The CEO of a company on the brink of an IPO ought to be confident and SSA Global’s chairman, president and CEO Mike Greenough was certainly that when he delivered his keynote on the first day of the company user conference. However the SEC-imposed pre-IPO quiet period meant factual information was sparse at the event in Philadelphia.
SSA has evolved, but the vision remains the same, to keep customers for life, Mr Greenough said as he highlighted milestones that demonstrated that the company was delivering on the objectives it set itself this time last year in terms of product convergence, technology modernization, integration and industry focus.
In August the company announced the first of its two convergence platforms for its ERP products, SSA ERP LN 6.1, which brings together the separate Baan, MK, and Manman products. The second, SSA ERP LX which brings together BPCS, PRMS, PRISM and Infinium MM/PR, will be released in the first quarter of 2005.
On the technology modernization front it has introduced a web-native user interface and web service capability across its core products, enabling users to increase productivity without having to upgrade. As far as integration is concerned, six months ago it entered into a deep strategic alliance with IBM and is moving its product set to IBM’s WebSphere middleware platform, an alliance PeopleSoft and IBM effectively mirrored last week. It has also built increased industry specific functionality across its product lines.
There was little new in the conference announcements, in part due to the quiet period restrictions, but Mr Greenough used the opportunity to stress the stability of the company, presenting it as a safe option going forward. Illustrating just how far the company has come since its near bankruptcy he pointed out that revenue has increased 500% over the past three fiscal years, with each acquisition being accretive to overall revenue, and asserted that it was a trend that was not going to stop. There is more opportunity today than there was three years ago, he said.
SSA has been viewed as a buyer of failing companies which is overly reliant on maintenance revenue but Mr Greenough denies this: We are not just a maintenance company. A significant proportion of our revenue comes from license fees. At the end of SSA’s Q3, 26% of revenue came from license fees and 50% from maintenance and while admitting that the proportion is high Mr Greenough says the ongoing trend has been for the proportion of revenue from license fees to increase. This contrasts with vendors like SAP, Oracle and PeopleSoft who are experiencing a growth in the percentage of revenue from maintenance as their software license fees decline. For SSA, a total of 15% of software license revenue last year came from new accounts, in emerging markets.
The mid market player is also out to prove that there is more to it than ERP, with 20% of its revenue derived from extended solutions such as SCM, and that that is where future opportunity lies.
The majority of customers in the $100 million to $1 billion [range] have been slower to adopt extended ERP than the large global companies so we have more opportunities to sell to the existing base than our competitors, said Mr Greenough. As a result he believes SSA is better positioned for growth than companies like SAP. One interpretation is that that where SAP currently derives 59% of its revenue from extended ERP products, compared to SSA’s 20%, SSA has more opportunity for growth within its existing customer base.
Since its resurgence SSA Global has been pragmatic about its business strategy while also resolutely driving to become one of the big players. It does not plan to adopt the tactics used by the living dinosaurs, which is how Mr Greenough referred to many technology companies. We will probably begin to be aggressive and assert ourselves but the market is still diverse and spread out. SSA is becoming a force and we can deliver as long as are in partnership [with our customers]. If we look for success at the expense of our customers we will fail.
With over 13,000 customers, about as many as PeopleSoft and roughly the same as Oracle’s business applications’ customer base, SSA is already a force, albeit a quiet one. It hopes that the upcoming IPO will give it the credentials to take a fuller part in the market play.
Mr Greenough is not about to make a mistake by going head to head into battle with the established tier one players. We are dwarfed by SAP. We will pick the battles we believe we can win. In tier one, we will continue with our existing tier one customers, he said.
Its ongoing strategy is simple. SSA does not have to bang on doors. We are developing the relationships we already have, with appropriate solutions for their business drivers. If we make you [our customers] look good, then you’ll come back.