Baan places bets on collaborative supply chain uptake

There are several parallels between manufacturing software company Baan and Rome, where the company held its recent user conference, according to Baan president Laurens van der Tang. Both have a long history. Both were founded by two brothers. And both, he says with a wry smile, were conquered by German barbarians – an oblique reference to Baan's thwarted attempts to compete head-to-head with German software giant SAP in the mid-to late-1990s.


Laurens van der Tang, Baan


Since its acquisition by UK-based engineering automation and control group Invensys in June 2000, Baan has put the questionable accounting, poor leadership and financial turmoil leading up to its takeover behind it, in order to focus on its core market of medium-sized, discrete manufacturing companies.

To what extent its efforts have paid off is uncertain. Invensys reveals little about Baan's financial results. What is clear, however, is that Baan's performance is crucial to struggling Invensys, which recently sharpened its focus – and increased its reliance – on software sales, after announcing plans to sell off a £2.3 billion chunk of its business that dealt with industrial components and systems.


Company name: Baan (part of Invensys)

HQ: Voorthuizen, Netherlands

Main activity: Manufacturing software

Last full year revenues: n/a

Last full year net income: n/a

Key issue: Baan is seeking to increase the penetration of its installed customer base, and attract new customers, with new supply chain management (SCM) and product lifecycle management (PLM) products.



Baan is part of the Production Management business at Invensys, which also includes the process manufacturing software businesses Foxboro and APV; the analytic tools supplier Wonderware; and the control software suppliers Triconex and Eurotherm. These interests have combined annual sales of £1.6 billion (€2.62 billion) and a customer base of 15,000 – of which Baan customers make up some 12,000.

According to van der Tang, Baan has made 350 customer wins in the past 20 months. His goal for Baan is to derive 30% of overall revenues from new customers and 70% from its installed base. Bruce Richardson, senior vice president, research strategy at AMR Research, describes this ambition as "optimistic". If it is to achieve this goal, it is clear that Baan needs new and compelling products in order to increase its penetration of existing accounts, and to appeal to new customers.

Much of its efforts in this area are focused on supply chain management. Its supply chain products were picked up in 1997 and 1998, when the company bought production scheduling software company Berclain; demand planning software specialist Eventus; and distribution planning company Caps Logistics. However, despite significant investment in supply chain management, Baan has experienced only limited success in that market.

To address this poor record of achievement, Baan announced the launch of an integrated supply chain management (SCM) suite, iBaan for SCM at the Rome event. IBaan for SCM incorporates these acquired products, along with two new components: a collaborative dispatch product, which enables partners to track event management in networked supply chains (this is already being implemented by a major automotive vendor); and a collaborative planning product, which enables manufacturers to share supply chain data with sub-contractors. Baan is still looking for a launch customer for the collaborative planning product, says Ed Daihl, formerly president of its Caps Logistics supply chain software unit, and now president of Baan Supply Chain Management.

The collaborative capabilities of iBaan for SCM set the product apart from competing suites, said Daihl. The technology behind these capabilities is the C-commerce Application Framework (CAF) product from Canadian collaborative commerce specialist Sockeye Solutions. Sockeye was spun-off from Baan and Invensys in February 2001, but is resold by Baan under the name iBaan Collaborate.

Daihl acknowledges that Baan's performance in the supply chain market has historically been poor. "We bought many of our supply chain capabilities as standalone companies and tried to manage them as standalone products. We've always had great technology and great applications. We just haven't been very good at expressing it," he says. Bundling these applications into a suite and incorporating new collaborative functions should kick-start growth, he claims.

In addition, Baan previewed its product lifecycle management (PLM) suite, iBaan for PLM, which is due for release in June 2002, considerably later than competitors. Specialist PLM software houses such as Agile Software, Matrix One and PTC have historically dominated this market, but have seen their primacy threatened with the launch of PLM software by enterprise application giants SAP of Germany and Oracle of the US over the course of the last 18 months.

Baan executives consider SAP to be its main competitor in PLM, but also claim that Baan recently beat PTC's Windchill product in a head-to-head contract.

Baan is unlikely to see significant returns from these new products in the short term, as its customers continue to struggle with the operational and technological issues surrounding collaborative commerce. Certainly, Baan is not seeing much demand for collaborative technologies such as portals and private trading exchanges, according to van der Tang. Out of a total customer base of 6,000 companies, fewer than 100 have implemented portals and fewer than 50 have implemented private trading exchanges, said van der Tang.

Nevertheless, Baan's credibility – and, more importantly, its ongoing competitiveness – rests on bringing these products to market before demand has reached critical mass, as its key competitors in the enterprise resource planning market have done, say analysts.

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Ben Rossi

Ben was Vitesse Media's editorial director, leading content creation and editorial strategy across all Vitesse products, including its market-leading B2B and consumer magazines, websites, research and...

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