Warning that its profits could fall by as much as a quarter in the second half of its financial year, Invensys blamed a “substantial decline in demand” at Baan, the ERP supplier it took over in September 2000.
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In the final quarter of 2002, Invensys cut about 250 jobs at Baan as part of moves to reduce costs, but the company said Baan’s final results were likely to be “materially worse” than it expected in November.
Invensys said it would review its investment in Baan at its financial year end in March.
Baan’s UK users were keeping a close eye on developments. “If there is any uncertainty surrounding a major supplier, we are always concerned,” said Jim Symington, group head of management information services at bedmaker Hypnos, which uses Baan systems.
Symington said Baan was getting undue blame for problems across the Invensys group. “I don’t see it as a dead duck, but the question is who ownership would pass to if Invensys decides it can no longer fund Baan.”
He added Baan had recently made successful efforts to improve its responsiveness to customers.Judith Jordan, analyst at research firm Ovum Holway, agreed that existing Baan customers could benefit as the company sought to halt its downward spiral. “It won’t be attracting new customers and will have to work really hard to retain the customers it already has.”