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Baan 'still core' to owner Invensys' strategy

Is Baan -- once the king of ERP in the manufacturing space -- ready to reclaim its crown?

Automation and controls company Invensys has moved to quash speculation over the future of Baan by saying the division...

is a "core" part of its future strategy, rebuffing rumors that the ERP vendor it bought for $800 million in May 2000 was about to be sold as part of its three-month-long strategic review.

But the U.K.-based Invensys has announced a massive restructuring operation of its own in a bid to pay off some of its $4.6 billion in debt, and also unveiled another strategic repositioning for Baan to make it fit into the "new Invensys."

Baan will now sit in Invensys' production management division, one of the two core divisions that Invensys has reorganized into, the other being energy management. Baan previously existed as part of its software systems division, which focused on four core areas: aerospace and defense, automotive, electronics and industrial machines. Although executives insisted the repositioning was consistent with Baan's strategic focus on "industrial enterprises," another top-level reshuffle does little to convey the impression that Baan's strategy is stable, even though this may have more to do with Invensys' troubles than Baan's.

Context

That said, Baan executives did their best to put a brave face on the restructuring, claiming the division has made "terrific" progress since it was acquired. The company said the last 18 months has seen the addition of over 300 new customers (bringing its total to about 6,000), profitability for the last five quarters, 50% growth in license revenue and a 40% increase in customer satisfaction -- although given the dire state of Baan's customer relations before Invensys, this is perhaps the least to expect. Baan also hailed the launch of iBaan -- its Web-enabled software suite -- its recent efforts in the CRM space, expansion into Mexico, Poland and China, and new or renewed strategic partnerships with IBM, Atos Origin, Crystal Decisions and IONA, as further signs of significant progress.

Restructuring

In addition to Baan, the newly formed ?1.6bn production management division comprises Foxboro measurement and process control software and the Wonderware manufacturing information software, as well as other interests including Triconex, APV and Eurotherm, serving industries as diverse as oil, gas, chemicals, power generation, food and beverage, healthcare and manufacturing. Baan will target these companies with a portfolio that includes CRM, supply chain management and product lifecycle management, as well as make greater use of its integration with other products in the division, especially Wonderware.

Services

Significantly, Baan president Laurens van der Tang said the company would also step up its services capabilities over the next 12 months through active recruitment of "talent." Although the company currently offers some limited services, most commonly consulting around its own application, it plans to encompass a broad range of services, specifically including integration with legacy systems, application lifecycle management and upgrade management. It's all part of Baan's vision to ensure its customers do "everything with Baan," says van der Tang, who also reaffirmed Baan's commitment to "aggressively innovate," outlining software that allows manufacturers to put in place build-to-order processes as one area of focus.

Conclusion

So is Baan -- once the king of ERP in the manufacturing space -- ready to reclaim its crown? It's difficult to say. Certainly, the company has to be applauded for the speed at which it has regained cost control and achieved profitability, at least on an operating basis. It proudly claims to be the only applications company dedicated to the cause of "industrial enterprises," although this is largely because rivals such as SAP have found more profitable vertical markets to branch into ? something Baan appears unlikely to aspire to under its current ownership. Tellingly, van der Tang said Baan is experiencing its most significant growth in Japan, a fact he largely attributed to the lack of aggressive competitors in this region. Credit to Baan for getting there first, but, on its own, picking off areas of the market that others have neglected is unlikely to return Baan to the top of the pile.


the451 (www.the451.com) is an analyst firm that provides timely, detailed and independent analysis of news in technology, communications and media. To evaluate the service click here.

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