Baan plots turnaround bid, but new losses could hurt

Baan Co. NV is preparing to launch marketing and software upgrade efforts in a bid to repair its tarnished image with corporate users. But some customers and analysts said it’s not clear whether the struggling business software vendor’s strategy will work.

Baan, which nearly went out of business two years ago before it was bought by London-based Invensys PLC, is trying to win new customers by focusing on the industrial manufacturing, electronics, automotive and aerospace industries. The company is also touting the planned rollout next fall of an applications upgrade that will support XML and Web services technology.

“The management team has spent the last month or so crystallizing our vision and strategy. Now is the right time to roll that out,” said Dave Wangler, senior vice-president of global marketing at Baan, during a briefing held last month near company headquarters in Barneveldt, Netherlands.

However, Baan President Laurens van der Tang disclosed during the briefing that the Invensys unit fell back into the red last April after six straight profitable quarters and lost money for the six-month period that ended Sept. 30. He blamed the losses on the “seriously depressed” state of the IT market.

His comments reignited questions about Baan’s viability less than two months after Invensys CEO Rick Haythornthwaite tried to ease the concerns of existing customers at a meeting in Los Angeles of the Toronto-based Baan World Users (BWU) group.

Brian Zrimsek, an analyst at Stamford, Conn.-based Gartner Inc., said he approves of Baan’s new strategy. But, he added, “Baan’s challenge continues to be that of execution and the cloud of viability that still hangs over them.”

About 70 per cent of Baan’s customer base still uses its Baan IV applications, not the most recent iBaan V release of the enterprise resource planning (ERP) software, Zrimsek said. He added that some users may see the upcoming launch of another upgrade as the ideal time to switch to another vendor, especially if they fear a possible reduction in support for the Baan IV technology.

Baan is preparing to enter the Web services world with the next ERP release, which is code-named Gemini and is due for release in September. Baan officials said users will be able to access the software through Web browsers and implement technologies such as XML and the Simple Object Access Protocol.

Despite the upgrade plans, Baan’s management is “committed to support Baan IV for a long time,” Wangler said. “We won’t try to motivate someone to upgrade with [fears of] obsolescence.”

The BWU, which previously had plenty of questions about Baan’s future, issued a statement saying that it’s “looking forward” to Gemini’s release.

But keeping its installed base happy will be a tough task for Baan, said Heath Tipton, chairman of the company’s user group in the U.K. and Ireland.

“Baan is now addressing one of the most difficult challenges facing software suppliers: harmonizing its installed user base across a controllable number of active software versions,” Tipton said. Doing so “is more difficult in the ERP market than in just about any other” because of the complexity and cost of application upgrades, he added.

– Evers writes for the IDG News Service

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