By Timothy Prickett Morgan

Having just finished its fiscal year, and a rough one at that, System Software Associates is looking forward to a better year during fiscal 1999. To that end, William Steuk, chairman and CEO of SSA, has been out telling Wall Street about its prospects and hopes for the coming year. Steuk certainly has his work cut out for him. He took over from company founder Roger Covey last April after the company saw sales of its Business Planning Control System (BPCS) client/server suite head south and its delivery of a suite of software for Windows NT get pushed out a year,. In July, these and other problems in Asia and Europe forced the company to lay off 12% of its 2,250 employees, shutter 25% of its office space and take a $120m hit on its books. As Steuk succinctly put it when announcing the layoffs, in its fiscal 1997, SSA was in the throes of survival and living hand to mouth. Steuk’s primary goal is to return his company to profitability and growth in 1999, and he has some reason to be optimistic about getting 15% revenue growth and breaking $500m in sales for the coming year.

AS/400 still dominates

For one thing, about 85% to 90% of SSA’s sales are for AS/400- based software, and according to AS/400 experts who know SSA’s ERP suite as well as those of its competitors JD Edwards, PeopleSoft and Baan, BPCS is still, technically speaking, a very good suite of software for AS/400s. Its customers are generally happy, although frequently SSA does something to annoy them – it was contemplating charging for Y2K fixes in 1997, which rankled customers until it changed its mind. Moreover, SSA is taking a hint from the rest of the industry and restructuring its product sales so it can make more money on services than on software license fees. In the first three quarters of fiscal 1998 (ended July 31), SSA had $147m in services fees compared to $161m in license fees; a year earlier, services fees for the first three quarters of 1997 were only $92m on $213m in license fees. It all comes out to the same money – just over $300m in total sales – but the way customers feel about it is different and so is the sales pitch. With the new approach, SSA keeps software fees low and charges for software customization at levels that are on par with its competitors. Now the company says all it has to do is sell more software licenses than it has and overall revenue growth will swell that much faster because the whole base buys some services every year. It is more important to have 10,000 customers who pay something every year in this market than it is to have 5,000 customers who upgrade every two or three years, and have to be coaxed and cajoled to do it at that.

Unix

It won’t be all that hard to get BPCS V6 customers running on Hewlett-Packard kit to move to new software. Yesterday, SSA announced delivery of BPCS V6.0.04, a release that sports much improved performance on HP 9000 Unix servers. SSA worked with HP and claims to have been able to squeeze up to two to ten times the performance (response time) and five times the scalability (aggregate throughput) out of HP 9000 servers running the updated BPCS. SSA says that 30 companies are at this moment moving to the new code. On benchmark tests that were run in conjunction with HP, SSA loaded up its financial, supply chain and manufacturing modules on an HP K570 server, which could support 100 simultaneous and 300 to 400 connected users. A V2250 server could support 500 simultaneous users and about 1,500 to 2,000 connected users in a three tier configuration including five K570 application servers. While SAP’s tests show that it can support 6,200 users on a V2250 in a three tier configuration, its tests only include the sales & distribution (SD) module of the R/3 suite, which is a modest workload, and the German company threw a lot more iron at R/3 as well. In January, SSA will deliver BPCS V6.1 on OS/400 and HP-UX – the company does not talk about IBM’s AIX or Sun’s Solaris in its product marketing any more, but presumably 6.1 will at least run on AIX. That release will include support for the new euro currency, improved features for companies in the automotive and pharmaceutical industries as well as extended e-commerce functions. BPCS 6.1 will also have hooks to cooperate with i2’s popular Rhythm suite of supply chain software, the first of what SSA says will be many cooperative links with other software suites. While this extended support will make existing customers happy and will even get SSA a few deals, the real kicker comes in the third calendar quarter with BPCS V7, which will be the first release of BPCS to run on Windows NT. SSA has already tested its CASE tool and knows how to generate BPCS modules for NT and has even signed a big deal with Hewlett-Packard to help it develop and test the NT version. While this NT suite is over a year late to market, and SSA stands to make its share of sales if it can get HP, the data base vendors and the big accountancies (SSA already has tight ties with PriceWaterhouse-Coopers) all behind it on announcement day next year. Everything depends on whether or not the code works, and that is where SSA has had lots of troubles in the past. We will all have to wait and see. á