Vendor
Summary
Baan
Co. is a leading global provider of enterprise business software. Founded in
the Netherlands in 1978 and with dual headquarters in Barneveld, the Netherlands,
and Reston, VA, USA, Baan Co. is the fifth-ranked ERP vendor with $736 million
revenue in 1998 (approx. 4.5% of the global ERP market). The Company's revenues
increased steeply from $216 million in 1995 to $680 million in 1997, with a
significant slowdown in 1998 (see Baan Company N.V. Annual Results). Baan Co.
shipped its first core accounting products in 1982. Today, Baan has a portfolio
of more than 100 software products, including customer management (sales automation,
product configuration and call center products), corporate management (financial
and HR), and operations management (ERP and supply chain) solutions. Baan also
provides add-on modules to support these core products such as business reporting
tools, business-modeling tools, and E-Commerce versions of applications. By
the end of 1998, the Company had licensed approx. 12,000 system installations
to more than 6300 customers worldwide. Baan Co. went public in 1995 and currently
trades both on NASDAQ and on the Amsterdam Stock Exchange in the Netherlands.
Fig. 1
Vendor
Strengths
-
Baan is competitive in some of TEC's six parent ERP market
evaluation criteria (Product Functionality, Product Technology, Product
Cost, Corporate Service and Support, Corporate Viability, Corporate Strategy),
particularly in functionality for discrete manufacturing and project industries,
as well as in price/performance ratio.
-
Baan can be rapidly implemented and easily (re)configured,
which are critical differentiators in an ERP market with languishing implementations
and rigid systems; BaanDEM (Dynamic Enterprise Modeler) and Industry Reference
Models are Baan tools that facilitate quick implementation (we have yet
to see another competitor deliver comparatively powerful and fully-functional
product).
-
High scalability of product suite makes Baan a possible
solution for both Large and Small-to-Medium Enterprise markets.
Fig. 2
Vendor
Challenges
-
Financial turmoil after $315 million loss in year 1998
(dismal 8% annual revenue growth, license revenue dropped 22%, service revenue
soared 63%, and costs skyrocketed 110%); The trend of decreased revenues
and loss reporting continued in first half of 1998 (see Baan Company N.V.
Quarterly Results Chart); Reviving top-line revenue growth primarily through
license revenue growth is an absolute imperative.
-
A number of recent acquisitions have created a number of
still unresolved integration issues within the product portfolio (e.g. ex
Aurum, CODA and Berclain products).
-
Intense competition, key staff turnover, volatility of
Baan's share price.
Fig. 3
Vendor
Predictions
-
Year 1999 will be extremely challenging; We predict minor
revenue growth (max. 5%). Break-even net income is the most optimistic scenario
(20% probability).
-
No major acquisitions are expected in either direction;
The focus will be on partnerships with IBM and Microsoft in a marketing
effort for brand recognition, as well as on partnerships with Application
Service Providers like Bull and Metamor Worldwide.
-
Year 2000 and after - Baan will still be a player to be
reckoned with, however, the chance that Baan will be one of the Top 3 global
ERP vendors has slipped away for good (90% probability).
Vendor
Recommendations
-
Target Small-to-Medium Enterprises (SME) market segment
with the entire product portfolio.
-
Expand into enterprise applications beyond traditional
ERP solutions (Front-Office, Supply Chain, E-Commerce) regardless of company
size.
-
Remain committed to further product innovation and reduction
of product complexity and price, by keeping R&D budget for 1999 at least
on the 1998 level ($152 million).
-
Expand global distribution, sales, services and support
capabilities, primarily by leveraging qualified indirect channels.
User
Recommendations
-
Worth considering in general - broad product portfolio,
with improving global service and support.
-
Discrete manufacturing, project and distribution industries
should consider BaanERP due to its comprehensive functionality in these
respective vertical markets.
-
Other industries might benefit from utilizing individual
Baan products for specific functional needs, like BaanFrontOffice, BaanSCM,
and BaanService products.
-
Any organization evaluating Baan should consider existing
functionality only, and be able to provide the majority of product support
in-house or through a 3rd party, due to Baan's financial situation.