This business process helps the diverse teams managing materials, formulas, packaging, and vendors to better rationalize their charges. By using the integrated design and compliance applications, more projects should be completed, and more savings should be delivered. Also, since all product development teams have insight into material, vendor, formula, and packaging status, redundant materials or rationalized materials are not re-introduced, and cost savings are sustained. Additionally, as part of new material introduction, the sourcing team should have visibility the instant a new experimental material is entered; alternate approved materials or vendors can then proactively be suggested.
Many companies have cross-functional teams which continually assess material value-add and regulatory risk. In an effort to minimize compliance risks, one customer reportedly turned off over 48 percent of its materials, and achieved significant cost savings. As companies buy, sell, close, or reconfigure plants, they need strategic sourcing suggestions. To that end, Optiva plays a critical role in requalifying, reformulating, and repackaging, in order to ensure regulatory, cost, and quality compliance. Companies are also finding that they are making sourcing decisions based on incomplete information, although the item and vendor item module in traditional ERP systems is well-suited for nascent regulatory requirements. A hypothetical scenario provides a good demonstration of the utility of this kind of module: Once an ERP item (a vitamin, for example) is entered and certified, alternate vendors may be sourced from, and entered as vendor-specific items, with differences in cost also entered. If a new allergen law (let's say) is enacted, it might suddenly be relevant that the first vendor uses peanut oil as a processing aid. But if one or more of the vendors uses vegetable oil as a processing aid instead, then a critical decision needs to be made.
Since sourcing is a numbers-oriented game, factors such as compliance risks and product quality need to be included. Several customers have integrated such sourcing metrics into product development, in order to ensure that products require less post-launch effort when developing alternate sources for single-sourced vendors, or when finding lower cost providers. These customers will focus R&D efforts on having fewer single-source materials, or will calculate the percentage of materials coming from preferred vendors. Integration of Optiva with ERP systems allows product development to leverage high volume (and often in-stock) materials. Rather than simply selecting an approved material, using these higher volume or in-stock materials means that managers can avoid generating new purchase orders, as well as the carrying costs of partial drums (or other bulk packages). If the material has shelf life issues, material write-off can be avoided too. Rather than needlessly duplicating existing strategic sourcing capabilities, Optiva has extended these capabilities to drive cost reduction and cost avoidance.
Optiva can also send recipes compliant with Instrumentation, Systems, and Automation Society (ISA) standard S88 to manufacturing execution systems (MES) used at multiple customer sites. Using integrated business process management (BPM) capability, the system can integrate with one or more ERP and MES systems, which should eliminate time and cost wastage, while optimizing cost performance and compliance. As these platforms are approved for multiple plants and markets, product platforms that are truly global can be relatively quickly adapted to company specificities, and companies can minimize time to global rollout.
With every new release, Optiva's portfolio management capabilities are enhanced. Most customers are using rule-based scoring and prioritization, risk rating, and readiness rankings, which are rolled up with each activity to provide near real-time visibility in Web-based dashboards. Being focused on process manufacturing, Optiva has developed a process-focused product configuration capability which is based on application platforms. Common uses include color matching, flavoring, or scenting of application platforms. Rather than maintaining a separate formula and packaging bill of material (BOM) for every possible combination, customers are building product platforms which are certified for permissible options (by plant, market, brand, use and user, and sometimes customers). This allows new requirements to be matched to the option, and also allows the most cost-effective and compliant intermediate material to be identified. A unique formula and package can be derived and validated for compliance.
Still, this laser-sharp focus is likely the reason why SSA Global was not more aggressively involved in the bidding for Formation Systems, although it would come as no surprise to learn that it was involved in preliminary (at least) merger discussions. Again, lately SSA Global has been considering only the acquisitions that would help in a "bigger picture" manner. In a way which is analogous to its CRM case, the vendor has a decent PDM solution stemming from Baan, but admits that the product's low brand recognition has limited it to only the existing install base (and even there it has to contend with best-of-breed PLM products). Conversely, as mentioned earlier, the vendor has become a feared competitor in the supply chain execution (SCE) space, given the successful assimilation of once well-known products such as EXE or CAPS (indications are that the license revenues from these products have quadrupled under SSA Global, compared to their status under their formerly independent and struggling vendors). Thus, if and when the time comes, SSA Global will most likely acquire a well-rounded and well-known PLM product (or a strategic sourcing and supply chain planning [SCP] product), although it recognizes that specialty process PLM vendors such as Selerant, Prodika, Sequencia, and IMS would be a good fit for its process-manufacturing-oriented products, which stem from both BPCS and the former Marcam's Protean and PRISM products (see The Name and Ownership Change Roulette Wheel for Marcam Stops at SSA Global). For the same reason, Infor will also likely remain in the hunt for more solutions, in order to round out its PLM, EAM, and product configurator capabilities.
The Optiva strategy is to develop tier one applications in modeling, vendor collaboration, compliance, and portfolio management, and also to increase its open integration capabilities. This will likely be used to integrate with applications from Infor or other vendors; as these tier one capabilities are developed, Infor pledges to develop best practices offerings that can be deployed by smaller process manufacturing customers.
This brings us to Infor's latest acquisition, which again highlights a differing strategy compared to SSA Global. In early November 2005, Infor's parent company, Golden Gate Capital (a San Francisco, California [US]-based private equity firm focused on investing in high-growth businesses in change-intensive industries), and Canadian company Geac Computer Corporation Limited (TSX: GAC and NASDAQ: GEAC) reached a firm agreement that Golden Gate Capital would acquire Geac in an all-cash transaction valued at approximately $1 billion (USD), which represented a 27 percent premium over the trading price at the time. Geac thereby capitalized on its diverse industry-specific focus and expertise in the manufacturing, government, financial services, health care, and retail sectors. The company claims that its vertical market success will be enhanced by the current initiatives and momentum within the Golden Gate portfolio.
With more than $2.5 billion (USD) under management, the technology businesses acquired by Golden Gate are carefully selected based on their growth potential and ability to deliver vertically-specific enterprise software offerings and deep market expertise. Golden Gate views Geac as a natural addition to a successful strategy of looking at acquisitions with a different perspective compared to most private equity firms. Namely, as witnessed with Infor, the parent firm seeks to integrate companies that can grow significantly faster together than they could on their own. This strategy has been implemented successfully with respect to Concerto/Aspect Software, AttachmateWRQ, Inovis, and Infor; the firm pledges to aggressively support the Geac business units with its "assembler" acquisition strategy. Consequently, upon completion of the acquisition, Geac will be reorganized into two separate Golden Gate Capital portfolio companies.
As part of the reorganization, Infor will acquire Geac's ERP software products, including System21, RunTime, Ratioplan, StreamLine, and Management Data; the employees who support them will move to Infor. By bringing together the resources, talent, and expertise of Geac and Infor, customers should benefit from the combined entity's solutions and services. On one hand, Infor customers will have access to additional domain expertise, while on the other hand, Geac's ERP customers should benefit from increased product diversity, additional product investments, and improved global reach. In addition to the immediate product and service portfolio enhancements, customers should also benefit from Infor's strong financial backing and proven deep focus on developing enterprise solutions for manufacturers and distributors.
Many companies have cross-functional teams which continually assess material value-add and regulatory risk. In an effort to minimize compliance risks, one customer reportedly turned off over 48 percent of its materials, and achieved significant cost savings. As companies buy, sell, close, or reconfigure plants, they need strategic sourcing suggestions. To that end, Optiva plays a critical role in requalifying, reformulating, and repackaging, in order to ensure regulatory, cost, and quality compliance. Companies are also finding that they are making sourcing decisions based on incomplete information, although the item and vendor item module in traditional ERP systems is well-suited for nascent regulatory requirements. A hypothetical scenario provides a good demonstration of the utility of this kind of module: Once an ERP item (a vitamin, for example) is entered and certified, alternate vendors may be sourced from, and entered as vendor-specific items, with differences in cost also entered. If a new allergen law (let's say) is enacted, it might suddenly be relevant that the first vendor uses peanut oil as a processing aid. But if one or more of the vendors uses vegetable oil as a processing aid instead, then a critical decision needs to be made.
Since sourcing is a numbers-oriented game, factors such as compliance risks and product quality need to be included. Several customers have integrated such sourcing metrics into product development, in order to ensure that products require less post-launch effort when developing alternate sources for single-sourced vendors, or when finding lower cost providers. These customers will focus R&D efforts on having fewer single-source materials, or will calculate the percentage of materials coming from preferred vendors. Integration of Optiva with ERP systems allows product development to leverage high volume (and often in-stock) materials. Rather than simply selecting an approved material, using these higher volume or in-stock materials means that managers can avoid generating new purchase orders, as well as the carrying costs of partial drums (or other bulk packages). If the material has shelf life issues, material write-off can be avoided too. Rather than needlessly duplicating existing strategic sourcing capabilities, Optiva has extended these capabilities to drive cost reduction and cost avoidance.
Optiva can also send recipes compliant with Instrumentation, Systems, and Automation Society (ISA) standard S88 to manufacturing execution systems (MES) used at multiple customer sites. Using integrated business process management (BPM) capability, the system can integrate with one or more ERP and MES systems, which should eliminate time and cost wastage, while optimizing cost performance and compliance. As these platforms are approved for multiple plants and markets, product platforms that are truly global can be relatively quickly adapted to company specificities, and companies can minimize time to global rollout.
With every new release, Optiva's portfolio management capabilities are enhanced. Most customers are using rule-based scoring and prioritization, risk rating, and readiness rankings, which are rolled up with each activity to provide near real-time visibility in Web-based dashboards. Being focused on process manufacturing, Optiva has developed a process-focused product configuration capability which is based on application platforms. Common uses include color matching, flavoring, or scenting of application platforms. Rather than maintaining a separate formula and packaging bill of material (BOM) for every possible combination, customers are building product platforms which are certified for permissible options (by plant, market, brand, use and user, and sometimes customers). This allows new requirements to be matched to the option, and also allows the most cost-effective and compliant intermediate material to be identified. A unique formula and package can be derived and validated for compliance.
Still, this laser-sharp focus is likely the reason why SSA Global was not more aggressively involved in the bidding for Formation Systems, although it would come as no surprise to learn that it was involved in preliminary (at least) merger discussions. Again, lately SSA Global has been considering only the acquisitions that would help in a "bigger picture" manner. In a way which is analogous to its CRM case, the vendor has a decent PDM solution stemming from Baan, but admits that the product's low brand recognition has limited it to only the existing install base (and even there it has to contend with best-of-breed PLM products). Conversely, as mentioned earlier, the vendor has become a feared competitor in the supply chain execution (SCE) space, given the successful assimilation of once well-known products such as EXE or CAPS (indications are that the license revenues from these products have quadrupled under SSA Global, compared to their status under their formerly independent and struggling vendors). Thus, if and when the time comes, SSA Global will most likely acquire a well-rounded and well-known PLM product (or a strategic sourcing and supply chain planning [SCP] product), although it recognizes that specialty process PLM vendors such as Selerant, Prodika, Sequencia, and IMS would be a good fit for its process-manufacturing-oriented products, which stem from both BPCS and the former Marcam's Protean and PRISM products (see The Name and Ownership Change Roulette Wheel for Marcam Stops at SSA Global). For the same reason, Infor will also likely remain in the hunt for more solutions, in order to round out its PLM, EAM, and product configurator capabilities.
The Optiva strategy is to develop tier one applications in modeling, vendor collaboration, compliance, and portfolio management, and also to increase its open integration capabilities. This will likely be used to integrate with applications from Infor or other vendors; as these tier one capabilities are developed, Infor pledges to develop best practices offerings that can be deployed by smaller process manufacturing customers.
This brings us to Infor's latest acquisition, which again highlights a differing strategy compared to SSA Global. In early November 2005, Infor's parent company, Golden Gate Capital (a San Francisco, California [US]-based private equity firm focused on investing in high-growth businesses in change-intensive industries), and Canadian company Geac Computer Corporation Limited (TSX: GAC and NASDAQ: GEAC) reached a firm agreement that Golden Gate Capital would acquire Geac in an all-cash transaction valued at approximately $1 billion (USD), which represented a 27 percent premium over the trading price at the time. Geac thereby capitalized on its diverse industry-specific focus and expertise in the manufacturing, government, financial services, health care, and retail sectors. The company claims that its vertical market success will be enhanced by the current initiatives and momentum within the Golden Gate portfolio.
With more than $2.5 billion (USD) under management, the technology businesses acquired by Golden Gate are carefully selected based on their growth potential and ability to deliver vertically-specific enterprise software offerings and deep market expertise. Golden Gate views Geac as a natural addition to a successful strategy of looking at acquisitions with a different perspective compared to most private equity firms. Namely, as witnessed with Infor, the parent firm seeks to integrate companies that can grow significantly faster together than they could on their own. This strategy has been implemented successfully with respect to Concerto/Aspect Software, AttachmateWRQ, Inovis, and Infor; the firm pledges to aggressively support the Geac business units with its "assembler" acquisition strategy. Consequently, upon completion of the acquisition, Geac will be reorganized into two separate Golden Gate Capital portfolio companies.
As part of the reorganization, Infor will acquire Geac's ERP software products, including System21, RunTime, Ratioplan, StreamLine, and Management Data; the employees who support them will move to Infor. By bringing together the resources, talent, and expertise of Geac and Infor, customers should benefit from the combined entity's solutions and services. On one hand, Infor customers will have access to additional domain expertise, while on the other hand, Geac's ERP customers should benefit from increased product diversity, additional product investments, and improved global reach. In addition to the immediate product and service portfolio enhancements, customers should also benefit from Infor's strong financial backing and proven deep focus on developing enterprise solutions for manufacturers and distributors.
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