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SSAGT to EXE-cute (Yet) Another Acquisition

Dek

On August 18, SSA Global Technologies (SSA GT) (www.ssagt.com), and EXE Technologies, Inc. (NASDAQ: EXEE) announced the signing of a definitive agreement under which SSA GT will acquire the embattled global supply chain execution (SCE) provider. Under the agreement, a subsidiary of SSA GT will merge into EXE Technologies and all holders of EXE Technologies outstanding common stock will receive $7.10 per share in cash, which represents an 18 percent premium over EXE Technologies’ closing market price on August 15, 2003.

On one hand, SSA GT’s acquisition spree might result in many manufacturing and distribution global enterprises that currently use a plethora of diverse products, ending up eventually dealing with virtually only one vendor. Still, the dichotomy is that the vendor in this case, SSA GT, will still have a slew of disparate products in its fold, which are yet to start seamlessly talking to each other. That is where the cultural difference comes to light—while SSA GT’s CEO Mike Greenough considers underlying technology a plug-and-play commodity that does all the integration behind the scenes and is transparent to the user, Baan’s continued excruciating efforts (i.e., time, money, and human resources-wise) and other recent delays to deliver its next-generation Gemini product and OpenWorldX integration framework, to be rolled into the future SSA GT Enterprise Integrator platform (not to mention SAP’s colossal task to deliver the still evolving NetWeaver platform) certainly shows that we are not there yet (see What’s Wrong With Enterprise Applications, And What Are Vendors Doing About It?).

Thus, SSA will have its platter full attempting to integrate EXE, as well as its other recent acquisitions while maintaining and improving customer support for EXE’s two main WMS products. It certainly cannot postpone the strategy roadmap delivery indefinitely, and we certainly do not envy the VP of solutions positioning on his or her impending daunting task. Good luck to anyone trying to rationalize and produce a standard price and discounts’ list that would take care of what goes with what and in which order (and particularly what cannot go together) for new users, and of existing customers’ requests for special (often bordering on blackmail) ‘incentives’ to remain within the SSA GT’s fold.

On the other hand, SSA GT with Mike Greenough at the helm, has many times surprised even the biggest skeptics by turning around seemingly non-viable vantage products (which iBaan, EXE, and Ironside certainly are not) and ailing vendors (which Baan and EXE have been). In any case, WMS installations are expensive investments that customers are loath to ditch, add, or switch particularly during a tight economy. The market is seemingly not yet ready to just abandon well-crafted SCE components for one-size-fits-all suites, for a number of reasons. One would be the mere complexity of warehousing operations, which has demanded serious customizations of earlier generations of WMS, making upgrades almost impossible. Further, despite the efforts of companies to integrate their supply chains, most still have functional silos between planning and execution, manufacturing, accounting, and logistics. The reality is that logistics cost data and constraints are required to develop truly optimal financial and manufacturing plans. Packaged suites may come in handy for highly repeatable, conforming processes in the back office, but that is not necessarily the case for more fluid, customer-specific, distributed processes, like distributed order management across geographic boundaries.