SSA buyout creates third-largest ERP

Gartner says purchase designed to propel Infor into the top tier

The ERP sector has experienced another round of consolidation, with Infor buying SSA Global Technologies for US$1.4 billion (NZ$2.23 billion).

The deal is a case of a buyer being bought — in the past five years, SSA has bought Baan and several other vendors.

Infor’s purchase was announced on May 14 and will result in the formation of the third-largest ERP vendor after SAP and Oracle. The deal is subject to regulatory approval and expected to close later this year.

Announcing the buy, Infor chief executive Jim Schaper said that with SSA integrated, Infor will have $US1.6 billion in revenue.

SSA head Mike Greenough says, “In a rapidly consolidating marketplace we have seen that size and scale matter.

“This transaction brings value to all of our key stakeholders, our investors, our customers and our employees.”

However, analyst firm Gartner has sounded a note of caution, saying in a research note on the buy that “although Infor generated more than 1,000 new accounts during 2005, selling outside of its installed base may prove to be more of a challenge in the future as the number of offerings with overlapping capabilities expands with the SSA Global acquisition.”

The note also says, “Although Infor has a policy of never ‘sun-setting’ a product, Gartner believes it will eventually need to commit to a produce convergence strategy.”

Gartner also says the buy may be designed to propel Infor into the top tier of ERP vendors. “But, for Infor to effectively compete beyond tier two divisional-level needs, its product strategy must further evolve to support service-oriented architecture strategies, as well as corporate-level financial management and human capital management technologies”.

Computerworld columnist Ephraim Schwartz notes, “Infor’s architectural strategy for the combined company is unclear and [Infor chief executive] Schaper says Infor is committed to SOA, but the company is in the applications business, not the infrastructure business.”

Infor will have to “rely on integrating with someone else’s middleware stack for integration and interoperability,” Schwartz says.

New Zealand SSA customers include Fisher and Paykel Healthcare, which uses the vendor’s MK (manufacturing knowledge) package.

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