Persbericht van SSA Global (CEO) :
Financial Times (London, England) June 29, 2005 Wednesday
Copyright 2005 The Financial Times Limited
Financial Times (London, England)
June 29, 2005 Wednesday
SECTION: FT REPORT - FT-IT REVIEW; Pg. 4
HEADLINE: Size matters in mid-business area SOFTWARE SECTOR: SSA is gaining ground, writes Geoffrey Nairn
BYLINE: By GEOFF NAIRN
BODY:
Larry Ellison, founder and chief executive of Oracle, likes high-performance aircraft, fast cars and expensive yachts. His one-time sailing nemesis, Hasso Platner, founder and former head of rival software company SAP, has equally lavish tastes.
But for Mike Greenough, president and chief executive of SSA Global, a fast-growing challenger to Oracle and SAP in mid-range enterprise software, happiness is a 13-year-old Lexus car.
The contrast reflects his unpretentious style - he is a former accountant from the no-nonsense north of England - and also gives an insight into SSA's business model.
According to Mr Greenough, his old Lexus is a metaphor for why SSA can make headway in the mid-range market, which both Oracle and SAP have been struggling to conquer for years.
"Car dealers do not send you away because you drive an old vehicle," says Mr Greenough. In a similar way, he argues, there is a lucrative business in servicing old software.
In stark contrast to Oracle and SAP, which promote "rip and replace", SSA is happy maintaining ageing software packages in return for the support revenues they generate. To keep this cash cow fed, SSA has acquired nine mid-range vendors of enterprise software in four years, including Baan, the former Dutch high-flyer. Its revenues now run at Dollars 700m.
Since 2000, there has been much consolidation in the mid-range enterprise resource planning (ERP) market, with the main predators being SSA Global, Microsoft, and, this month, US-based Lawson Software, which bought Sweden's Intentia.
Mr Greenough hints at more acquisitions in the pipeline, although the rigours of now leading a public company mean he is uncharacteristically restrained when asked about possible candidates. Last month, SSA Global raised Dollars 99m in a long-delayed Nasdaq debut.
Analysts say SSA's strategy makes a lot of sense. Unlike enterprise customers, small to mid-sized businesses (SMBs) often do not want to keep upgrading software.
"Many mid-range businesses are attracted by the promise of eternal support," says David Dobrin of B2B Analysts, a US-based research firm.
SMBs are less infatuated by new technologies, he argues, and will keep running an aging ERP program as long as it continues to do its job - and someone can provide support. SSA wants to be that someone.
SAP and Oracle argue the opposite: ageing products are too primitive for modern businesses and create problems that outweigh any apparent cost savings.
Donna Troy, senior vice president of SAP's SMB business, argues that SMBs now realise that if they want to compete on equal terms with larger businesses then they have to use the same weapons, namely SAP software.
"If you are motivated to grow, then clearly you have to start doing things differently," she says.
It is a message that is winning converts. SAP added more than 1,000 SMB customers in the first quarter of 2005 and analysts see more SMBs being swayed by SAP's recent deal with Microsoft to create a new product, code-named Mendocino, which makes it easier to access information from SAP systems in a familiar Microsoft Office environment.
With growth in the high-end enterprise software market increasingly hard to find, both Oracle and SAP are looking to the mid-range market to drive future growth.
But this market is complex and far from homogeneous. Even large enterprises, the traditional target for SAP and Oracle, may use different ERP packages in different regions and divisions. For these reasons, analysts say the mid-range is a tough market for the heavyweight ERP vendors.
"Some companies will look to Oracle or SAP to standardise their ERP, but a lot of companies have different divisions that are not all necessarily suited to either SAP or Oracle," says Nigel Montgomery, analyst with AMR Research.
So while, Oracle and SAP battle aggressively for the top 60 per cent of the market, there is still plenty of room for smaller ERP companies to boost their revenues - if they can convince customers their products have a future.
Mr Greenough points to the example of Baan, which had good products and customer loyalty, but lost its way. SSA Global bought Baan two years ago and, despite fears that the acquisition marked the end of the road for Baan, SSA Global has rewarded those who stayed loyal with a new release of the Baan software, now rebranded as SSA ERP LN.
"We have done all we have said we would do with Baan," says Mr Greenough. Boeing, one of SSA's biggest customers, plans to use the new SSA ERP LN software to build future aircraft, which he sees as a vote of confidence in SSA's strategy.
In the past 12 months, analysts have detected a shift in SSA's business model as it seeks to throw off the image of a rest-home for retired ERP programs. So, the new SSA is no longer solely interested in milking existing customers for support, but has developed new products and extensions. According to Mr Greenough, around 10 per cent of SSA Global's licence revenues now come from new customers.
As for Mr Greenough's ageing Lexus, which served him so well as a car and his business as a metaphor, it was recently sold. "It was giving poor return on investment." The soaring cost of gas prices made it too expensive to run, and so the former accountant has bought a more frugal Mini Cooper.