Baan Resurrects Multi-Dimensionally Part 3: Market Impact

Event Summary

In its bid to return to its erstwhile short-lived glory, Baan, the resurrected global provider of collaborative enterprise business solutions and a unit of the Invensys Software Systems (ISS) division of Invensys plc, the global automation and controls group with headquarters in the UK, has lately blitzed the market with a number of announcements. The most prominent amongst these were:

  • Deliveries of vertically focused solutions for some industries
  • Deliveries of horizontal, cross-industry applications
  • Some high-profile partnerships
  • Some initiatives to shore up its large customer base

This is Part Three of a four-part Event Note concerning these Announcements and their Market Impact.
Part One detailed recent product announcements.
Part Two covered alliances and customer support.
Part Four will contain User Recommendation based on this analysis.

Market Impact

While one would be overly optimistic to believe that Baan will completely regain its old glory, given how much ground the bigger (and even some smaller) competitors have gained since the beginning of its well-publicized troubles in 1999/2000, over the last 18 months Baan has accomplished several remarkable endeavors. It is amazing to see what a company can do, even after it has reached rock bottom. When Invensys acquired Baan, it faced the following major challenges:

  • To curb losses by cutting costs and to become profitable,
  • To upgrade its software to keep abreast of the competitors' offering,
  • To restore confidence within existing customer base, and
  • To develop a strategy for expanding customer base.

While the first challenge was overcome earlier than expected (see Baan Achieves A Speedy Recovery Despite The Tough Times), the other three might have been resolved (or at least tackled) with the above-mentioned recent moves. The key success factor was the company's ability to retain most of its development team worldwide, possibly owing to the authority of Baan president Laurens van der Tang, a 14-year Baan veteran and former CTO. With a new management team (but both Baan and Baan USA presidents being veterans) in place, new Internet technology harnessed, a new focus on selected vertical industries and on strategic alliances, and with income statement swimming in black for five consecutive quarters, the company should be taken seriously again. Baan remains one of only a handful of vendors that are capable of providing full application suites on scaleable platforms that can be globally deployed by larger enterprises.

As Invensys' acquisition of Baan has long been consummated, Baan has since focused on rebuilding market confidence because bad publicity negatively impacted its business. Baan also remains focused on increasing its process automation breadth within a limited set of manufacturing industries. Continuing its long-time global focus on automotive, aerospace and defense (A&D), electronics/high tech, and industrial machinery industries, Baan has been able to demonstrate understanding of its customers' needs. The depth of the above-mentioned iBaan applications reflects the company's expertise in its targeted industries.

The company is taking a sensible approach in bringing new products to market by creating solution sets that meet the specific needs of the vertical industries it has traditionally served. Baan will be offering a core stack of modules (iBaan Enterprise) that includes ERP, OpenWorld integration layer, Decision Manager, B2B Server, Portal, and Reporting. To enhance this stack, the company strives to deliver customer intimacy, operational excellence, and product leadership capabilities (supported by the respective CRM, SCM, and PLM products) tailored to specific industry requirements. Extending the functionality of its ecosystem for the above industries by offering collaborative CRM, SCM, BI, and PLM functionality, all tightly integrated to the core Baan ERP suite should enable these customers to improve their agility and responsiveness in a currently tough and rapidly morphing market.

Focus on Mid-market Discrete Manufacturing

To that end, Baan's renewed focus on the mid-market discrete manufacturing segment, the fertile ground that made it thrive during the mid 90s, is undisputedly a wise move. Unified master data across ERP, SCM and CRM systems are of a paramount importance to attract any customer. It is advantageous to any company not to, e.g., have duplicate customer masters in their disparate ERP and CRM systems. Baan was one of the first ERP vendors to promote the idea that ERP should be integrated with adjacent functionality of e.g. SCM, CRM and eBusiness. In that endeavor, it unfortunately went on a rampant shopping spree, buying e.g. Aurum, Beologic, and Antalys for CRM and Berclain and Caps Logistics for SCM (for more information, see Baan - What Will The Future In Invensys' Stable Bring? Part 1: About Baan), and then choked while trying to integrate these products with the core Baan ERP system. While the assimilation of SCM products has still seemingly been in the process, one should assume that the CRM products saga has all but ended.

Baan has chosen to differentiate itself by concentrating on industry pertinent content through, e.g., enterprise-wide CRM analytics and reporting instead of traditional CRM functionality, that many vendors can tout as well. To that end, the company has developed thousands of key performance indicators (KPIs) and linked them to business processes/workflows and best practice templates relevant to its above target industries.

Another Baan initiative likely to attract user interest is a focus on lean manufacturing. Baan supports "pull" or demand-driven manufacturing (flow manufacturing) in addition to solely the "push" philosophy of many contemporary ERP systems. This, in turn, should allow manufacturers to strive to real-time manufacturing and build-to-order systems to eliminate the inefficiencies and disruption that plague manufacturing nowadays. With its focus on real-time strategies, Baan has logically been adding the capabilities of Wonderware plant automation and management solutions to the ERP system.

e-Business Solutions

iBaan, the first product launch since Baan became part of the ISS, addresses manufacturers' growing demands for tighter integration and full visibility across their entire supply chains, by also covering Internet trade exchanges, collaborative supply chain operations and enterprise portals. Consequently, the iBaan product portfolio revolves around the following three themes: information, integration, and collaboration. iBaan Portal gives employees access to all personalized information sources, applications, and business processes they need for day-to-day decision-making and execution. iBaan OpenWorld is a universal iBaan integration framework that should help companies integrate third-party and legacy applications. iBaan Collaboration is a set of collaborative commerce solutions that allow organizations too make adjustments to business processes, and reconfigure applications on the fly as relationships change (e.g., a web-centric supply chain collaboration engine supports capable to promise (CTP), supply extranets and web exchanges). iBaan Webtop is a thin-client for iBaanERP that provides customers with a whole new Web interface. iBaan Solutions is a range of new e-business solutions.

In addition to seemingly turning the corner under the strong management and financials of ISS, Baan has been working on all currently hot items: e-collaboration, supply chain management, shop floor integration, the OpenWorld architecture, its fast 'Ready to Implement' approach, and the BRAVO (Baan Rapid Assessment of Value and Opportunity) and DEM (Dynamic Enterprise Modeler) process modeling tools. Moreover, the company has been touting the right things to its audience: streamlining manufacturing and business processes, cutting costs, compressing lead times, and build-to-order practices, while pursuing industry specific partnerships backed up with 20 years of history in manufacturing and more than 15,000 sites.

Challenges and Baan Responses

In addition to the above, Baan must continue its efforts to penetrate the market with its entire applications portfolio, mainly through indirect channels and outsourcing arrangements. To that end, Baan must expand global distribution, sales, services and support capabilities, primarily by leveraging qualified indirect channels.

The indirect channel has been reevaluated and reduced to only tried-and-true strategic suppliers that can deliver the necessary customer satisfaction the new organization has been striving to achieve. A 'mother of all relationships' appears to be the above Invensys-IBM alliance, as IBM has the vast majority of consultants worldwide working on Baan products, as well as implementation laboratories in Copenhagen and Atlanta devoted to the products.

Baan has also pledged that customer satisfaction and support is the theme from now on. Consequently, the alignment of the organization to enhance the customer issues has been propagated throughout the sales, technical, and client support divisions globally. A new account management feedback practice was implemented in order for the company to hear the voice of its client base and to continually improve the customer support process. Baan has also reorganized its sales force, with pre-sales consultants now being merged with the technical product architects.

Nevertheless, the "new" Baan, as part of Invensys, still has a lot of housekeeping to do. It has been unfortunate that the Baan business was hit with troubles exactly when it finally seemed to have delivered its most stable and mature product although technologically outdated, Baan IVc. The bifurcated releases of the core ERP product within iBaan (Baan IVc and Baan 5.0 — with diverse vertical solution extensions), while necessary at this stage to keep old customers aboard, will eventually have to be merged into one code set for development and support. Otherwise, valuable R&D and service & support resources will continue to be diluted indefinitely by the requirement to maintain multiple code bases. Also, while the product migration strategy, which also includes the integration of iBaan Logistics, has been put in place and conveyed to the market, it still reflects a three-year timeframe, during which time both releases will be enhanced and supported.

This concludes Part Three of a four-part Event Note concerning these Announcements and their Market Impact.
Part One detailed recent product announcements.
Part Two covered alliances and customer support.
Part Four will contain User Recommendation based on this analysis.

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