Bouncing Back at Baan

New SCM unit signals focus on supply chain as once-wobbling provider battles back

Tempe, AZ  May 1, 2002  Ed Daihl, the head of e-business solution provider Baan's newly formed supply chain management division, said he knew it was time for Baan to create such a unit when he saw a recent report from one of the technology consultancies.

The report included a chart listing various software providers and the supply chain capabilities of their respective solutions. CAPS Logistics, the Baan division that Daihl led at the time, was listed in three of the chart's eight boxes, while neither Baan nor the company's other supply chain offerings was listed at all.

"That said to me that we need to get the Baan name much more recognized in supply chain in the United States," Daihl said, "and the only way to do that is to put [all the Baan solutions] together in one group and go out and get synergy in the marketplace."

Putting it all together is getting to be a habit for Baan. Analysts with ARC Advisory Group credit Baan, once best known as a provider of enterprise resource planning (ERP) solutions for mid-market manufacturers, with being the first provider to spot the convergence of customer relationship management (CRM), supply chain management (SCM) and product data management (PDM).

Now, with Daihl at the helm of its new SCM division, the company, a division of British engineering group Invensys, is seeking to stake its claim in the supply chain space by integrating CAPS Logistics' solutions with functionality from the provider's iBaan Logistics and the recently launched iBaan for SCM solution.

Baan said the SCM business unit will offer software and services to customers in the hybrid and discrete manufacturing industries and lean logistics providers focused on lean manufacturing and lean logistics, with the goal of helping companies maximize and improve through-put, inventory utilization, supplier relations and performance, logistics and procedure execution.

A tall order, indeed, but a recent research note from technology consultancy AMR Research pointed to a few factors in Baan's favor: First, the company has an installed customer base numbering some 12,000, or more than 50,000 if you add in the entire Invensys customer base. Second, the company is investing heavily in software development and services: one-third of the company's 3,300 employees are in development, while another 1,400 handle Baan's service and support. And third, under Baan President Laurens van der Tang, the company appears to be turning itself around, with a reported 40 percent improvement in customer satisfaction in the 20 months since Invensys acquired Baan.

Daihl acknowledged that part of his challenge is going to be getting customers to see beyond Baan's legacy in enterprise resource planning. "Right now Baan is seen predominately as an ERP player, and what I'm trying to do is to point out how strong we are in the standalone supply chain space," Daihl said.

"Standalone" will be a key point of emphasis for Baan. Daihl said that while iBaan for SCM is fully integrated with the company's core ERP platform, Baan can also offer the supply chain solution on its own. "We have an integrated supply chain offering, but we also have the ability for [the SCM applications] to stand alone as separate modules," Daihl said. "For example, our advanced planning and scheduling module is fully integrated to the Baan ERP platforms. But you can also buy it completely standalone and plug it into SAP, PeopleSoft or whatever other ERP platform you have."

The modular nature of the Baan offering means the company can provide a point solution to address a particular business pain at an enterprise, such as supply chain management, and generate a faster return on investment (ROI) than a full-blown ERP implementation, which Daihl views as a key requirement in the current down market for enterprise software. "We're seeing that people are willing to spend money for a point solution that has a relatively quick ROI," he said. The point solution strategy could have benefits down the road, too, Daihl asserted, because his sales force can cross-sell additional solutions to installed customers.

Daihl's unit will focus sales efforts on Baan's four core global industry verticals, including aerospace and defense, electronics, heavy equipment manufacturing (industrial machinery) and automotive. In addition, in the United States and Europe, Baan is looking at logistics as a vertical, combining CAPS logistics offerings with a product, iBaan for Logistics, that the company has been building for the last year and that is scheduled to ship this summer.

Not that the company won't take clients from other sectors. Baan has customers in such sectors as retail sales and consumer packaged goods. For instance, iBaan for SCM, the supply chain solution rolled out in April at the provider's inForum user conference in Rome, has already found acceptance at Alcan Cable, a North American manufacturer of aluminum cable, rod and strip products, but also at House of Prince, a European cigarette manufacturer,

The new SCM unit is likely to get a further boost from the larger reorganization efforts underway at Baan. For example, in December the company used its own CRM system to integrate the customer bases and sales organizations of its different divisions into one organization globally, with sales and consulting staff now consolidated around geographies. The logic behind this move was simple, according to Daihl: "If we're going to market with the key message of an integrated solution, we didn't see that it made sense to have a CRM sales force, a PLM [product lifecycle management] sales force, a supply chain sales force and an ERP sales force."

Other recent moves by Baan include announcing a new iBaan for CRM solution in January and, at its Rome conference, new versions of its integration framework, iBaan OpenWorld, and iBaan for Product Lifecycle Management (iBaan for PLM), due out in June.

All this effort seems to be paying off, at least in terms of positive buzz. Just two years ago, prior to its acquisition by Invensys, Baan, facing falling revenues and growing losses, went so far as to warn that it could fold if shareholders did not approve the Invensys purchase. Even after the acquisition, AMR Research analysts wrote recently, "we questioned why a company most known for its process control systems would want an ERP supplier." But now, given the latest moves, the analysts suggested, "This could be the first ERP acquisition that worked."

Elsewhere, ARC Advisors wrote, "Baan shows how good management, a tight focus on a few industries, a sensible partnership strategy, a change of culture and key people can help get on the short list of most manufacturers."

For his part, Daihl offers a rather blunt explanation for his company's rising fortune: "I don't know a polite way to say it: Our stuff works." 

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