SSA GT Gets Big OS/400, Unix Bases with interBiz Buy

by Alex Woodie

In addition to PRMS, an RPG application that is similar in many ways to its flagship ERP suite, BPCS, SSA GT netted a cluster of other line-of-business applications that Computer Associates had amassed over the years, four of which run can on the iSeries or use its database; they are as follows:

SSA GT acquired all intellectual property and physical property rights associated with these applications, obtained all 724 employees that had worked in the interBiz unit, and added between 3,500 and 4,000 new customers to its installed base, boosting the number of companies around the world that use SSA GT software from about 6,000 to between 9,500 and 10,000, company officials said.

Most interBiz customers were located in the United States, and this acquisition will effectively double the revenue SSA GT takes from the U.S. Company officials say the geographic distribution for interBiz customers was as follows: 70 percent from the Western Hemisphere; 20 percent from Europe; and 10 percent from Asia. Before the acquisition, SSA GT's revenues were split evenly between the three regions.

For CA, the divestiture of these applications sends a clear message that the company sees no future for itself in the applications business and that its future lies in providing systems management utilities, including security, scheduling, and business intelligence software. There were 10 other applications in CA's interBiz business unit, mostly banking applications, which CA intends to keep, but it is unclear where they went in CA's organizational structure; CA officials refused to provide comment for this story beyond the quotations provided by CA's CEO, Sanjay Kumar, in a press release.

SSA GT was still sorting through paperwork associated with the acquisition early last week. SSA GT acquired the interBiz units for an undisclosed amount of cash. While hard numbers were not readily available, it is clear that PRMS brings the largest installed base and that "thousands" of companies that use PRMS are now SSA GT customers, according to company officials.

The deal brings SSA GT 1,500 customers that run their interBiz software on Unix platforms, officials said. With that number in hand, it is probably safe to say that the number of PRMS customers that are current with their maintenance is probably somewhere between 1,500 and 2,000 companies.

Before this acquisition, SSA GT supported three operating systems with its software: OS/400, Windows, and HP-UX. Now it offers a mix of 13 different products that run on 12 different operating systems and support eight different databases.

SSA GT officials say they currently have no plans to end support for any of these applications, aside from the customers that run their interBiz applications on the HP 3000 or VAX systems, both of which have been given sunset dates by their respective owners, Hewlett-Packard and Compaq.

"We're not going to sunset any product, but, obviously, where technology changes, evolves, we're going to look at how we can give those clients a migration strategy," said Graeme Cooksley, SSA GT's executive vice president of global sales and marketing. "In the next year and a half, we'll move them [MANMAN users] to one or other of the offerings with as little pain as possible. We certainly have no intention of stopping support of any product."

While there is some obvious crossover between the functionalities of BPCS and PRMS, which for years competed for customer accounts among midmarket manufacturers, Cooksley said that SSA GT plans to continue to market and develop both, and that over time the two ERP suites will be segmented into specific vertical industries, with BPCS taking the lead in areas such as pharmaceuticals and food processing.

PRMS originated in 1975 as an MRP package for the IBM S/34 developed by a company called IR. Professional Computing Resources bought IR in 1978 and rewrote the software for the S/38 in 1982, calling it RMS/38. In 1986, Professional Computing Resources was acquired by Pansophic Systems, which rewrote the package for the AS/400 in 1988 and renamed it PRMS. In 1991 Pansophic was acquired by CA.

PRMS is a close sibling of BPCS. The three founders of System Software Associates and the original architects of BPCS, including Roger Covey, were RPG programmers at Professional Computing Resources during the 1970s. "It was a boot camp for how to create ERP systems," said a consultant who has followed the two systems for years. Covey helped found SSA GT, in 1981, and led the development of BPCS for the S/36, and later for the S/38 and AS/400.

SSA GT has recently signed OEM agreements with several ISVs to build "extensions" from BPCS to CRM, supply chain, business intelligence, and procurement offerings. One of the most immediate requirements following this acquisition is to get these extensions prepared to work in the PRMS environment, Cooksley said.

Several other areas of cross-product integration emerged following the deal. For example, the OS/400- based Warehouse BOSS warehouse-management system, which has been integrated and sold with PRMS, will make an excellent supplemental logistics package for BPCS users, Cooksley said. "We will be integrating that product directly with BPCS," he said. Likewise, a plan maintenance package that SSA GT offered to its BPCS installed base will find use among the interBiz customers, he said.

SSA GT is taking a two-pronged approach to managing the combined workforces of SSA GT and interBiz. Employees who specialized on one ERP system or the other, such as sales forces or some consultants, will be kept separate. But in more generalist areas, such as presales or administration, SSA GT will consolidate the workforces, to cut cost and drive efficiency. SSA GT has already given several under-performing PRMS sales representatives their walking papers, and undoubtedly more layoffs will follow in the weeks to come.

To support 10,000 customers in the short term, SSA GT is going to have to scrounge for resources within its own organization. "We have some concerns--the bandwidth on our servers, is our intranet up to scratch," Cooksley said. "Our biggest concern is that we don't let the customer down, and that support services stay in place."

In the long term, SSA GT is committed to developing all of its product lines, with an emphasis on integrating open standards, such as XML, across its offerings, Cooksley said. SSA GT currently spends 12 percent of its revenue on research and development, and that number will not change as a result of this acquisition, although the total amount of money spent on R&D will, he said. "The R&D spend will go up considerably," he said.

Before the acquisition, SSA GT allocated R&D funds based on which application generated the most revenue. The OS/400 version of BPCS received the most attention because it drove 90 percent of the company's revenue.

With the acquisition of PRMS, OS/400 software will continue to be the major driver of revenue at the company, even though the company is committed to supporting a wide range of products running on every major operating system and database in existence. "The iSeries is still the most important hardware platform [for SSA GT] and will continue to be," Cooksley said.

When SSA GT fell into bankruptcy, in 2000, many customers lost faith in the company and took analysts' advice to seek a migration strategy away from the sinking ship. However, by most accounts, the new SSA GT has succeeded in plugging the holes over the last 18 months and winning back the confidence of at least some of the fleeing customers. Several industry insiders have praised the new SSA GT, particularly CEO Michael Greenough's fiscal responsibility. (See Midrange Stuff's interview with Graeme Cooksley, which details the steps involved in the turnaround.)

The trick now will be continuing that forward progress following this acquisition.

"Our track record over that period of time, if we can emulate it over a period of the next 12 months, I think the interBiz clients should be very happy," Cooksley said.