Baan's E-Biz Rise -- and Fall?

Rome -- Perhaps inspired by the towering pillars dotting the landscape, Baan erected pillars of its own -- namely, e-business pillars. At its inForum conference, taking place today among the ruins of the world's greatest empire, Baan unveiled supply-chain management (SCM) and product lifecycle management (PLM) offerings that go hand-in-hand with its customer-relationship management (CRM) software announcement in January. These three pillars, Baan executives say, coupled with a Web services-based integration strategy and an unlikely partnership with rival SAP, will catapult the once-embattled enterprise software vendor to lofty heights. "We promise to bring back Baan as a major force in the enterprise application market," says Laurens van der Tang, president of Baan. The road to recovery though, won't be easy. For starters, Baan's announcements put the company in the crosshairs of powerful rivals SAP, PeopleSoft and Oracle -- all of whom beat up on Baan in the heady days of enterprise resource planning (ERP) software. And Baan admits it's a latecomer to the crowded e-business arena. Indeed, parent company Invensys, which saved Baan from financial ruin by its acquisition 18 months ago, is making a huge bet. Invensys plans to invest heavily in its new e-business strategy, which is shouldered almost entirely by Baan products and services. In part, this means "selling assets to fund investments in service of our customers," says Rick Haythornthwaite, CEO of Invensys. He acknowledges that Baan was poorly run in the past, resulting in "sprawling conglomerates." The goal now is to simplify the corporate structure and offerings, and focus on bringing value to customers. Hence the three pillars. The Three Pillars Baan launched iBaan for SCM under a dedicated business unit, which combines software and services to help customers flatten inventory and improve supplier relationships. A key feature of iBaan for SCM is a module called Collaborative Dispatch, an event-management system for logistics planning. The module manages when and where products need to be delivered, using real-time tracking and status notification features. Industry watchers peg the SCM opportunity at around $5 billion worldwide, growing to $16 billion by 2005. Later this summer, Baan plans to formally launch iBaan for PLM, which is software that helps companies get a handle on managing the lifecycle of a given product, from initial concept to design, production, maintenance and even retirement. All of this requires close electronic collaboration among suppliers and customers, in order to keep everyone in the loop regarding expectations, timeliness and market opportunity of the product. The rewards, though, make it all worthwhile: PLM can boost a company's bottom line by reducing cost and waste, largely from surplus inventory. The last major e-business thrust is iBaan for CRM, unveiled earlier this year, which has been beefed up with analytics and reporting features. Customers can now create customized reports showing such things as statistics and data reports about sales pipelines, broken down by sales teams or territories. All of Baan's e-business pillars are tailored toward a handful of industries, many of which are on the frontlines of technology and design. The industries include: aerospace and defense; automotive; industrial machinery and equipment; electronics; and process manufacturing. These industries play on Baan's strengths, says Sharon Ward, vice president at market researcher Hurwitz Group. "Baan has always appealed to innovators," she says. Pleasing the Crowd On the other hand, Baan's far-flung techno ideas often came at the expense of satisfying customers' real business needs. Baan's Laurens van der Tang admits execution has been a problem, which is why his company decided to become a champion, of sorts, for the customer. This way of thinking prompted Invensys to implement Baan software throughout the company. In order to lead with the customer, the thinking goes, it had to be a customer, "starting with our own operations," Haythornthwaite says. Invensys will also pitch Baan software to its 50,000-strong customer base. Baan already touts 12,000 customers, including Flextronics, Hitachi Data Systems, Coca-Cola and Boeing. In Q4 2001 Baan inked 128 deals, as companies sought to control costs. "Our preliminary tests show that, with the help of iBaan solutions, we may be able to obtain cost reductions of as much as 25 percent in administration costs alone, which could save us up to $32,500 per month," said Auster Nascimento, finance and general administration director of Multek, a large manufacturer of printed circuit boards based in Latin America, in a statement. Sales will flow through Baan's new Global Solution Services group, also announced today, and a network of channel partners. Global Solution Services is charged with developing Baan's broader solutions approach and working closely with customers at all stages of a project, from design to implementation and application management. When asked about potential channel conflict, Laurens van der Tang says, "Customers get to decide." But the most riveting testament to Baan's new customer-led focus might be a close partnership with SAP, which also peddles CRM and SCM offerings. Baan announced a 'plug-and-play' compatibility strategy, called iBaan OpenWorld Platform Connector for SAP. "Baan's new openness is unique in the software industry," says Ward. "It shows they're really letting the customer lead." Slaying the Integration Beast iBaan OpenWorld Platform Connector for SAP is a generic solution enabling customers to integrate parts of SAP systems to Baan software, such as an iBaan sales module with SAP R/3, without the need for modification, Baan claims. The connector is based on Baan's OpenWorld integration technology framework, which supports Web services standards such as SOAP, UDDI and WSDL. But Katherine Jones, analyst at Aberdeen Group, remains skeptical. Integration is the single biggest challenge facing e-business vendors and customers alike, she says, and everyone is touting a magic bullet. Simply put, a plug-and-play connector into a complex ERP system sounds a bit far-fetched. "This is not Martha Stewart and the glue gun," she says. "Does Baan even have the skill set to do integration with SAP?" While Jones believes Baan's overall e-business strategy is "logical and builds on the vendor's strengths," she points out the inherent danger of working closely with a rival like SAP, which is looking to sell its own CRM and SCM offerings. For SAP, the partnership is "a bit like a Trojan horse," she says. Tom Kaneshige also writes for Line56.com