, albeit it has taken some time for the company to learn empirically how to improve performance and show true benefits to enterprises. Configuration of Protean is simple and intuitive through a combination of graphical tools for production models and screen forms that can be role-based customized for variety of users, without using training-intensive development tools. The product is also easily extensible because new objects and new data types can be added, again by power users only and without development tools. For example, terms that are more familiar within the particular manufacturing environment can easily supplant the corresponding default Protean's terms.

As a result, some Protean customers, with a different ERP installed in parts of the business, have stated that it took less time to upgrade to a new Protean release than it took to estimate how long it takes to upgrade their other system to a new release. Because of Protean's ease of use, costing and shop floor functionality, it is one of the few ERP applications that can be deployed for process-oriented shop floor control. Although Protean uses the same patented production model concept as PRISM, it can be implemented using provided generic model templates that can significantly speed implementation and improve maintenance requirements, since the production model building is done graphically and can be readily assembled and changed.

Protean's exposed objects also give it a remarkable number and granularity of application programming interfaces (API). While traditional procedural products must have APIs written to allow interoperability, object-based products like Protean should have the APIs natively built into the product. Therefore, the Protean's object-oriented product architecture has long boded well for its integration into a heterogeneous and evolving application environment, which has unfortunately not been highly appreciated until recently. Protean also leverages its object architecture in workflow management, since, e.g., FileNet's Visual Workflo, can be linked to Protean's business objects to generate user-specific Protean workflows graphically.

This concludes Part Four of a six-part note.

Part One provided background information.

Parts Two and Three discussed the marketing by Invensys.

Part Five cover the merger impact and challenges.

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