Veteran Player Makes a Comeback Bid

Baan has a new owner, along with new offerings and product direction.

Officials at Erstwhile ERP software player Baan Co. have a message for potential customers: Were back.

An independent software company for more than 20 years, Baan fell on hard times in the late 90s and began to reposition itself from being an enterprise resource planning software developer to a maker of business-to-business applications. The company has been in turnaround mode since Invensys plc. purchased it in August 2000, and the efforts—and cash infusion—appear to be paying off with new products and new customers.

Earlier this month, Baan, which has headquarters in the Netherlands and Herndon, Va., launched a new module for its iBaan B2B e-commerce software. iBaan for IM&E (Industrial Machinery and Equipment) streamlines business processes by linking information from sales, engineering and production groups, officials said. The module will put engineering and pricing data in the hands of salespeople, resellers or customers to help provide greater order accuracy.

The software enables manufacturers to manage engineering changes internally and with supply chain partners. A self-service portal and automatic change propagation capabilities can be used to minimize supplier coordination costs.

iBaan Service Scheduler 2.0 for equipment-related service and maintenance management, which was also rolled out, lets companies better manage customer service and maintenance functions by extending the visibility of customer preferences.

Baan is also adding support for IFX (Interactive Financial Exchange), an XML specification that provides a common format for exchanging financial data electronically, to its iBaan solutions.

IFX is expected to be used by banks and other financial institutions to achieve quicker and more cost-effective fund information transfers.

To bolster its new-product story, Baan announced 51 contract wins in North America during the fourth quarter of last year. In the 19 months Baan has been part of Invensys, it has signed more than 300 new customers, seen a 50 percent increase in license revenue and been profitable for five quarters in a row, according to Susan Heystee, president of the companys Baan Americas division.

"Weve been strongly profitable since weve come through our downturn," Heystee said. "Weve really emerged as a strong company with quite a few new customers, and we see strong potential growth."

Not everyone is so upbeat. AMR Research Inc. reported that the majority of Baans customer wins were current-customer upgrades, rather than new-customer wins.

"I dont think weve seen any comeback yet," said Jim Shepherd, an analyst at AMR, in Boston.

London-based Invensys has been successful in applying some measure of financial stability and discipline to Baan. It has also done a good job reaching out to customers and providing much better support—something that was sorely lacking in the "dark days" at Baan, according to Rob Owen, vice president of information services at Microchip Technology Inc., a Baan software user.

"When you make an ERP decision, you are heavily invested," said Owen, in Chandler, Ariz. "Was I concerned with the health of the company? Absolutely. I saw the service degrade prior to the Invensys buyout."

But he has seen improvements.

"Callbacks have been quick, and high-priority problems dont stay on the list long," said Owens, who installed Baans 4B enterprise resource management software in 1998. "I dont need a lot of support from sales and marketing, but I am starting to hear about new products, so I feel like, definitely compared to the dark days—which seemed like a year before the buyout—that they are improving."

Rick Hawk, manager of systems applications at Bioproducts Inc., in Fairlawn, Ohio, was likewise concerned with Baans difficulties.

"You dont want to have to revisit ERP," said Hawk. "We are keeping a close ear to whats going on. The [4C] application is extremely strong, and whether [Baan] stayed under the same name we werent worried about, as long as its investments in the product carried on. And we see early signs of that."

Baan will make more noise about new products at its inForum conference in Rome next month, where officials will announce product enhancements to Baans CRM (customer relationship management), supply chain management and product lifecycle management suites.

"You will not see us go outside those markets," said Heystee. "We are staying very focused."

However, Baan may never compete head to head with its old ERP rivals.

"What hasnt happened [at Baan] is a dramatic product enhancement or [dramatic enhancement] to sales and marketing," said AMRs Shepherd. "Theyre pretty much where they were, and they serve the same markets. But they dont really get to play in the high end anymore."

For Baan to compete against the likes of SAP AG and Oracle Corp., it will have to accomplish two objectives, according to industry experts: generate new-license sales and have a corporate parent willing to invest in research and development.

"Thats the $64,000 question, whether Invensys was the right buyer for Baan," said Microchips Owen. "My observation is things have gotten better, and it looks good to me."