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Consolidation has been a major theme among enterprise resource planning (ERP) software providers during the last five years. Oracle Corporation’s purchase of Siebel Systems, Inc.; PeopleSoft, Inc.’s acquisition of JD Edwards; and then Oracle’s purchase of PeopleSoft, captured most of the attention. In addition, but with a little less fanfare, another layer of ERP software providers (positioned slightly below these large players) has also been consolidating. Among them were SSA Global Technologies, Inc. and Infor Global Solutions. SSA, founded in 1981, developed the popular package known as BPCS® (pronounced “Bee-Pix”). Starting in 2001, SSA began a series of acquisitions, including PRMS, MANMAN, Elevon, Inc., Baan, and PRISM, among others. By the end of its acquisition stream, SSA’s line card consisted of more than 15 different products and an install base of more than 13,000 customers. At about the same time, another software firm, Infor (itself a product of acquisitions) executed a similar strategy. Between 2003 and 2005, Infor acquired NXTrend, Lilly, Mapics, GEAC, and others. Then, in 2006, Infor acquired SSA and all of its products. So what has happened to BPCS amidst all of these market moves? After a new version release, Infor now markets ERP LX (the package formerly known as BPCS) as one of its flagship products. As a result, many thousands of BPCS customers are considering whether or not to proceed with the major upgrade to ERP LX they need to stay current with the Infor product and its associated maintenance. With all of the turmoil accompanying this consolidation spree, it’s no wonder that SAP, the world’s leading provider of business software and, known for its organic-growth strategy, has begun aggressive pursuit of this space once occupied solely by smaller niche players such as BPCS. By applying pre-configured templates and using SAP’s industry-specific best practices, numerous small and midsize companies have implemented SAP software successfully. What was once considered an ERP solution only for the largest of companies, typically with more than $2 billion in revenue, SAP now has a successful track record with small and midsize companies, typically $100 million - $1.5 billion in revenue. Given this chain of events, many BPCS user companies are now asking the question: “If I am going to incur the time and expense of a major upgrade to ERP LX, should I take a look at SAP before committing my company to such a big project?” To answer this question, Hitachi Consulting interviewed an ex-CIO, Marsha Williams, who implemented both packages at her former employer, an FDA-regulated manufacturer. Ms. Williams has recently taken a position with Tatum LLC, the nation’s largest executive services firm. Hitachi Consulting: Historically, what have been BPCS’ strengths? What would you say are

the main reason’s for its popularity?

Moving Beyond BPCS: A CIO’s Perspective An Interview with Former CIO Marsha Williams, current Tatum LLC partner



Ms. Williams: First, BPCS has always been strong on the shop floor, especially for FDA-

regulated industries. Its trace/track and lot-management functionality support the complex requirements found in food and beverage, pharmaceutical, and medical device manufacturers. Similarly, its quality-management system is the best I’ve ever seen. Second, BPCS’ ability to handle promotions and deals has also been a key selling feature. Again, medical, pharmaceutical, and food & beverage all have highly creative and complex transaction-processing requirements in this area and BPCS can handle the toughest of them.

Hitachi Consulting: How would you compare those strengths to SAP? Ms. Williams: SAP is strong in all of those areas, as well. In terms of processing the

transactions in an FDA-regulated industry, feature for feature, it is difficult to find an area where the two packages differ significantly.

Hitachi Consulting: Then how can someone who is considering both packages differentiate the

two? Ms. Williams: From my experience with both packages, there are two key functional differences

– supply chain planning and business analytics. These are BPCS’ biggest downfalls and SAP’s biggest strengths.

In terms of analytics, BPCS has never had a truly integrated solution. Cognos built the

sales analysis and then SSA took over to build the rest. It never worked as intended. The biggest complaint I have about BPCS is its ability to get the data out.

This disability is most painful in supply chain planning where sales and operations

planning (S&OP) best practices require sophisticated forecasting and the ability to do what-if analysis on inventory positioning, etc. Compounding the lack of information is an unsophisticated planning module that has not kept up with modern techniques, such as general constraint-based planning.

SAP, on the other hand, has spent the last 10 years making more and more

improvements to its ability to get the data out. Its SAP NetWeaver® Business Intelligence component (formerly SAP Business Information Warehouse) [OV] has taken the software’s analytical capability to a new level. SAP has integrated SAP NetWeaver BI [OV] into its applications so that it’s not a bolt-on component [OV]. This is a huge advantage in today’s world where analyzing, forecasting, and predicting outcomes is a company’s best competitive edge.

And, of course, SAP Advanced Planning & Optimization (SAP APO) [OV] leads the pack

in optimizing your supply chain from the network to the shop floor schedule. For companies with sophisticated planning scenarios, BPCS just doesn’t compete here.

Hitachi Consulting: Okay, that covers the differences in the software. What about the effort

involved in configuring the two packages? Ms. Williams: That’s where I believe BPCS has an edge over SAP. Simply put, BPCS is

simpler to set up and run. SAP can be configured to work in many more industries than BPCS. From the communications industry to healthcare to manufacturing, SAP can work



in any of them. Let’s face it, this breadth gives SAP many more features than BPCS and that, in

turn, makes it more complex to implement.

Of course, SAP’s investments in industry best practices, coupled with pre-configured implementation templates, have done a lot to change this. In the future, we may see that SAP is just as easy, if not easier to implement, but historically speaking, BPCS has the upper hand.

Hitachi Consulting: I would imagine that the effort involved in configuring SAP versus upgrading BPCS is the main reason a BPCS customer would decide not to consider SAP.

Ms. Williams: Well, there are a number of hidden technical costs to a BPCS upgrade. If CIOs

are doing their homework, they’ll discover that, from a technical architecture standpoint, it’s a re-implementation, not an upgrade.

For example, BPCS v6 uses semantic gateways, known as SMG’s, to feed interfaces into screens for validation. FDA-regulated industries have liked this feature because it gives the appropriate control and a low potential for data-b integrity problems. ERP LX (a.k.a. BPCS v8) has XML-based interfaces. Depending on the SMG’s, an upgrade may require re-programming all the interfaces in XML.

Other technical factors to consider are that v6 to v8 requires separate instance migration

and there are significant database changes. Any custom code will have to be examined and possibly re-written. Also there is a significant investment in hardware and software move to Websphere/AS/400.

And then, of course, there’s the support factor. Hitachi Consulting: What’s the hidden cost there? Ms. Williams: Well, it’s no secret that when SSA bought Baan it stretched its R&D and

resources quite a bit. In Europe, for example, SSA riffed 80 percent of its BPCS resources. For customers with European operations, this really hurt. Overall, SSA’s ability to support BPCS took a hit.

Then, when Infor bought SSA, there was a huge exodus of BPCS support resources. These resources went to other software providers. Pair that with the fact that ERP LX is still new and buggy, and the result is that a BPCS shop now needs to be self-supporting. If I were considering an upgrade, I would make sure that I had the in-house resources to do the project and to support the application going forward. Even if I had these resources now, I’d put some serious succession-planning dollars in my budget to ensure I have the team I need in the long haul.

Hitachi Consulting: So, what is your opinion on the longevity of BPCS versus SAP? Ms. Williams: That’s anyone’s guess, but if I had to speculate, there are a few factors to

consider. First, Infor has a ton of products to support and continue to develop. How



many support dollars will go toward BPCS versus the rest of its line card? SAP has one product.

Anyone can do the math here. The second factor is the sheer size of SAP and its R&D budget. It dwarfs Infor’s. This is

best demonstrated in SAP’s product roadmap. Industry by industry, SAP can tell you what’s planned in the next release and what’s planned out into the future. The amount of ongoing SAP development is significant.

The bottom line is this: Even if you’re convinced that BPCS is here to stay, should you continue to invest your IT dollars in a product that will develop more slowly than the competition? If a company considers IT to be a strategic asset, then SAP is a better long-term play.

Thank you for your insight, Ms. Williams. IT leaders are charged with advising senior management on infrastructure investments and the ability of those investments to meet strategic business objectives. Given the ERP landscape today, investing in the right platform for long-term business success is more important than ever. Both Tatum Partners and Hitachi Consulting are committed to helping our clients work through these kinds of decisions.

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About Hitachi Consulting

As Hitachi, Ltd.'s (NYSE: HIT) global consulting company, Hitachi Consulting is a recognized leader in

delivering proven business and IT solutions to Global 2000 companies. We leverage decades of business

process, vertical industry, and leading-edge technology experience to understand each company's unique

needs. From business strategy development through application deployment, we are committed to helping

clients quickly realize measurable business value and achieve sustainable ROI.

With offices in the U.S., Japan, and Europe, Hitachi Consulting's client base includes nearly 35 percent of the

Fortune 100, 25 percent of the Global 100, as well as many leading mid-market companies. We offer a

client-focused, collaborative approach, which integrates strategy, people, process and technology, and we

transfer knowledge throughout each engagement. For more information, call 1.877.664.0010 or visit

www.hitachiconsulting.com.

Hitachi Consulting -- Inspiring your next success!®

About Tatum LLC

Tatum is the largest and fastest-growing executive services firm in the United States, helping companies in

transition to accelerate business success and create more value.™ Through 33 offices nationwide, Tatum's

700+ executive partners and professionals provide strategic and operating leadership in finance and

information technology. Tatum is distinct in its ability to immediately mobilize and integrate the right

leadership to assess, forecast, plan and oversee any business scenario. Founded in 1993, Tatum is based in

Atlanta. For more information, please visit www.TatumLLC.com.

Hitachi 053107

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