Baan: Begin the Beguine
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After Herndon, Va.-based Baan suffered major financial losses and significant executive defections, including exits of CEO Mary Coleman and CFO James Mooney, speculation was rampant. Would the former ERP leader fold? Would it be absorbed by a larger, stronger ERP player? And was their 1997 acquisition of CRM developer Aurum all for nothing?

Shortly after taking charge of the flailing company, new CEO Pierre Everaert announced the creation of an independent subsidiary focused on CRM. The Golden, Colo.-based company will be made up of Baan's CRM-related acquisitions, lead by Aurum but also including the Beologix product configuration suite and the Matrix sales support software.

The immediate gains look to be a boost in Baan shareholder equity, which had dipped below $10 million during a harsh restructuring in the fourth quarter of 1999, and a more efficient, focused, core Baan operation. But what is the significance of this spin-off from the CRM perspective? Is Aurum back? "Aurum was always there. Spinning it off as a company shouldn't imply that it will have any more presence in the market," says Christopher Selland, vice president of CRM research at the Yankee Group. "I don't think being thrust back into the market re-establishes Aurum's presence. I think the company has to execute."

As of this writing, Baan had not yet named a management team for its new CRM spin-off. Given the defection of Coleman, who was Aurum's chief before the merger, as well as other key departures over the past three years, this will not be easy. "Unfortunately, the company has lost some of its best people," says Selland.

It may take some doing just to get CRM customers to look at the offering of the new company, whose name had not been announced at press time. The Aurum name has been virtually wiped off the map during Baan's tenure, but may be the best choice. Beologix and Matrix are European products with questionable brand recognition.

But the spin-off, catchy name or no, might have enough tools to create a compelling, if not wholly unique, product once more. "There's room for what they're trying to do," says Selland. "CRM and configuration tools, in some markets, belong together. I think there's a pretty natural fit there, but it doesn't differentiate them."

Aside from convincing customers and integrators that the new company is real and here to stay, that may be their greatest challenge--discovering a niche in an already crowded market. Laurie Orlov, research director of e-business applications at Forrester Research, suggests that the spin-off itself may provide a fresh perspective for the market. "This is kind of refreshing. There aren't that many high-end CRM offerings that stand alone," she says, alluding to the recent acquisitions of Vantive by PeopleSoft and Clarify by Nortel Networks. "At the high end of the market, if the Aurum product is still competitive, there will be room."
--Jason Compton

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