industry estimates target the Business to Business e-commerce market to reach
$1.3 trillion by the year 2003. Enterprise Resource Planning companies, like
SAP, J.D. Edwards, and PeopleSoft are rushing to establish a foothold in this
expanding market through the creation of e-business applications. These "e"
applications are leveraging the Internet to connect suppliers, business partners,
and customers in an effort to streamline business processes.
Baan Company has made recent announcements regarding its entry into the e-commerce
arena. While the challenges of creating "e" offerings are great, Baan's are
even more substantial. They have suffered loss of market share, mediocre product
development, and extended financial loss over the past 24 months. The recent
departure of their CEO Mary Coleman, delivers another blow to the already troubled
the past 36 months, Baan has made several attempts to expand beyond its core
ERP functionality and stimulate sales growth. Initiatives include the introduction
of an enterprise application framework, vendor enhanced plug-ins, sales force
automation tools, customer resource management, and the latest trend, business
to business e-commerce.
November, Baan announced its Open World framework for connecting business applications.
On January 4th they announced a strategic reorganization to focus operations
on e-enterprise solutions for the manufacturing industry.
from the Open World initiative, Baan has announced "E-Enterprise" as a product
suite to help deliver business to business functionality. Built on a common
technology platform, the "E-Enterprise" solution offers three primary applications:
E-Sales: a selling system that allows customers to browse, interact, configure,
order, and monitor delivery status. A subcomponent of e-sales is the e-configurator
tool, which delivers support for "real-time" sales configuration on the web.
E-Collaboration: a system that allows employees and business partners to
E-Procurement: an "indirect" procurement solution that connects to Baan's
ERP-based procurement functionality.
is not alone in this market. Baan faces stiff competition from industry giants
such as SAP with its "mySAP.com" offering, J.D. Edwards alliance with Tradex/Ariba,
and PeopleSoft's partnership with Commerce One.
Strategy and Trajectory
Baan is focusing its E-Enterprise sales efforts on manufacturers within their
existing client base. The notion is to establish the product suite and use the
existing client base to help refine the e-business applications. Baan hopes
this introduction and refinement will coincide with their customer's Internet
education and grow with their needs. If this stage is successful, they will
focus on winning new accounts.
are 6 - 8 months behind their competition. Competitor, J.D. Edwards has inked
a deal with marketplace mover Ariba. SAP has established hosting partnerships
with IBM, Exodus and others, while also pursuing ten vertical markets. If Baan
wishes to compete in the ERP/e-commerce environment, they will need to consider
similar initiatives within the year.
Focus: Baan has selected Microsoft's Back Office Suite as the single platform
to base their E-Enterprise products. By leveraging Microsoft's architecture,
Baan can deliver an electronic commerce solution faster by using readily available
- industry accepted components. Focusing on this single platform will provide
this struggling company the opportunity to master the hosting, implementation,
and product refinements required to expand their e-commerce offerings.
ERP Integration: A second strength is their ability to integrate with
Baan's ERP product that has over 3000 installed users. Creating functional connections
between an ERP system and web applications is complex. Having created the ERP
solution, Baan is in good standing to leverage internal resources to integrate
Procurement Focus: A third strength is its focus on "indirect" procurement.
Baan describes "indirect" as consumable goods, such as office supplies and computer
equipment. Efforts by Staples, Office Max, Dell, and others have established
working models for the electronic procurement of consumables. Connecting with
these resources will help bolster the functionality of their product suite.
Dilemma: While the choice of Microsoft's Back Office Suite is listed as
a strength, it may represent a double edge sword. We estimate 70 percent of
Baan's existing ERP customers are Unix based. As a result many companies may
not be ready or willing to support a Microsoft operating platform at this time.
Leverage: Baan may have difficulties leveraging its existing client base.
Companies interested in "e-business" may need to move faster than Baan is willing.
Boeing, a Baan ERP client, recently chose Oracle to implement its e-procurement
initiatives. While this is only one customer, Baan will need to provide feature
rich and tightly integrated solutions, if they wish to maintain the existing
Challenges: Operating systems and feature rich solutions are essential,
but speed is also important. Creating price books dynamically, obtaining real-time
quotes, and capturing on-line configuration data can easily strangle a network.
Baan does not have performance metrics or benchmarks available for the E-Enterprise
solution. As new clients adopt the solution, they will need to pay close attention
to performance metrics in order to provide usable solutions.
In order to be successful, Baan will need to focus on its core client base of
manufacturers. However, it will need to refine its focus to accommodate specific
initiatives to target the automotive and air/space/defense industries within
the next 6 months.
Expect primary "E-Enterprise" revenues to be derived from existing clients in
the short term, thus providing a window of 5-8 months to establish functionality.
Expect an announcement regarding a hosting partnership in the next 1-2 months.
If the hosting announcement does not include an ASP component, look for one
within the next 4 months.
expect announcements identifying a vertical market within in the telecommunications
industry within 4 months.
Baan is to survive this turbulent stage we recommend:
They must execute their e-commerce development and roll out extremely well.
They must concurrently maintain and improve their ERP solution.
hosting agreement(s) to support and promote their "e" initiatives.
vertical markets outside of the "manufacturing" comfort zone.
or link to a digital marketplace allowing customers to benefit from mass purchasing
and publish a long-term e-business plan.
new clients considering Baan's complete product offerings keep in mind this
company is in trouble. We suggest you evaluate the features, price, and corporate
viability of all vendors before making a selection.
For existing Baan clients, we suggest keeping the "E-Enterprise" solution on
your long list. If you're interested, perhaps the existing relationship could
be leveraged to dramatically reduce the cost of the "E-Enterprise" suite. Consider
negotiating a pilot or trial period at no cost to you. Also, use the Baan opportunity
to negotiate a lower price with competitors. If Baan is willing to provide their
solution at a low cost, or even free of charge, use that information with other