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Baan up for sale, fate of Indian staff hangs in balance

Rahul Neel Mani / New Delhi

The fate of over 500 Indian employees of Baan hangs in balance following the decision of London-based Invensys to sell Baan. In India, there are over 40 employees of Baan apart from the 500 who work at its India development centre. Baan, which competes with SAP, PeopleSoft and Oracle in the enterprise applications market, is one of several units Invensys is shedding in an ongoing effort to spur growth and reduce debt.

In an exclusive interview with Express Computer, Dave Wangler, senior vice president for Global Marketing at Baan, said that the decision on Indian employees depends on the kind of partner the company gets. “If a financial partner takes over then there is this kind of threat or perception. On the contrary, if there is a partner who is into the software business there may be some synergies coming out of this combination,” he said.There are broadly three categories of investors that the company is looking at. They are: pure financial partners from the private equity community, vendors from the complementary software space and those who form the hybrid community as in software companies who are also financial companies.

Customer confidence
Baan India CEO Gopal Madnani and Wangler were confident that the 6500 strong customers of Baan are going to stay and will reiterate confidence in the company. “The response from customers, particularly those with whom the company shares a long relationship has been extremely supportive,” said Madnani.

There will be no change in strategy in business and execution for this interim period. Informed Gopal, “In the India development centre located in Hyderabad, Baan and Invensys share a common infrastructure and one can assume that there are two different companies sharing the infrastructure. Even the way we were structured, Baan was a separate division of Invensys. We were functioning as separate businesses with some integration points. Thus, we could continue to occupy the same infrastructure and work on our predefined plan but continue to have an alliance in some areas.”

In India, Baan provides a range of solutions from ERP to supply chain management (SCM), customer relationship management (CRM), logistics management (LM), product lifecycle management (PLM), business intelligence (BI), e-commerce and OpenWorld (for applications) integration. “The growth areas we see are SCM, CRM, PLM, BI and e-commerce in the existing customer base, since having implemented ERP as a backbone, organisations today want to improve their operations further and derive more value from investments in IT,” opines Ravi Kathuria, general manager of the company.

The company provides support to all its customers from India itself. “Baan is unique in the sense that we have both India as well as global support centres within India. The India support centre is based in Mumbai and the global is based in Hyderabad. The existence of these support centres enables continuous, uninterrupted support locally,” said Kathuria.

Once considered a dark horse and a possible threat to tier-1 enterprise applications vendors such as Oracle, Peoplesoft and SAP, Baan lost its momentum in 1999 amid declining revenue and management turnover and was facing possible bankruptcy. After being able to pull sales of $176 million in the first quarter of 1999, the company sales fell drastically to $80 million in the second quarter of 2000. Two CEOs came and left in quick time. That was the time when Invensys came forward to its rescue in May 2000. After eight consecutive quarters in losses, the company was finally able to return to profitability in the last quarter of 2000.

Taking a leap into the future, company also announced the iBaan suite of Internet-based products for the six core industry segments such as aerospace and defence, automotive, industrial machinery and equipment, electronics, logistics and hybrid manufacturing. The decision to make manufacturing a prime target for increasing its customer base proved positive. It was able to emerge as a much stronger and vibrant player than ever and total customer base went up to 6500 worldwide.

However, worries for Baan are manifold. The corporate image, ability to keep the flock of customers together and intact, convince partners, acquire new business, and last but not the least, go-ahead on the new product launches will not be so easy for Baan in the given circumstances. Sources and analysts are of the opinion that the company will never be able to reach even close to the figure that it fetched when it was sold to Invensys.

Fate of Gemini
Partners and customers must be wondering about the much-talked about project code named Gemini–the new generation product from Baan. Will it happen or not? “The Gemini launch, as we have discussed with every existing partner and potential partners, will be as per schedule around the timeframe of September-October this year. There is absolutely no modification in that programme. The investments that have already been made in that project are a huge part of the total R&D budget and of critical value, and we will make sure that those investments do not go waste. Gemini will be the key enabler of success for Baan as a company,” reaffirmed Wangler.

When Invensys took over Baan in mid-2000, the company underwent a lot of restructuring and reengineering as a result of which, many of the then existing employees lost their jobs. There was a massive cost-cutting drive on the operational front as well, so much so that the total strength of the company was brought down to nearly 3000 employees out of which 1200 are working in the research and development sector. Company sources say that if the strength is cut even further then the company will start bleeding and will not be able to sustain operations. For now, it will be business as usual for the company. It will continue to sell, develop and support customers. For example, week after next will be the sales kick-off in the Americas, followed by Europe, Japan and the rest of Asia.

Company officials are not leaving any opportunity to convince customers, partners, media and others that the health of the company is not going to be affected with this new development. On the contrary, they feel that it will be a welcome change. It can bring back the old glory of Baan when it was trying to take tier-1 competitors head-on and succeeded in making a substantial dent in the customer base. But good days have always been numbered for Baan. Despite good products and impressive installed base, Baan needs a stable parent to match the firepower of ERP biggies like SAP, Oracle and PeopleSoft.