Baan ended two years of crisis last week when it agreed to be bought by UK industrial conglomerate Invensys.
Such is the negativity surrounding what was Europe's second biggest software firm only two years ago, that its new owner's share price promptly fell £1.14 billion in next-day trading. Invensys' head, Allen Yurko, admitted his new purchase was "facing meltdown".
Baan was once rated as a first-class contender. "We always considered it as one of the top tier enterprise resource planning (ERP) players, alongside JD Edwards, Oracle, Peoplesoft and SAP," said Arthur Hochberg, a chief analyst at Gartner Group.
The question for customers is what happens next.
"I am reassured, but cautious. Baan has to support ecommerce and customer relationship management if it's going to succeed. Being solely an ERP supplier is not enough," said David Ellis, IT director of weighing equipment manufacturer Avery Berkel, which has 1,200 Baan seats.
"We need to confirm that Baan's vision will be developed. How Invensys' words will turn into reality is the next question. I won't fully believe it until I see it."
"Baan's vision has always been excellent - but its ability to execute has been in question," he added. "With the right support, Baan should be able to pursue its ecommerce aims. But whether they will be realised in Invensys' stated timescales is questionable."
Easing customer concerns
Analysts have welcomed the end of Baan's crisis. "Invensys will provide financial stability," said analyst Dan Roberts of market analyst Cambashi. "My question is how Invensys will fit Baan together with its other manufacturing software offerings."
Gartner believes the acquisition will ease customers' concerns about Baan's viability. "Invensys' financial strength and discipline bodes well. Companies that are relying on Baan solely for manufacturing will be OK," said Hochberg.
Invensys is a £6.7 billion engineering conglomerate which owns IT firms such as Marcam, Foxboro, Powerware and Wonderware. It says it is committed to a "strong" research and development programme, and will support the full suite of Baan products.
Invensys wants to reduce Baan's $720 million annual operating costs by $240 million before the end of this year. Up to a thousand of Baan's 4,700 staff will go immediately, mostly in administration and sales, says Invensys.
It denies it will cut development staff significantly. How many customers will follow remains to be seen.
- Baan: the ups and downs
1978 Founded as a manufacturing consultancy by Jan Baan.
1981 Jan's brother Paul joins the board. They create a company selling a suite of manufacturing software products.
1994 Wins $20 million contract with Boeing.
1997 Baan's valuation peaks at $11.5 billion.
1998 In October, the Baan brothers step down after questions are raised about billing practices. Share price declines sharply.
2000 Interim chief executive Mary Coleman departs in January. When Baan's share price hits rock bottom, the board starts seeking a buyer. After two months, Baan accepts Invensys' takeover offer of EUR762 million (£469 million), taking on EUR100 million of debt.
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