SSA Global prepares for ERP price war

Newly renamed enterprise resource planning (ERP) vendor, SSA Global, is convinced that a price war is looming in the enterprise software market.

The acquisitive company, whose latest acquisition was Baan for $135m (£81.6m) in July, predicts that within a year it will top $1bn in sales and have 20,000 customers - up from around $600m and 16,000 customers today.

But the real goal is 25,000 customers, which it says will translate to roughly a 40 per cent market share of the ERP market.

"That's when we get market power and can initiate more aggressive pricing," said Mike Greenough, SSA Global's president, chairman and chief executive, at the company's user conference in Orlando, Florida this week.

Greenough said that SSA Global is more than ready for dramatic price cutting, and that long-time misfit Baan would soon make a profit.

"Our average contract selling price is around $250,000 today. Within six to nine months we will be able to be profitable even if that price falls to $50,000," he told vnunet.com.

"Baan will be profitable for the first time in its history by the end of this quarter."

SSA Global maintains that its spate of acquisitions over the past few years - six since May 2001, with several more on the way - has given the company the ability to maximise its existing ERP user base as well as win entry to new customers.

"Twenty per cent of our sales are now coming from new customers," said Greenough.

But the company's existing user base is its key strength, and the target for much of its future sales.

According to Greenough, 33 per cent of SSA Global's revenues come from licence sales, and in the EMEA markets that was as high as 40 per cent in the company's last quarter.

Even so, the company's sales remain largely dependent on the manufacturing sector, which represent more than 80 per cent of sales worldwide.