Are Spend Management (or SRM) Apps Suited for the Mid-market? – Part 1

My previous blog entry about procurement commandments in a down economy also made me think about whether there are different priorities for the chief procurement officer (CPO) during prosperous economic times. Or, how different are (or should be) the CPO’s strategies in good versus bad times?

Well, the CPO’s fundamental objectives do not change: procure the physical goods and services needed by the company at the best possible mix of price and performance (non-price features). The focus can shift at times from operational streamlining to new product introduction (NPI) to supplier rationalization.

In lean times, however, there will be pressure to do even more with less, postpone large expenditures, and get additional concessions from suppliers (e.g., better shipping rates, rebates, discounts, or better payment terms, etc.). Amid all of this, the CPOs must provide high-quality service guidelines to their employees to encourage the proper use of systems and policies, and to reduce maverick purchasing practices.

Universal Supply (Chain) Issues

I could think of at least the following five key issues and challenges that in turn lead to tremendous opportunities to save money, time, and bolster the bottom line of companies of all size.

Issue #1 is excessive spending for direct and indirect goods and service
—i.e., more than a company should for it needs. The opportunity here is to reduce the company’s spending by minimizing maverick purchasing practices, reducing transaction costs, and leveraging the aggregated (collective) purchasing power of the enterprise to negotiate more favorable pricing, service, and contractual terms and conditions.

Issue #2 is a lack of visibility and accountability. Many companies are not exactly sure what they are currently spending their money on. The pertinent historical and snapshot data is lacking and is likely inaccessible. Questions like, “How much are we spending? With what suppliers? On what categories? Who is spending it? How long does the approval take? Are we within the budget? What suppliers are (or are not) fulfilling orders on time? Should we rationalize our supplier base? Are there spikes or trends in our spending patterns that require action?” and so on require constantly changing answers.

The opportunity here is for all managers and executives to monitor spending (via personalized interactive analytics and alert messages) by category, location, cost center, department, project, you name it. These metrics should be known/viewed as transactions are happening, instead of only after they are booked to the general ledger (GL).

One way to solve this conundrum could be via procurement data marts that provide prepackaged spend analysis over a few dozens metrics and dimensions for fast answers to the above questions. These answers should be based on fresh (real-time, or close to real-time) data rather than on “rearview mirror.” This hindsight speed-of-thought spend analysis should measure and optimize savings via packaged buyer analytics, key performance indicators (KPIs), and proactive control and supplier collaboration.

Thou Shalt Remain Under the Budget

The feature that also gets the attention of prospects and customers is Epicor’s capability around “budgets and commitments.” This feature, which was breifly mentioned in Part 1, captures commitments not only from the Procurement module, but also from other sources of spend, including A/P and general ledger entries.

The Budget and Commitment Checking feature may deserve an article on its own. In a nutshell, the capability continually accumulates commitments from multiple sources that come from (not necessarily Epicor’s) procurement, accounting and supply chain management (SCM) modules. An administrator can configure which sources to include as a commitment (against accounts) according to their business requirements.

The company can create business rules to define what exact transaction states constitute commitments. For some companies, perhaps a purchase order is not a commitment, but goods received but not yet invoiced are commitments. For others, perhaps only invoices are the first establishment of a commitment.

A raft of the budget control settings allow companies to specify what requisitioners are allowed to see in budget numbers. For their part, budget override authorities by title, similar to spending limits, determine “how high” in the hierarchy one has to route a requisition for approval based on how much a budget has been exceeded.

My intention in providing this level of detail is to point out how sophisticated and comprehensive this Epicor SRM capability is. The process is comprehensive, much more than a high-level integration between Procurement and GL/AP, and it is done in a way that allows for budgets or commitments to come from non-Epicor sources too.

To the end of the important premise of spend management (i.e., to stay under budget), the Budget View provides approvers with the opportunity to perform “what if” scenarios with all orders pending their approval to determine the optimal combination of approvals and disapprovals to meet budget control objectives. Last but not least, and also related here, Epicor SRM also features strong spend analytics capabilities.

The Current State of Affairs

As with all Epicor solutions, the sweet spot for Epicor Procurement and Epicor Sourcing is the midmarket, where efficient management of corporate spend and automation of internal processes are significant competitive advantages. Epicor Procurement has been licensed by over 140 companies (not all of them have implemented it yet, though), while Epicor Sourcing has been licensed by about 20 companies. The number of Procurement users per customer ranges from 20 to 3,000.

Epicor’s SRM solutions are truly horizontal, and applicable across various industries. The majority of Epicor SRM customers are in North America, although each global sales region has Epicor SRM on its price list. Epicor Procurement is currently available in English, French, and Spanish, whereas Epicor Sourcing is available only in English.

Currently, Epicor does not actively market Procurement as a standalone solution, but has gotten a few deals that way anyway. The Epicor SRM sales pattern has shown a steady upward trend from 2003 right through to now. Since most of the low-hanging fruit in Epicor’s customer base have licensed Procurement in the 2003-2007 time frame, one could attribute the continued steady product sales to the vendor’s ongoing education of the midmarket about the importance and opportunity of spend management and related best practices.

Epicor SRM is most often sold as part of the complete Epicor solution. Thus, about 95 percent of customers that purchase Epicor SRM are buying it as part of the overall Epicor ecosystem. The fact that the vendor offers an end-to-end solution is one of the key value messages for its target market.

According to the vendor, in the midmarket the biggest competitor for Epicor Procurement is “doing nothing.” If a current customer is interested in procurement, the company almost never looks beyond Epicor. If Epicor is engaged with a prospect, then procurement is most often part of a bigger deal that includes a full ERP system.

In those cases, Epicor usually competes against Lawson Software, Oracle, SAP, and Microsoft. The Microsoft Dynamics ERP products do not have their own strong procurement capabilities. Thus, they have to bring in a third-party solution, and that plays to Epicor’s benefit. Lawson, Oracle, and SAP do have their own procurement capabilities, but feature-for-feature Epicor Procurement can win.

In general, Epicor plays Procurement as a strong differentiator for a total Epicor ERP decision. When Epicor is competing in standalone SRM/procurement deals it faces off Ariba and some vertical niche players. The company has also occasionally sold Procurement into accounts that are running SAP, Oracle, Microsoft Dynamics GP, and other ERP systems, where Epicor Procurement was evaluated to be a superior solution.

Product’s “Order Winner” Traits

Packaged integration to Epicor Financials and Epicor SCM solutions and to other ERP systems results in the inherent ability to handle internal inventory orders and perform three-way matching in accounts payable (A/P). Other differentiators include configurable, point-and-click purchasing workflow automation (with no programming required), a patently simple user interface (UI), the ability to approve orders from a mobile device, “Tap Outs,” “FreeForms,” and a “360-degree” budget and commitment checking process.

To explain some esoteric terminology, “Tap Out” is Epicor’s term for what Ariba and Oracle call “PunchOut” and SAP calls “Roundtrip.” It is the ability to leverage suppliers’ e-commerce sites during the search, select, and shop experience as an alternative to managing supplier catalogs locally.

Are Spend Management (or SRM) Apps Suited for the Mid-market? – Part 3

Epicor Software Corporation is a global company dedicated to providing integrated enterprise resource planning (ERP), customer relationship management (CRM), supply chain management (SCM), and professional service automation (PSA) software solutions to midmarket companies and divisions of the Global 1000. Founded in 1984 and headquartered in Irvine, California (US), Epicor serves over 20,000 customers in more than 140 countries, providing solutions in over 30 languages. For more details on the company’s offerings, see my blog series on Epicor in early 2008.

The Epicor SRM suite stems from Epicor’s acquisition of certain assets of formerly Atlanta, Georgia (US)-based Clarus Corporation in October 2002, as part of its strategic initiative to offer a comprehensive and integrated enterprise solution. For more information, see TEC’s 2002 article entitled “Epicor Picks Clarus’ Bargain At The Software Flea Market.”

The acquisition brought an initial set of SRM solutions covering Web-based procurement, sourcing, online invoice presentment and payment (settlement), and the ePortal Supplier Pack for secure supplier access to relevant information. Then there was View BI, a business intelligence (BI) module for spend analysis, and finally eTour, a training and reference application available 24/7 through a Web browser.

eTour has since been retired, since it was underused and too expensive to maintain. For its part, View BI has meanwhile been replaced with Epicor Enterprise DecisionStore for spend analytics. The invoice presentment and payment module was never really completed by Clarus, and Epicor chose not to invest in it because the company felt that procurement, sourcing, and spend analytics were the most important and most value-add midmarket SRM solutions. Indeed, electronic invoice presentment and payment (EIPP) solutions have long been offered by Ariba, Basware, and J.P. Morgan Xign.

Product Development Goes On

Since 2002, Epicor has delivered three major releases and several minor releases, especially of the Procurement module. These enhancements have all required internal development, since there have been no other SRM-related acquisitions. In late 2003, the vendor announced the release of Epicor eProcurement 7.3, a purchasing management solution that provided a connection between buyers and suppliers for the purchase of direct and indirect goods and services within the framework of defined business rules.

New in eProcurement 7.3 was the integration of inventory management and back-office purchasing modules (e.g., with the back-office purchase order approval routing and end-user requisition capabilities). Blanket purchase orders and releases was another major group of capabilities within the 7.3 release.

For example, permissions to create blanket purchase orders are configurable, and blanket orders can be used for either private or public consumption. Blanket orders’ characteristics (or specification of the goods or services that the order covers) can be specific items and quantities, a monetary amount of one or more product categories, or a general monetary amount, regardless of items or categories. Blanket orders also support effective dates and consumption priorities, while order releases can be done individually or on a schedule.

Furthermore, the proxy effective dates and organization requisition proxy group capabilities in Procurement 7.3 are associated with the ability of one user to assign another user as a proxy requisitioner or proxy approver for a specific date range. Other nifty features that were introduced at that time included one-click order copy capability, the ability to link e-mail approvals directly to the purchase order, the ability to approve from an order’s line detail, the ability to create a catalog item from a non-catalog item, and the ability to add attachments to extensible markup language (XML)-based purchase orders.

APICS 2009 Webcast Session 3: Lean for Materials Managers

In the forthcoming 2009 APICS International Conference and Expo, many educational tracks will be covered by industry leaders, and lean is one of them. Since we are in a global economic crisis where every manufacturer, supplier, and producer is trying to reduce cost and minimize waste while increasing production or throughput, I am particularly interested in the “lean” educational track to hear what the experts are saying. Recently, I had the privilege of attending the preview of “Lean for Materials Managers” by Bill Kerber, President of High Mix Lean.

In his presentation, Bill explained “Lean Material Planning and Control Charts” to guide us through the proper procedure when implementing lean material management. He also mentioned the process to further streamline material planning by using the Kaizen concept. Later in the presentation, he talked about the four important concepts for material managers: leveling production, flow, pull systems, and interval to determine lot sizes within production. Even though all four concepts are crucial in today’s economy, in my opinion it will be beneficial if each concept can be integrated within the software already used by organizations. This will bring the concepts, processes, and technology under one umbrella.

Bill talked about how leveling production can be achieved for small to large manufacturing organizations. He also provided his expert advice on waste types (Muri, Mura, and Muda) and their respective reduction concepts. Another important topic he covered was buffering strategies. In my opinion, many organizations do not understand the importance of buffering strategies and they are beneficial if applied accordingly. He also spoke briefly about the four types of buffering strategies: finished goods, back log, capacity, and hybrid. He provided relevant examples on how to use these strategies to maximize production while minimizing waste and delays. In my past experience, organizations using a combination of these strategies are making the most out of their lean/buffering strategies.

Later, he shared his knowledge about flow, an important concept for a lean production environment. He explained how the increase in flow will reduce lead time and waste while increasing production. He also shed some light on a pull system, and compared the old and new logic which helps us understand and implement lean processes. Some of the other important material management topics he covered were lot sizing and interval which also leads towards reducing waste. In my opinion, Mr.Kerber should have mentioned the benefits of using Six Sigma methodology and statistical data because it helps management drive lean concepts throughout the organization (not only in material management).

Even though this webinar was of an advanced level, Bill covered all the basis of material management in a lean environment and also provided comparison with traditional processes along with advantages and drawbacks. In my view, if you have a basic understanding of material management and planning you can benefit from this session.

Vendor Rating Updates: Learning, Distribution ERP, Financials, CRM

Oct
22
Vendor Rating Updates: Learning, Distribution ERP, Financials, CRM
Filed Under (Inside TEC) by Josh Chalifour (see bio)


Take note if you’re evaluating software for any of the following types of systems.

* learning management
* POS or merchandising
* financial software
* CRM
* distribution-oriented ERP

We recently published updated ratings on a number of vendors’ products. Individual reports are available for purchase, or better you can review the ratings in-depth using a free evaluation centers trial. Here’s a quick rundown of the updates.

Knowledge Management Solutions’ KMx product, which is an integrated e-learning package, is up-to-date as of its 4.3 version in the Learning Management Evaluation Center.

Retalix targets companies with retail and distribution requirements. Depending on what your company does, you can view its products’ functionality based on our ERP - Distribution, SCM, Merchandising, or POS models of enterprise software.

Two significant updates in the area of enterprise financial software are online for comparison. One is for the Lawson S3 Finance system and the other is for Microsoft Dynamics GP.

Finally, the latest information on Sage SalesLogix is available in our CRM Evaluation Center. It covers a 30% change from the previous ratings and shows new or increased support for over fifty features.

The Intricacies of Global Retail Sourcing

A few major (and often conflicting) objectives have been driving retailers to turn to information technology (IT) to streamline their sourcing and logistics processes. One objective is the pursuit of lower prices, which often involves excessively extended supply chains to remote, lower cost regions. The other is the quest to shorten cycle times, which is essential—but so is having quality control to ensure that companies get their merchandise on time and according to the exact specifications. With suppliers on the other side of the globe, it can be hard to check to see how things are going, and one typically finds out about problems after the fact, when the goods arrive. Therefore, although some vendor relationships are smooth and run on "automatic pilot" (for example, companies might simply casually monitor purveyors of office supplies for best prices and basic service requirements), a much deeper and more involved relationship is essential for strategic vendors such as retail goods suppliers, who must deliver to specifications, on time, and at the right cost. These vendors might be evaluated on many key performance indicators (KPIs) in a holistic scorecard-based fashion, such as on-time delivery, quality, innovation (organizational health and technology), responsiveness and customer service, security, social compliance, and so on.

Part Two of the series The Gain and Pain of Global Retail Sourcing.

Certainly, even without IT deployment, retailers must become more agile, efficient, and timely with product development, planning, procurement, manufacturing, and execution (logistics and transportation) if they are to maximize benefits from their private-label strategy and opportunistic buying. While technology plays a major role, organizations must better coordinate activities and bridge handoffs among product design, sourcing, and logistics groups to shorten lead times and ensure that "hot item" goods are on the shelf exactly when the customer wants them. Still, global sourcing is substantially more complex than domestic sourcing, and should not be attempted without adequate technological support and business process controls. Executive global sourcing mandates that are not supported with such tools to execute typically either fail or do not meet expectations. For further discussion, see The Gain and Pain of Global Retail Sourcing.

The ideal situation would be for a retailer to establish a collaborative trade platform that offers the tools, content, community, and business infrastructure to support global commerce communities and a transparent trade process. Yet, many realities typically entail the politicization of global sourcing by polarized functional and infrastructure camps inside the organization, which hampers the ability of the organization to produce necessary strategic changes. There is also little opportunity to train buyers, partners, and suppliers across an extended supply chain within such infrastructures. Ironically, control over the extended supply chain should be driven by the common need to impact delivery before the production begins, since on the tactical level, a lack of visibility results in costs becoming multiple times higher to fix problems onshore (when the goods have already arriived) than offshore.

Come with Some Inevitable Pains

Yet, the savings from global sourcing come with possible steep expenses elsewhere, since a company must find qualified factories, solicit bids, place purchase orders, inspect the factories, monitor quality, handle logistics, customs, and duties, and so on, all on its own, which is not a small feat. Any merchant nowadays has to manage numerous details on how private label brands are sourced, produced, and delivered, which can be quite daunting to deal with, especially when trading partners are scattered all over the world. The momentum of private labels in the retail industry (from grocery stores to major apparel stores) is driving even more opportunistic contracting with small and unknown suppliers in remote countries, which requires buyers to really take a chance when ordering from unfamiliar suppliers in the hopes of keeping total landed costs to a minimum.

This requires a timing mindset change, given that most issues with domestic suppliers can be resolved right away (or at least within a week, in the worst case scenario). Internationally, though, even for bordering countries, it might take a more particular purchase order even several weeks to be confirmed, let alone processed and delivered over oceans and through customs and duties. With global sourcing, the challenge has become how to communicate from a swanky domestic office in a Group of Eight (G8) country with a factory as far away as Africa or the Far East. The challenge is also how to assimilate and communicate multiple data points effectively into a unified operation on a single screen. After all, in the manufacturing process, communication necessarily takes place among retailers, manufacturers, brand managers, contractors, agents, brokers, and logistics providers. Many still share product information over the phone, or via email and faxes, or through physical communication, and the difficulty is thus to consolidate all these diverse data points.

In a more sophisticated scenario, though, all the members of the supply chain communicate through a Web-based system, which means that when a vendor makes a change in the status of a product, for example, everyone in the supply chain will see the change too. The key in global sourcing today is to minimize the overall cycle and disruptions, and the most important way to do that is to have live, accurate, immediate information. New Internet-native sourcing software applications should give users visibility throughout the world of current product or order status at any point in time, and eliminate almost all duplication of information, thereby allowing all trading parties to collaborate on more rewarding issues, rather than constantly fighting fires.

For instance, prior to implementing a contemporary Web-based automated solution, contacting multiple vendors at once for pricing would be a tedious and pedestrian manual process for the sourcing group. On the other hand, by using a Web-enabled infrastructure, user enterprises should be able to better integrate globally with their supply base, and broaden the scope of vendors they can locate. Such technology has lately streamlined the ability of many retail firms to get estimated pricing from several vendors simultaneously. Also, when the design team comes up with a new fashion concept and wants to get a sample of that concept, such a system allows the information that they have designed to flow into the sourcing organization, which then allows the sourcing team to start getting estimated costs, as well as time-and-action (meaning normalized or synchronized calendars within the entire production cycle) information. Then the team can better determine where it wants to place the production, depending on volume—possibly also integrating with the merchant organization to give them a feel for how much product the firm will be sourcing of a given style, so that they can look at capacity constraints. The next step could be to use the software tools to break style data down by more variables, in preparation for placing the purchase or production order. For instance, this might provide suppliers with answers to several questions: How much does the retailer want to order by color and by size? What is the final pricing? What is the final time-and-action calendar?

Increasingly, the standard order confirmation and customary advance ship notice (ASN) procurement practices cannot provide sufficient guarantee that everything is going smoothly with any placed order. This is particularly the case for the internationally sourced, custom-made purchases that are common in the consumer goods manufacturing and distribution industries. Here, the difficulty of communicating across time zones, along with long lead times, make for lengthy recuperation periods (if it is even possible to recover) when problems occur. That is why buyers should benefit from visibility and event management systems that would inform (or alert) them that, say, their orders were (not) started on time, or were (not) placed on the boat on schedule; or whether the design team has meanwhile (yet again) changed specs on color or fabric for a paarticular planned merchandise; or that the order was (not) properly documented to clear customs without a glitch.

Potential Global Sourcing Gains

In a nutshell, companies source globally to differentiate their products, gain competitive advantage with reduced price points, and realize margin improvements. On average, many contemporary analyst studies, surveys, benchmarking reports, and so on, have concluded that a well-devised and well-executed sourcing strategy can produce margin improvements up to 2 percent (through a more efficient trading partner collaboration); reduced cycle times by up to 30 percent; up to 5 percent in reduction to the cost of goods sold (COGS); and up to a 15 percent increase in gross margin (through increased international sourcing on low labor and supply costs from East and Southeast Asia, Eastern Europe, and South America). Sure, expectations are usually much higher than these figures, since initial savings may provide false gains. And with many costs and risks being hidden (such as logistics complexity and increased lead time ramifications), one should always take a long-term view and analysis. For more information, see Understanding the True Cost of Sourcing.

What also contributes to the popularity of global sourcing today might be the fact that for years, only larger companies had the wherewithal to operate complex and pricey import/export software systems. Today's technology, conversely, has leveled the playing field for international trade, given that inexpensive Web-based systems—designed for simplicity and more easily deployed—can now enable much smaller companies to engage in global sourcing with a wide range of suppliers. The unstoppable march of the Internet and the growth of online shopping and other transactions mean that we are all operating in a new electronic real-time world (the global village), with inherent visibility into important events. These new systems make it possible for a small retail company to engage even just once—opportunistically if needed (as in a "one and done" manner)—with a supplier, to still record a profitable and efficient transaction. This has brought about what some experts call the "great leap" in global sourcing: it is no longer the privilege of only a few humongous and mighty companies, but is becoming a viable strategy for almost any company.

In addition, trading quotas and other barriers have been disappearing (or are being reduced) globally, while the expansion of the European Union (EU) eastwards opens up potential new sourcing countries along with new potential markets. With the end of apparel import quotas, this sector is growing rapidly in India and the Far East, while the passage of the Central American Free Trade Agreement (CAFTA) promises to bring additional activity into Central America as well. Today, on average, retailers are consequently following the top executive mandates to increase imports (of both raw materials and finished goods), even up to a quarter of total purchases (from a current level of 5 to 12 percent).

There is also a growing trend towards offering private labels or brands, and a consequent fundamental reassessment of the structure of global sourcing. In other words, the question now is whether to use agents or other middlemen at all, if via Internet trading exchanges (and the like) companies can now increasingly work directly with manufacturers. Therefore, given some reported examples of success with lower-priced house brands, retailers in several segments, including fast-moving consumer goods (FMCG), consumer electronics, and apparel, are increasing their focus on private-label merchandise to take advantage of margin improvements, improved quality consistency, and brand loyalty. For more information, see The Fragile Consumer Packaged Goods Market and Private Label Products and A Unique Product Lifecycle Management Tool for Private Label Retail.

The Gain and Pain of Global Retail Sourcing

For anyone who has not spent the last several years hibernating or stranded on a remote island, it has become apparent that supply-side control is more important than ever for overall business success. This is due to globalization (meaning new potential markets, but at the price of growing competition too), low-cost country sourcing (and even outsourcing of some, if not most, manufacturing or service operations), continuous cost pressures (shrinking margins), and other driving forces which have combined into a "perfect storm." Global sourcing (the process of identifying appropriate domestic and far- or near-shore suppliers of goods and services—preferably from countries with significantly lower cost bases—and then ordering the goods and arranging for payment and delivery) has thus become a way to go for many. In fact, this has lately become an increasingly important corporate strategy (and often an executive mandate for buying departments) that is rapidly becoming a survival strategy too, in sharp contrast to the stepchild and "ugly duckling" perception of supply-side control in previous decades.

Part One of the series The Gain and Pain of Global Retail Sourcing.

In fact, there is today a growing imperative within organizations to source directly from an ever-expanding global universe of prospective vendors. Indeed, according to the World Trade Organization (WTO), about 55 percent of all raw materials for American manufacturing are now being sourced outside the US, which compares to about only 12 percent in the 1980s. As another example, the Wall Street Journal last year reported huge volume increases of Far East imports through the port of Savannah, Georgia (US), where the cargo container volume of 1.7 million per year has tripled over a decade ago, as an US east coast alternative to the clogged and constrained (in terms of labor and capacity) west coast ports (which are the logical, shortest-path destination for Far East goods).

CA Unloads interBiz Collection Into SSA GT's Sanctuary Part 3: Challenges

One can always wonder if SSA GT, which has its own share of trouble, will be able to achieve success with such an unwieldy set of disparate products, considering that a vendor of CA's stature was not able to do much with them. SSA GT took a long time to put its house in order and to upgrade a single product. What are the chances that it will repeat this success for almost a dozen products, some being of vintage '78 or '82 tag (which some may refer to the medieval era of computing)? Continuation of an unfocused, multi-product and multi-technology strategy in the markets with diverse dynamics typically multiplies and overstretches sales, R&D, and service & support resources jeopardizing the chances its products could stand a chance of long-term success in their respective niches. Geac, Epicor, Ross Systems, and SCT Corporation are recent examples of companies where this strategy has failed: all have had to resort to divestiture and to a focus on core competencies.

The management's rhetoric might even suggest that SSA GT is banking its future mainly on its installed client base. The possibly insufficient revenue stream might, therefore, require some additional downsizing in the future as well as the R&D programs cutbacks. Any attempt to increase revenue by, e.g., bloating significantly support & maintenance fees, may backfire in customers' defections to the competition. Additionally, SSA GT has an inordinate scope of functionality to cover through external partnerships.

While the best-of-breed approach has its merits and is a necessity for some plant-level applications that ERP vendors do not typically provide (e.g., data acquisition), it inadvertently leads to additional integration costs and complicates service & support arrangements. Interfaces between disparate applications like ERP, CRM and/or e-business usually require significant tailoring, which should now be multiplied by the number of newly acquired products and their different product versions. This can be a barrier to future changes as further modifying already modified code is notoriously time consuming, costly, and risky.

Also, the profit margins for third-party products are typically lower than for natively provided functionality, which again lessens the bottom line. Vendors such as IFS, J.D. Edwards, SAP, Oracle, Intentia, Baan, QAD, Navision, Ross Systems, Geac, SCT, IBS, MAPICS and many others that offer more unified solutions running on many platforms, and that have strong vertical presence, may therefore give SSA GT's prospects a value proposition that can be difficult to decline.

More importantly, except for Cognos and SynQuest or Manugistics (for an advanced planning & scheduling (APS) product add-on), the above partnerships, which have certainly made a splash, are either in their infancy or are just another bite at the cherry. For partnerships to solidify and result with a true commitment and solid products, one needs time and significant user acceptance (read sales), both of which have yet to happen in earnest.

Also, while embracing the IBM WebSphere platform for e-procurement, CRM, and other components integration strategy cannot be debated, the caveat lies in the fact that the company has done it only very recently. To that end, much more aggressive interaction with the analyst community and more perspicacious explanation of positioning of its Semantic Message Gateway (SMG) and Direct Data Gateways (DDG's) interconnectivity technologies would be important. There have been indications that SMG's had exhibited poor performance, hence the addition of DDG's. However, the DDG's have reportedly only been tested once for an adapter for SynQuest integration. There are no performances statistics/benchmarks available, and there have been no other DDG's officially announced, which may ominously resemble the experience many interBiz users have already had with their systems.

While SSA GT plans to keep previous BPCS versions (e.g., V4.05CD) alive was prudent and necessary as to avoid an adverse revenue shortfall, the need to make any new functionality backward compatible 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) will likely impede the speed of delivering these. The story seems to be quite compelling although one should be cognizant of the magnitude of the efforts to execute it. This may also mean that users of the most current product versions will see their annual maintenance revenues being dissipated to enhancements for V4.05CD (and now to possibly a dozen of interBiz products) and not to the current versions. Furthermore, the company's silence about MAX product it acquired not so long ago (see SSA Acquires MAX Hoping To Leap From Its MIN) might indicate that it was an impulse purchase and that the company has not many ideas as what to do with it, since MAX essentially competes with its own BPCS NT product. It is not that difficult to imagine the possible magnitude of confusion, products' overlaps and conflicts with a slew on new products in the picture.

The above challenges may impede SSA GT's ability to leverage its existing client base and channel, as illustrated in the fact that more than 3,000 BPCS users, and a few thousands of interBiz users have yet to be possibly reinstated with maintenance contracts. Also, SSA GT has only recently delivered a Web Browser Interface in V8 product release that is browser-based, which makes it quite behind its competition regarding e-business capabilities, and consequently vulnerable to their attacks. Portal solution, however, is only envisioned with versions 8.2 and beyond. As a summary, while SSA GT's gallant attempt to regain credibility in the industry is noteworthy, it still has much more catching-up to do, with the market keeping a close eye on its execution. Time will tell whether it is possible to mate two old horses in the same stable in order to produce stallion-like offspring.

CA Unloads interBiz Collection Into SSA GT's Sanctuary Part 1: Recent Announcemen

SSA GT has pledged continued support for the interBiz product lines, along with assurance that it will enhance the applications. Furthermore, in some instances where it will make sense, there will be an effort to integrate the products as well as provide a migration plan for products using discontinued technologies, such as the HP 3000 platform. Through the transaction SSA GT hopes to achieve the following:

* Offer customers added support through an expanded global network; additional revenue to spend on research and development and expanded Global Guide Groups to understand customer, industry and market demands

* Provide the critical mass to re-position itself as a leading vendor in specific vertical markets, expanding its global capabilities, resources and customers

* Leverage the company's global service and support functions

* Underscore its business model, and financial viability

* Strengthen organic growth in its key vertical markets - automotive, fast moving consumer goods (including food, beverage and electronics), general manufacturing and pharmaceutical industries;

* Expand its commitment to deliver more opportunities for customers' e-commerce and collaboration initiatives

* Add experienced management and IT professionals in the U.S. and International markets.

Over the past year, SSA GT has been reengineering its company to deliver a solution strategy that involves e-commerce and collaboration with BPCS, its core ERP product. SSA Global Technologies will apply its business model and solution strategy to the newly acquired products. For customers utilizing the interBiz brands, this strategy will give them new opportunities to benefit from e-business and collaboration solutions. Products covered under this transaction include CAS, interBiz Logistics, interBiz Online, interBiz Reports, KBM, MANMAN, Masterpiece/Net, MasterPiece/Net HRMS, MAXCIM, MK Logistics, MK Manufacturing, PRMS and Warehouse BOSS. A fully integrated organizational structure is in place for SSA GT where employees are being integrated, service offerings are being coordinated and cross-selling opportunities pursued.c
In a nutshell, the good news is - a foster home has been found for interBiz; but there is the bad news too - the room space might be insufficient to accommodate all of the orphaned products. Nevertheless, SSA GT is, for a number of reasons, possibly the best place where most of interBiz products will continue to be kept on a life support. There are seemingly many synergies that could exist between the two product lines/organizations, including the cited closeness of product codes (considered ancient by many, as they go as far back as COBOL or FORTRAN) at the base level and both camps' heavy reliance on mature IBM iSeries (formerly AS/400) platform. These sorts of blessings in disguise could still allow SSA GT to build on its core ERP transactional capabilities while being able to offer extensions to the core products, something not many other ERP vendors that are relying heavily on the latest 'hot button' technologies (e.g., Java or .NET) would be willing to undertake. Also the companies have similar corporate cultures and have long been competing in the same or similar markets. They both have extensive worldwide coverage, and both companies' staff members have extensive manufacturing and distribution industrial experience.

At a first glance, one can even notice a complementary nature of some products. Some of the interBiz products may indeed still provide a 'kick for a buck' proposition. For instance, PRMS is still a well respected manufacturing ERP offering and a formidable competitor to SSA GT's BPCS, although it is perceived as ancient in the market and has been confined to the IBM iSeries platform. The product supports manufacturing, distribution, financial, and warehousing capabilities for discrete, repetitive, process and co-existent manufacturing and distribution enterprises.

Another manufacturing-related product that might functionally attract new customers would be MK Manufacturing - a versatile Unix and NT-based ERP solution that supports make-to-order (MTO), configure-to-order (CTO), and make-to-stock (MTS) discrete manufacturing requirements. The caveat, however, is that SSA GT remains focused mainly on IBM platforms and web server technologies (iSeries and WebSphere). Moreover, the interBiz ERP products are backed up well with Warehouse BOSS, a rules-based stand-alone warehouse management system (WMS) and interBiz Logistics, an e-fulfillment distribution management package. Warehouse BOSS, as a matter of interest, exhibited functionality several years ago that many leading WHS vendors have only recently incorporated. Furthermore, the MasterPiece financial management and HRMS product might significantly enhance SSA GT's financial and HR modules' functionality, which have not traditionally been BPCS' strongest area (if not a wide functional gap).

While mergers and/or acquisitions in the mid-market in the recent times are no surprise per se, SSA GT's action might have an additional meaning. Although the acquisition of interBiz by SSA GT should have minimal impact on the global market in the short run, it might have an important psychological effect on existing SSA GT's and interBiz' customer bases. On its hand, the erstwhile SSA has suffered, over the past several years, a tremendous loss of market share and customer confidence, while its channel also dwindled during the same period of time.

Revenues for SSA GT, which is now majority (~60%) owned by a $6.5 billion high-tech venture capital firm Cerberus and ~20% by Gores Technology, were $126 million for fiscal 2001 ended on July 31, 2001, with an undisclosed profit. It is still only a fraction of once SSA's over $450 million turnover in the mid 1990s, though. Therefore, SSA GT, having gone through its bankruptcy and rebirth initially under the Gores Technology in 2000, remains within Top 20 ERP vendors, steeply down from once being neck to neck with J.D. Edwards.

The vendor has undergone considerable turmoil even post-purchase, with new management teams' rotations, a new owner and considerable staff departures, and consequently, a loss of some of its customer base to competitors. But that base remains large with 6,500 customers running on BPCS, evenly divided between North America, Europe and Asia-Pacific, although around 3,500 of these are not still currently paying maintenance.