Enterprise System Spectator blog: ERP and enterprise system vendor evaluation, selection, and implementation.

The Enterprise System Spectator

Thursday, August 25, 2005

What is SSA's strategy in Epiphany bid?

Earlier this month, SSA Global announced that it is acquiring Epiphany, a $75 million CRM vendor. Epiphany was a big name during the dot-com era, when its CRM analytics were (and still are) an important part of e-commerce business development. Epiphany's products have been widely implemented among companies that have large numbers of direct customers, such as wireless carriers, financial services firms, and utilities. Epiphany boasts customers such as Nestle, The Gap, Citibank and Microsoft Corp.

SSA is paying $329 million for Epiphany, which had revenues of about $75 million and a loss of $16 million in the last 12 months. In fact, Epiphany has not ever shown a profit in any fiscal year since it went public in 1999. Furthermore, through its acquisition of Baan, SSA already has considerable CRM functionality.

So, why does SSA want Epiphany?
I listened to SSA's conference call regarding the acquisition, and SSA indicated that it plans to blend Epiphany's product into SSA's CRM suite. SSA claims that 20% of Epiphany's customers are already customers of SSA, so there are already synergies.

Furthermore, SSA claims there is actually very little overlap of Epiphany's CRM offerings and those that it acquired from Baan. Epiphany brings functionality for marketing automation and analytics, sales force automation, and online sales e-commerce, whereas SSA with its Baan product line has strong functionality for order management, field service, and sales order configuration. So, in fact, the two product offerings are complementary.

All this makes sense from the sales side.

Buying the Developers
But I think the key motivation is on the development side. SSA made a big point in the conference call and its press release about Epiphany's J2EE technology and component based architecture, that it was quite close to SSA's own technical direction. But that's the big difference. Epiphany's technology is already incorporated in its products. SSA's technology is just a statement of direction. SSA's products will need much retooling to conform to the vision of a service oriented architecture, and its going to need developers experienced in these technologies.

By buying Epiphany, SSA acquires a development organization that is already at the place where SSA wants to be. With demand for leading edge software developers increasing, the job market is tightening. SSA may have just satisfied a big part of its staffing need with this acquisition.

CRM Party with a No-Host Bar
The CRM market has been picking up this year, so SSA's timing might be perfect. But interestingly, with these sudden riches of CRM functionality, SSA still does not have an offering in the hottest corner of the CRM market: software on-demand. During the call, SSA said it has not considered the acquisition of a hosted CRM vendor. In fact, management indicated that they still see more opportunities for "on-premise" software--in other words, the old software licensing model.

SSA is swimming against the tide here. Although SSA points out that it does offer some hosted solutions, particularly in transportation management, it is highly organized around and committed to the traditional license sales model. There's something to be said for staking out a position and sticking to it. I'm just wondering whether SSA is on the wrong side on this one.

Related posts
SSA's IPO comes up short
SSA grows, but don't get no respect
SSA's strategy: acquire customers and technology on the cheap
Software on demand: attacking the cost structure of business systems

by Frank Scavo, 8/25/2005 06:32:00 PM | permalink | e-mail this!

 Reader Comments:

Agree on all points but the last re SSAG swimming against the tide for not having an on-demand CRM offering.
I believe this is instead a clear sign of the future of CRM: to be a component part of an ERP platform. There is very little future for standalone CRMs (a-la-Siebel).
Users do not want to spend time and energies to reshape their business processes to accomodate a CRM suite install.
the ones who just want some basic customer list and SFA functionalities will welcome on-demand CRM.
Thise who want a more complete solution will privilege integration with a strong back-office system. That's where SSAG comes into play: to have a CRM well integrated with a strong ERP back-end.
Say good-bye to those huge multi-million CRM implementations (after all, how many have been really successful?)
 
The question is whether SSA installed base users will be looking for a hosted CRM solution. There are a lot of companies that would like to have a CRM system but they don't want to go through the time and expense of another major implementation. If SSA doesn't offer that option, its own customer are easily going to go to Salesforce.com or some other hosted provider.
 
Post a Comment
 

Links to this post:


 

Powered by Blogger

(c) 2002-2016, Frank Scavo.

Independent analysis of issues and trends in enterprise applications software and the strengths, weaknesses, advantages, and disadvantages of the vendors that provide them.

About the Enterprise System Spectator.

Frank Scavo Send tips, rumors, gossip, and feedback to Frank Scavo, at .

I'm interested in hearing about best practices, lessons learned, horror stories, and case studies of success or failure.

Selecting a new enterprise system can be a difficult decision. My consulting firm, Strativa, offers assistance that is independent and unbiased. For information on how we can help your organization make and carry out these decisions, write to me.

My IT research firm, Computer Economics provides metrics for IT management, such as IT spending and staffing benchmarks, ROI/TCO studies, outsourcing statistics, and more.


Go to latest postings


Search the Spectator!
Join over 1,700 subscribers on the Spectator email list!
Max. 1-2 times/month.
Easy one-click to unsubscribe anytime.

Follow me on Twitter
My RSS feed RSS News Feed

Computer Economics
ERP Support Staffing Ratios
Outsourcing Statistics
IT Spending and Staffing Benchmarks
IT Staffing Ratios
IT Management Best Practices
Worldwide Technology Trends
IT Salary Report

Get these headlines on your site, free!


Awards

2014 Best Independent ERP Blog - Winner

2013 Best ERP Writer - Winner

Alltop. We're kind of a big deal.
 
Constant Contact 2010 All Star Technobabble Top 100 Analyst Blogs


Key References
Strativa: Business strategy consulting, strategic planning
Strativa: IT strategy consulting
Strativa: Business process improvement, process mapping, consultants
Strativa: IT due diligence
Strativa: ERP software selection consulting and vendor evaluation
Strativa: CRM software selection consulting and vendor evaluation
Strativa: Project management consulting, change management
StreetWolf: Digital creative studio specializing in web, mobile and social applications
Enterprise IT News: diginomica


Spectator Archives
May 2002
June 2002
July 2002
August 2002
September 2002
October 2002
November 2002
December 2002
January 2003
February 2003
March 2003
April 2003
May 2003
June 2003
July 2003
August 2003
September 2003
October 2003
November 2003
December 2003
January 2004
February 2004
March 2004
April 2004
May 2004
June 2004
July 2004
August 2004
September 2004
October 2004
November 2004
December 2004
January 2005
February 2005
March 2005
April 2005
May 2005
June 2005
July 2005
August 2005
September 2005
October 2005
November 2005
December 2005
January 2006
February 2006
March 2006
April 2006
May 2006
June 2006
July 2006
August 2006
September 2006
October 2006
November 2006
December 2006
January 2007
February 2007
March 2007
April 2007
May 2007
June 2007
July 2007
August 2007
September 2007
October 2007
November 2007
December 2007
January 2008
February 2008
March 2008
April 2008
May 2008
June 2008
July 2008
August 2008
September 2008
October 2008
November 2008
December 2008
January 2009
February 2009
March 2009
April 2009
May 2009
June 2009
July 2009
August 2009
September 2009
October 2009
November 2009
December 2009
January 2010
February 2010
March 2010
April 2010
June 2010
July 2010
August 2010
September 2010
October 2010
November 2010
December 2010
January 2011
February 2011
March 2011
April 2011
May 2011
July 2011
August 2011
September 2011
October 2011
November 2011
December 2011
January 2012
February 2012
March 2012
April 2012
May 2012
June 2012
July 2012
September 2012
October 2012
December 2012
January 2013
February 2013
March 2013
May 2013
June 2013
July 2013
September 2013
October 2013
December 2013
January 2014
February 2014
March 2014
April 2014
May 2014
June 2014
July 2014
August 2014
September 2014
October 2014
November 2014
December 2014
February 2015
March 2015
April 2015
May 2015
June 2015
July 2015
September 2015
October 2015
November 2015
February 2016
May 2016
June 2016
July 2016
August 2016
September 2016
October 2016
Latest postings