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Baan plots turnaround but losses could sting

Baan is to launch a raft of software upgrades to repair its tarnished image with corporate users. But some analysts doubted whether the strategy would work.

Baan, which nearly went out of business two years ago before it was purchased by Invensys, is trying to win customers by focusing on the industrial manufacturing, electronics, automotive and aerospace industries.

The company is also offering an applications upgrade that will support XML and Web services technology.

"The management team has spent the last month or so crystallising our vision and strategy. Now is the right time to roll that out," said Dave Wangler, senior vice-president of global marketing at Baan.

However, Baan president Laurens van der Tang disclosed that the Invensys unit fell back into the red last April after six straight profitable quarters and lost money for the six-month period ending 30 September. He blamed the losses on the "seriously depressed" state of the IT market.

His comments reignited questions about Baan's viability less than two months after Invensys chief executive officer Rick Haythornthwaite tried to ease the concerns of existing customers at a meeting in Los Angeles of the Baan World Users (BWU) group.

Gartner analyst Brian Zrimsek said he approved of Baan's strategy but added, "Baan's challenge continues to be that of execution and the cloud of viability that still hangs over them."

About 70% of Baan's customer base still uses its Baan IV applications, not the most recent iBaan V release of the enterprise resource planning (ERP) software.

Zrimsek said users could see the upcoming launch of another upgrade as the ideal time to switch to another vendor, especially if they fear a possible reduction in support for the Baan IV technology.

Baan is preparing to enter the Web services world with the next ERP release, codenamed Gemini, which is scheduled for release in September. Baan officials said users would be able to access the software through Web browsers and implement technologies such as XML and Simple Object Access Protocol (Soap).

Despite the upgrade plans, Baan's management is "committed to support Baan IV for a long time," Wangler said. "We won't try to motivate someone to upgrade with [fears of] obsolescence."

However, keeping its installed base happy could be a tough challenge for Baan, according to Heath Tipton, chairman of the company's user group in the UK and Ireland.

"Baan is now addressing one of the most difficult challenges facing software suppliers: harmonising its installed user base across a controllable number of active software versions," Tipton said. Doing so "is more difficult in the ERP market than in just about any other" because of the complexity and cost of application upgrades, he added.

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