Back from the brink
Back from the brink
The remarkable turnaround of an ERP vendor that faced extinction less than four years ago.
In April 2000, System Software Associates Inc. (SSA) filed for voluntary Chapter 11 bankruptcy protection. Now it is the number one provider of Enterprise Resource Planning (ERP) solutions for the manufacturing and mid-market sectors and the fourth largest extended ERP provider in the world. Headquartered in Chicago, SSA Global has 121 worldwide offices serving more than 16,000 customers that represent companies in over 90 countries.
SSA has been quietly gaining strength, consolidating and improving its position in the market through its strategy of growth by acquisition. In a time of major change within the enterprise application sector, the company represents the shape of enterprise vendors in the coming years.
Founded in 1981, the company has experienced a turbulent time since the late 1990s. As one of the early ERP players, SSA was best known for their BPCS product suite running on AS/400 platform, which is now known as the iSeries.
The product sold well in the industrial manufacturing sector, but things went wrong when the company attempted to develop BPCS as an object-oriented multi-platform system. The move was poorly executed and new management was brought on board to set more manageable goals. This enabled the company to make the transformation, but it came too late.
Gores Technology Group and other investors rescued SSA from Chapter 11 in April 2000 and re-launched it as SSA Global Technologies, creating the company we know today. Gores Technology Group (GTG) a leading international technology acquisition and management company has an aggressive strategy of acquiring promising high-technology organisations, products and services, and managing them for increased growth and profitability.
SSA has been able to carry out its acquisition-driven business plan making numerous acquisitions since April 2000. They are; ICL MAX International Limited (MAX International) interBiz, the former eBusiness division of Computer Associates, Infinium Software, Ironside Technologies, Baan, Elevon, and most recently, global supply chain execution provider EXE Technologies.
These acquisitions have been critical in transforming SSA from being essentially a one-product, ERP software vendor focused on the manufacturing industry to a multi-product end-to-end ERP provider.
"Traditionally the vast majority of our business has been focused on manufacturing, now when you talk about manufacturing we really fit the gamut of the manufacturing space. What we have done is extended the forte of products over the course of three years to cover all aspects of that side of the business," says Martin Ambrose, Regional President, Asia Pacific and Japan, SSA Global.
"When you come outside of that and look at other areas that software provides functionality in, you start to get into other areas that are outside of what we have been traditionally know for, which is non-manufacturing areas. Things like the financial sector, hospitality and gaming. We are now targeting a vast spectrum of industries."
In addition to the acquisitions, SSA believes its recent success is due to listening to the needs of its customers' and delivering solutions that they want. According to Ambrose, this is a big shift in the ERP market, with customers now basing their decisions on specific business drivers instead of what the industry is telling them to do. This is challenging for vendors as there is no "silver bullet" when offering an ERP solution.
"What we are seeing is clients are making specific decisions based on their business drivers as opposed to what the industry is telling them to do. During the 90's, the industry was telling customers to go from MRP to ERP, then onto e-business and change their business, what they saw at the latter end of that was perhaps not the kind of returns that they were looking for," suggests Ambrose.
"They may have had the flashiest system known to man but they had not really changed their business processes. Now a lot of organisations are using the lines of operation like logistics, production departments and sales departments to resolve a certain business issue," he says.
The decline in IT spending has put pressure on the ERP sector, and this is leading to a wave of consolidation, with the general feeling among large users being that suppliers need to consolidate in order to improve their product range and quality of service. Only the largest, full-portfolio companies will be able to survive. In effect there are too many suppliers and not enough customers.
"The ERP space is only going to grow between 5-7 percent over the next 3-4 years when talking about the core ERP system. However, when you look at the extension outside of that core, things like CRM, BI, CPM, those individual extensions are growing respectively in two digits-so anything between 15-30 percent.
"Growth out into the extension space that grew through the course of the late 90's is now becoming more a part of the overall integrated ERP system," believes Ambrose. The message is loud and clear ERP providers will need to extend their portfolios to satisfy the demands of customers, with companies like SSA extending their ERP solutions to include the following functional areas: Corporate Performance Management (CPM) and Customer Relationship Management (CRM).
"Compartmentalisation is critical so that we can deliver elements of functionality that not only fit with today's products but can also migrate forward in the future. We need to be progressive to develop and deliver. We essentially need to become more of a shopping centre and depending on what type of client you are you will need to walk down a different aisle," concludes Ambrose.
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