Baan's Strategy to Compete

In a move to reboot its once-powerful brand, Baan has launched a strategy to increase its focus on enterprise industrial companies and grow its services business.

During a conference call today Laurens van der Tang, president of Baan, stressed that the ERP firm is still relevant and is an important core unit of parent company Invensys plc.

London-based Invensys has undergone a reorganization in which the holding company created four divisions. Baan will remain part of Invensys Software Systems, now called the Production Management division.

"A key reason for this call was that Invensys has announced a new strategy and that Baan is a core element and part of the manufacturing division," van der Tang said. "We have made progress and Baan is getting back in the market. We are profitable and we are reestablishing ourselves in the market."

Van der Tang's remark's about Baan's importance to Invensys were made to head off rumors that Baan would be sold off as part of the reorganization. Invensys' new Chief Executive, Rick Haythornthwaite(CQ), who arrived last October, undertook a mission to reevaluate and streamline the company's portfolio.

Part of Baan's strategy is to leverage and grow its historical focus in the manufacturing sector. "As we are coming from behind, we are the only application vendor focused on the industrial enterprise market. We haven't stopped developing these products for a second," he said, adding that the more than 1,100 employees are dedicated to research and development.

A central piece of its strategy is to extend Baan into the industrial enterprise with a new vision around what seems to be the marketing tagline Everything Made with Baan. "Our ambition is to be the pervasive solution that industrial enterprises use to build their products," van der Tang said.

As it brings to market its manufacturing applications, which include supply chain management and CRM, Baan is also looking to grow its services business by becoming an Admired Solution Provider, van der Tang said. That means, instead of just providing software or handing it off to a consultant or systems integration, Baan now wants to provide the talent to help implement its solution and integrate to other systems inside an enterprise.

He said the company historically has not done a good job at project management and is moving forward to acquire the skill sets to be able to provide those kinds of services. In fact, many of the CRM enterprise application providers such as Siebel Systems and PeopleSoft have seen their services revenue grow, and in some cases it is higher than their software revenue.

Even Microsoft Corp. has jumped headlong into building its services business. Last year it officially named Microsoft Consulting Services to go after business in select large accounts. Supplying IT services is a lucrative proposition for software companies. The best model is the services arm of IBM Global Services, which generated $35 billion in 2001, more than 40 percent of the company's total revenue. That services revenue is the highest among any of the systems integrators or Big 5 consultants.

In some cases, Baan's CEO said, the company may offer ASP services either by hosting the solution or partnering with an ASP to offer a specific Baan solution for customers.

As a prelude to its initiative to grow its services, last week Baan launched Quickstart, a rapid development program for its iBaan for CRM application. It bundles iBaan SalesPlus 4.2 software with installation and training, allowing companies to have a sales force automation package up and running in 30 days.

Baan is also looking for growth for all its products, van der Tang says, and is seeing positive market traction especially in Japan.

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