Caution urged over Baan results

Enterprise resource software company Baan's unexpected return to profitability six months ahead of schedule is no guarantee of...

Enterprise resource software company Baan's unexpected return to profitability six months ahead of schedule is no guarantee of future sales growth, according to Bloor Research analyst, Graham Fisher.

Arlene Martin

Last week Fisher warned that the company's impressive performance in the October to December 2000 period might not be repeated. He said he would need to see a second and perhaps successive quarters of profits before he would be fully reassured.

Parent company, UK software and automation group Invensys, who rescued Baan five months ago, last week reported that the ailing Dutch software company had made a dramatic return to profit after nine successive quarters in the red.

Baan achieved sales of £69million in the third quarter, up 37% on the previous quarter. Licence revenues more than trebled to £22milion.

Invensys attributed the turnaround to an increased proportion of sales in higher-growth applications such as supply chain management and e-business applications.

The parent company also predicted similar results from Baan's fourth quarter figures.

But Fisher expressed doubts that Baan's results indicated a general upturn in IT spending: "There needs to be positive profit announcements across all sectors of IT before we can say IT is on an upward trend," he said.

He added: "ERP is about delivery and is the enabler to allow businesses to display their products in their shops. ERP is the thing that makes a company run. If similar companies start announcing good profits consistently, businesses will begin to realise that fulfilment is everything. However, it's early days yet."

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