In a bid to reaffirm the extensibility of its Unix and NT-based ERP platform, SSA Global yesterday disclosed that a leading customer of the suite -- The Boeing Co. -- has renewed its landmark contract and will continue using the enterprise software within its Commercial Airplanes business unit.
The five-year pact, signed earlier this quarter, calls for the mid-market enterprise software vendor to continue to provide Boeing Commercial Airplanes with SSA's ERP LN software suite -- a product line inherited when SSA acquired Baan's product line from Invensys plc in the summer of 2003. The original contract, awarded in 1994 at an initial estimated value of between $30 million and $50 million, essentially put Baan Co. NV on the ERP map, establishing the then-Dutch vendor as a viable competitor of more established enterprise software vendors such as SAP, which reportedly bid on the deal.
In a prepared statement, SSA would only say that it will continue to provide ERP software that supports Boeing's lean manufacturing and supply chain objectives. In the same prepared statement, Dave Fennell, vice president of information technology for Boeing, noted: "We renewed the agreement with SSA Global for use of the SSA ERP products because they provide modern manufacturing functionality supporting Boeing's continued delivery of the world's most efficient and reliable aircraft."
Neither SSA Global nor Boeing was available to comment on the terms or value of the contract renewal, which was revealed at the same time SSA announced availability of upgrades to ERP LN.
Analysts were unsure of the potential value of the deal given the many renegotiations that have occurred since the deal was originally inked. After signing the initial contract with Boeing, Baan invested a lot of time, money, and computing cycles customizing its ERP software to the commercial airplane manufacturer's business needs. When Baan began experiencing financial problems later in the decade, the software vendor was forced to trade receivables for additional licenses, services, and development priorities, which makes estimating the renewal value difficult, if not impossible, noted Jim Shepherd, an ERP analyst at AMR Research Inc. in Boston.
Absolute value notwithstanding, the fact that Boeing re-upped is significant, Shepherd said, pointing to the company's marquee value to SSA as a reference account. "If a prospective LN customer or an existing one ... sees that the largest user of the product in the world signs up for another chunk of maintenance," it acts as a strong endorsement of the software's continued viability, he said. "It means a substantial part of [the Boeing] company is now using ERP LN and expects to keep using it," he concluded.
Since announcing a bifurcated ERP strategy -- ERP LN for Unix and Windows users, ERP LX for IBM iSeries users -- SSA has worked hard to extend the capabilities of both product lines. Key to the strategy is a service-oriented architecture (SOA) that eventually will enable better interoperability with internally developed products and recently acquired enterprise software modules spanning supply chain management, customer relationship management, and human capital management.
Launched in 2005, ERP LN already has between 30 and 40 live installations, with another 400 customers evaluating or in the process of implementing the software, noted Russell Johns, SSA's director of ERP solutions marketing, in an interview on the ERP LN upgrades. That's up from a dozen customer installations announced in the third quarter of 2005.
The new release offers a wide array of usability features as well as embedded localization and industry vertical "best practice" templates, which have been discussed with and expected by SSA customers in the discrete and hybrid manufacturing segments, Johns said. The release should appeal to a wide array of functional areas within the manufacturing enterprise, from logistics, finance, and project planning through sales and service, he noted.
One highlight of the new release is functionality that helps manufacturers visualize planning on the shop floor. By delivering an interactive planning board "planners can see visually what is happening, which makes it easier for them to move jobs around on the shop floor," Johns said. The data was already available in ERP LN, but the new release makes it more accessible and intuitive to work with, he added.
A new machine utilization chart offers a graphical picture of what is happening on each machine on the plant floor, enabling plant floor managers to level loads, avoid bottlenecks, and make the best use of deployed assets. "You could always get load information in terms of percentages and hours, but we are continually striving to get info to the user in an easier way to use," Johns said.
Also included in the new release is a dashboard for viewing serialized items which can be used to track parts across a product's entire lifecycle. For users on the service side of the house, the new release offers a graphical representation of service order lines, which should enable CSRs to better understand complex interactions with customers, Johns noted.
For ERP LN users wearing financial visors, embedded localization enables North American companies with operations overseas to see financial results in local currencies. Previously customers had to ask the software to compute conversions, Johns explained.
The new business templates, meanwhile, are aimed at manufacturers in ERP LN's target industries that are looking to optimize the way they interact with suppliers on the shop floor. The templates, for example, can be used to define how different part numbers with the same specs supplied by different vendors can be substituted for one another in building a device -- a capability that should appeal to electronics manufacturers that use alternative parts to stuff printed circuit boards, Johns noted.
Moreover, the templates could be used to adapt standard business practices to specific manufacturer needs. Manufacturers that rely on vendor-managed inventory, for example, may want to receive materials directly on the shop floor -- bypassing the warehouse. The templates can be used to ensure that inventory is properly registered into ERP LN, Johns noted.
On a one-off basis, none of the ERP LN upgrades appear all that significant because the software suite is already considered functionally rich, and continues to receive architectural improvements, AMR's Shepherd noted. This upgrade cycle is reflective of SSA's strategy, he said, which tends to focus more on user enhancement requests and less on functional requirements that would enable the vendor to expand its market segment reach.
"What this means is that what is in the new release is a whole bunch of small items that are pretty unexciting for anyone other than users of the products," he noted.
However, the approach is critical as SSA attempts to hold onto a mature customer base. By spending a high percentage of revenue on things customers need, the company can ward off market intrusions by SAP and Oracle, both of which, Shepherd said, are "spending a lot of money on things [manufacturing] users don't care about" -- such as helping them move into new industries such as financial services or new geographic markets.