On the middle path

On the face of it, it would seem that M&As is the only way left for

mid-market ERP vendors to sustain in the business. The ERP market is seeing a

major shake-up with Baan’s takeover by SSA GT and PeopleSoft swal-lowing up JD

Edwards.

Following in the footsteps of rival enterprise resource plann-ing vendors,

SSA Global has finally outlined its strategy to provide customized software

solutions to vertical markets in India. Baan was sold for $ 135 million to an

investment group consisting of Cerberus Capital Management and General Atla-ntic

Partners.

As part of the acquisition, Baan has become a division of SSA Global

Technologies to cre-ate a manufacturing-specific enterprise software behemoth.

SSA’s plans to acquire Baan surprised users but they were cautiously

optimistic that the merger could improve the pro-duct lines of both companies.

Watching closely the dogfight-taking place in the ERP market, Baan is all set to

make a come back under the new brand SSA Global.

SSA’s new strategy include bouquet of solutions for Indian market- Baan CRM,

ERP, supply chain logistics and service app-lications, as well as its analytical

application, ‘Cross Enterprise Analytics’. The company is aim-ing to

distinguish itself from other large CRM vendors such as SAP and Oracle by

focusing on vertical markets it has been traditionally strong in–aeros-pace

and defense, automotive and industrial manufacturing, and at the same time,

deliver a message that CRM is not just a technology, but a strategy as well.

SSA Global CEO and chair-man Mike Greenough said that his strategy is to

acquire market share, support customers and continue to sell software licen-ses

to users who want to ext-end systems managing everyth-ing from accounting and

human resources to sales, purchasing and distribution. Also he has no intentions

to target tier1 ERP upmarket. "We don’t intend to go to upmarket "

he said, referring to industry giants SAP AG, PeopleSoft and Oracle Corp., which

focus on selling to big corporations and government. While the com-pany has

formalized its CRM vision later than other major vendors, its history in the CRM

space goes back as far as its 1997 acquisition of Aurum Software, a sales force

automa-tion firm founded in 1990. In May 2000, Baan was acquired by London,

England-based Invensys plc, which incorpora-ted BaanFrontOffice products along

with its Invensys CRM brand offerings.

SSA currently supports the automotive, electronics, proje-cts and process

industries. Now with an expanded portfolio, it is also considering launching the

logistics, supply chain solu-tions and also solutions for the Pharma market. In

addition it is also exploring opportunities for financial solutions.

In the crowded mid-market ERP, SSA is riding high and aims to grow upwards of

20 percent. The company currently has about 150 customers for Baan solutions and

about 50 for Busi-ness Planning and Control Sys-tem solutions, both now being

offered as part of the SSA Global solution portfolio. The company had 20 new ERP

insta-llations last year and is expec-ting 25 new accounts this year.

If we look at the history of Baan, after a collapse in sales Invensys bought

the company in 2000 for $ 708m and in rec-ent months the management team have

stabilized Baan and announced a number of new customer wins. Now after Baan’s

acquisition, SSA can leverage Baan’s expertise in verticals like

manufacturing. Post acquisition, SSA Global now has the largest customer base in

manufacturing in the world. Prior to the acquisition SSA itself had a

substantial customer base in this segment. Therefore now the combined solution

portfolio is now availa-ble for its customers–provid-ing SSA an opportunity to

add even more value to them. For example Baan’s supply chain offerings can now

be positio-ned to an expanded customer base. Pre-acquisition, Invensys spent a

lot of money helping Baan develop its next genera-tion of software and now SSA

is all set to leverage it to bolster its bottom lines. Explained Madnani,

"The R&D invest-ments made by Baan before and after Invensys have all

being realized and aggregated into the IPR that is now Baan solutions as part of

SSA Global. These solutions will be offered as part of the normal innova-tion

cycle by SSA Global and we expect that such innovations will yield good Returns

of Investment for both us and our customers."

The company currently ope-rates with total of about 400 plus employees in

India–most of them are scattered in the two development centers in Mum-bai and

Hyderabad. In the next two years as it plans to invest more in different

activities in India–the recruitment rate co-uld go up by about 30 percent or

so.

" We are in the process of upgrading our development centers in Mumbai

and Hydera-bad and the new recruitments will boost up the bottom lines in the

country as we are expec-ting a 30 percent growth in software industry this year

in the country," Greenough maintained.

Claiming to be the leader in the mid-market ERP segment, the company will

double its ex-penditure from the present $10 million as it has plans to make

India as global hub of opera-tions as in next phase the thrust would be more on

outsourcing.

Recently PeopleSoft has acquired JD Edwards and has strengthened its position

in the mid size ERP market. Since Baan’s strength has always been mid-market,

the company plans to strengthen it more in the changed ERP market. Also the

company hasn’t denied the fact that consolidation has already begun in this

space and in fact SSA Global itself has been one of the first aggrega-tors. As

for the mid market, which is their core strength, the company will continue to

focus on this. Madnani says "We have today the largest market share of the

mid market in India and globally and we will continue to defend this position.

There will certainly be more consoli-dation in this space with SSA Global being

one of the likely consolidators. Of course we will do it when it makes the most

business sense and allows all our solutions to be positioned in a synergistic

and compleme-ntary way for our customers."

A flurry of acquisitions among high-profile ERP players has customers and

vendors mired in the fallout of a con-solidation period. Industry exp-erts

expect large-scale vendors to bolster existing products in an effort to fill the

midmarket void that these acquisitions have created in enterprise app-lication

arena.

Doing business in today’s knowledge-driven networked economy requires more

than software that allows access to vital information across the enterprise and

Baan is all set to help enterprises gain business benefits in this scenario.

Post SSA acquisition, the company claims that it has now become a one stop shop

that provides all required solutions to enhance business value for our

customers. In fact even with current ERP solutions, namely SSA Baan, it has

customer testimonials that highlight the benefit and value achieved by the

customers. The ERP custo-mers can now realize even more value by using the ERP

integration backbone and deploying solutions like CRM for customer intimacy, SCM

for operational excellence and PLM for Product innovation.

Alliances and partnerships gives SSA much needed boost in its mission to

deliver world-class information solutions so as to help customers run a better

business in the industrial enterprise sector, and help them enjoy substantial

growth in profits. The company levera-ges partnerships and alliances in two

ways. In the services area by ensuring that partners are vertically focused for

the indu-stry being served while in the product area by bringing to cus-tomers

world class compone-nts–for example, Cognos for the Business Intelligence

area.

But analysts have apprehen-sions over Baan’s sell-off by Invensys to SSA

Global and casts doubt over future support for the well-regarded ERP software.

Rahul Gupta


(CyberMedia News Service)