I stumbled across two articles this morning, out of the UK, that indicate SSA Global Technologies is in the lead to purchase Baan (see my preceding post). The articles point out that, earlier this month, SSA GT raised $75m from General Atlantic Partners LLC specifically for new acquisitions. So, there may be some truth to the rumor.
If true, this would be an interesting play for SSA, which would be adding Baan's extensive product line in ERP, business intelligence, CRM, product life-cycle management (PLM), and supply chain management (SCM) to its already diverse collection of systems. Over the past two years, SSA GT has been cornering the market for systems built on IBM's iSeries (formerly AS/400) hardware platform, starting with its own BPCS ERP system, plus its acquisition of Computer Associates' Interbiz division last year (picking up PRMS, KBM, Warehouse BOSS, and a slew of other products), and its acquisition last year of Infinium's well-regarded financial and HR applications (see my post on Oct. 31, 2002). Adding Baan to the mix would introduce an extensive set of enterprise class systems built for Unix and Microsoft platforms. Baan's industry focus on aerospace & defense (Boeing is a showcase account), automotive, electronics, and industrial machinery would complement and strengthen SSA's focus on most of the same industries, although A&D would be a new vertical. And interestingly, another of SSA's legacy ERP products, ManMan, was originally created as a spin-off from an older version of Baan (Triton). The acquisition creates a possible upgrade path to the current version of Baan for those ManMan clients.
If SSA is successful, it will be a remarkable story. In the late 1990's, SSA was pretty much considered down and out for the count. But it emerged from bankruptcy in 2000 as SSA Global Technologies, a private company with a significant established installed base in a few key verticals, such as pharmaceutical manufacturing and industrial products. Over the next two years, it became clear that SSA was adopting a strategy of growth by acquisition. With major new customer wins for most vendors being few and far between, SSA's strategy to build a large installed customer base through acquisitions has a certain appeal. For example, SAP is relatively healthy today compared to some of its competitors, largely on the strength of sales and services to its installed base. So, if you don't have a large installed base, you can try to buy one--especially in today's market, where established vendors such as Baan may be purchased on the cheap.
As most enterprise system vendors continue to struggle, SSA GT is quietly building a portfolio of products and an installed base it hopes it can leverage for a sustainable revenue stream. This will be easier if it can develop new products that are "good enough" to leverage across multiple systems--new products such as business intelligence, common financials, and CRM. Such "horizontal" offerings don't need to be best-of-breed. They just need to be good enough to extend the life of the customer's installed system, to spare them the pain of migrating to a whole new platform. In today's risk adverse atmosphere toward large IT projects, such an approach does make sense.
Datamonitor and Yahoo UK have more details on this latest rumor.
