Baan, a winning formula for SSA

Rahul Gupta

MUMBAI: 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 swallowing up JD Edwards. Following in the footsteps of rival enterprise resource planning 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 Atlantic Partners. As part of the acquisition, Baan has become a division of SSA Global Technologies to create 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 product 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 applications, as well as its analytical application, 'Cross Enterprise Analytics'. The company is aiming to distinguish itself from other large CRM vendors such as SAP and Oracle by focusing on vertical markets it has been traditionally strong in -- aerospace 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.

Asserted SSA Global Country Manager, Gopal Madnani, "since we've been acquired by SSA, we've really focused the business and continued significant investment in areas such as support and product development and innovation." He added that SSA would distinguish itself by focusing on its vertical market strengths. "Post SSA acquisition - we will continue to focus on acquiring new customers and adding value to existing customers in these segments."

SSA Global CEO and chairman, Mike Greenough said that his strategy is to acquire market share, support customers and continue to sell software licenses to users who want to extend systems managing everything 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 company 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 automation firm founded in 1990. In May 2000, Baan was acquired by London, England-based Invensys plc, which incorporated BaanFrontOffice products along with its Invensys CRM brand offerings.

SSA currently supports the automotive, electronics, projects and process industries. Now with an expanded portfolio, it is also considering launching the logistics, supply chain solutions 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 Business Planning and Control System solutions, both being offered as part of the SSA Global solution portfolio. The company had 20 new ERP installations last year and is expecting 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 recent 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 available for its customers - providing SSA an opportunity to add even more value to them. For example Baan's supply chain offerings can now be positioned to an expanded customer base.

Pre-acquisition, Invensys spent a lot of money helping Baan develop its next generation of software and now SSA is all set to leverage it to bolster its bottom lines. Explained Madnani, "The R&D investments 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 innovation cycle by SSA Global and we expect that such innovations will yield good ROI for both us and our customers."

The company currently operates with total of about 400 plus employees in India - most of them are scattered in the two development centers in Mumbai and Hyderabad. In the next two years as it plans to invest more in different activities in India - the recruitment rate could go up by about 30 percent or so.

" We are in the process of upgrading our development centers in Mumbai and Hyderabad and the new recruitments will boost up the bottom lines in the country as we are expecting 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 expenditure from the present $10 million as it has plans to make India a global hub of operations, 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 aggregators. 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 consolidation 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 complementary way for our customers."

A flurry of acquisitions among high-profile ERP players has customers and vendors mired in the fallout of a consolidation period. Industry experts expect large-scale vendors to bolster existing products in an effort to fill the mid-market void that these acquisitions have created in enterprise application 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 customers 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 a 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 leverages partnerships and alliances in two ways. In the services area by ensuring that partners are vertically focused for the industry being served while in the product area by bringing to customers world class components - for example, Cognos for the Business Intelligence area.

But analysts have apprehensions over Baan's sell-off by Invensys to SSA Global and casts doubt over future support for the well-regarded ERP software.

SSA's track record of development spend is not good. The company has been contract mining - contacting users and squeezing more licenses out of existing implementations - rather than developing.

Consolidation has started happening in ERP space and SSA is ready for further acquisitions to enhance its portfolio. Baan has been sold twice in the last few years and Greenough has not ruled out further sell-off of Baan if required and is interest of customers.

(CyberMedia News Service)