17 April 2002 Rick Haythornthwaite, CEO of troubled engineering company Invensys, has stated that the company’s manufacturing software business unit Baan is “critical” to its parent company’s goal of “uncovering extraordinary performance for our customers and for ourselves”.
Speaking at Baan’s inForum user conference in Rome, Haythornthaite said that since arriving at Invensys six months ago, he has been “extremely impressed” by the “outstanding job” Baan has done in reshaping itself as a “tight, effective organisation with a keen dedication to industrial enterprises.”
According to Baan president Laurens van der Tang, Baan has made some 350 customer wins in the past 20 months. His goal for the unit, which forms a part of Invensys’ Production Management business, is to derive 30% of overall revenues from new customers and 70% from its installed base. However, Bruce Richardson, an analyst at AMR Research, describes this ambition as “optimistic”.
According to Richardson, Baan’s headcount is poorly balanced – and it must address this issue if it is to make a positive contribution to the fortunes of its parent company. For a start, says Richardson, Baan has too many employees working in product development – around one third of the company’s overall headcount.
Meanwhile, some 1,400 employees work on the consulting and services side of the business – “about the right amount”, according Richardson, but too many of them are “too specialised in individual products” and are therefore unable to work across broader combinations of Baan’s software. The company’s sales team, by contrast, numbers just 300 employees worldwide and its structure is “too complicated”.
Commenting on Baan’s overall strategy, outlined at the inForum event, Richardson says: “Baan is taking logical steps to getting itself back on track, but its strategy focuses too heavily on products and vertical markets. It needs to shift that focus to sales and marketing if its efforts are to pay off.”
Baan’s performance is crucial to struggling Invensys, which recently sharpened its focus on software after announcing plans to sell off a £2.3 billion (€3.77 billion) chunk of its business that dealt with industrial components and systems.
The Production Management business at Invensys is the home of all of the company’s manufacturing software interests, which include Baan, process manufacturing software businesses Foxboro and APV, analytic tools supplier Wonderware, and 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.