Baan, once one of the leading independent providers of enterprise application solutions for industrial enterprises, and subsequently part Invensys plc. (London Stock Exchange: ISYS), was sold on June 3 to an investment group consisting of Cerberus Capital Management, L.P. and General Atlantic Partners, LLC, two of the world's leading private investment firms. Backed by nearly USD $14 billion in investment capital, the investment group plans to employ a growth oriented, long-term strategy to the Baan business, in the manner similar to the incredulous comeback of SSA Global Technologies (SSA GT) (www.ssagt.com), incredulous comeback. Very likely the new mid-market manufacturing ERP empire-in-the-making will be spared from any unnecessary controversy and the stalemate that embroils Oracle, PeopleSoft, and J.D. Edwards.
SSA GT has unequivocally said that it does not intend to discontinue any of acquired brands, but will rationalize the organization structure, as already seen in letting almost half of former interBiz' and ~20% of former Infinium staff go, which will have caused inevitable disruption in a short term. While Baan's and Ironside's workforce exodus is not expected to a such degree, partly given worker-friendly Dutch labor law, the pressure for that will build up over time in case of continued poor financial performance. Thus, user companies will still need serious convincing that SSA GT/Baan will not �stabilize' or even discontinue some brands. Moreover, even in the cases where the company has been showing close attention to its customers' wish lists, its crucial tenet of operation is profitability and setting realistic goals (the ROI justification works for the vendor as well). It does not appear very realistic to expect the equitably due attention to over a dozen products, though, as only the enhancements that will result in marketing value to SSA GT/Baan will pass.
Continuation of an unfocused, multi-product and multi-technology strategy in the markets with diverse dynamics typically multiplies and overstretches sales, R&D, and service & support resources jeopardizing the chances its products could stand a chance of long-term success in their respective niches. In addition to Invensys, Geac, Epicor, Ross Systems, and SCT Corporation would be relatively recent examples of companies where this strategy has failed: all have had to eventually resort to divestiture and to a focus on core competencies. With SSA GT/Baan stating more appetite to acquire more vendors in light of impending large-scale consolidation (see Frantic Merger-Mania Spiced Up With Vendettas Leaves Customers Anxious), before even putting this two mergers well behind, it might be flying into face of these negative experiences, and it may soon have too much on its platter to handle.
It may be interesting to note that SSA GT, although recently acting from a position of strength, yet has to ensure that the erosion of user companies that have already initiated a switchover replacement strategy (either due to lingering bad market perception of certain products' viability or due to SSA GT's lack of approaching them) or that are being merged or acquired by other companies having other renowned ERP products is outnumbered by new accounts and new reactivated customers. Some companies may still need more value proposition than the SSA GT CEO's often cited mantra that "changing an ERP system is like a brain surgery � should be performed only if the patient is dying". Time will tell how Gemini and OpenWorldX (and Ironside in part) can help in that regard, both as glue for disparate divisional systems and as a long-needed upgrade for some legacy products. At least, the Ironside purchase might indicate, more than others, that SSA GT is not a mere �bone collector'. Ironside was more an acquisition of a good fringe technology, since its fledgling customer base will not be a major support revenue contributor.
Still, the new combined company's profit margins will likely be under pressure given that vendors such as IFS, J.D. Edwards, SAP, Oracle, Intentia, QAD, Ross Systems, Geac, MAPICS and even Microsoft Business Solutions (coming from the lower end), most of which offer more unified solutions and that have strong vertical presence, may therefore give Baan/SSA GT's prospects a value proposition that can be difficult to decline. This will make the task of concurrent organizational restructuring and product development much more difficult for SSA GT/Baan.
On the other hand, SSA GT with Mike Greenough at the helm has many times surprised even the biggest skeptics by turning around seemingly non-viable vantage products (which iBaan and Ironside certainly are not) and/or ailing vendors (which Baan has been, and Ironworks will have likely become). We impatiently expect the next quarterly report that should include Baan's operations to see whether this is becoming the tradition. Assuming the huge venture capital funding philosophy holds out and profitability continues to grow, the combined company might move faster than many could currently comprehend and give it credit.
SSA GT has unequivocally said that it does not intend to discontinue any of acquired brands, but will rationalize the organization structure, as already seen in letting almost half of former interBiz' and ~20% of former Infinium staff go, which will have caused inevitable disruption in a short term. While Baan's and Ironside's workforce exodus is not expected to a such degree, partly given worker-friendly Dutch labor law, the pressure for that will build up over time in case of continued poor financial performance. Thus, user companies will still need serious convincing that SSA GT/Baan will not �stabilize' or even discontinue some brands. Moreover, even in the cases where the company has been showing close attention to its customers' wish lists, its crucial tenet of operation is profitability and setting realistic goals (the ROI justification works for the vendor as well). It does not appear very realistic to expect the equitably due attention to over a dozen products, though, as only the enhancements that will result in marketing value to SSA GT/Baan will pass.
Continuation of an unfocused, multi-product and multi-technology strategy in the markets with diverse dynamics typically multiplies and overstretches sales, R&D, and service & support resources jeopardizing the chances its products could stand a chance of long-term success in their respective niches. In addition to Invensys, Geac, Epicor, Ross Systems, and SCT Corporation would be relatively recent examples of companies where this strategy has failed: all have had to eventually resort to divestiture and to a focus on core competencies. With SSA GT/Baan stating more appetite to acquire more vendors in light of impending large-scale consolidation (see Frantic Merger-Mania Spiced Up With Vendettas Leaves Customers Anxious), before even putting this two mergers well behind, it might be flying into face of these negative experiences, and it may soon have too much on its platter to handle.
It may be interesting to note that SSA GT, although recently acting from a position of strength, yet has to ensure that the erosion of user companies that have already initiated a switchover replacement strategy (either due to lingering bad market perception of certain products' viability or due to SSA GT's lack of approaching them) or that are being merged or acquired by other companies having other renowned ERP products is outnumbered by new accounts and new reactivated customers. Some companies may still need more value proposition than the SSA GT CEO's often cited mantra that "changing an ERP system is like a brain surgery � should be performed only if the patient is dying". Time will tell how Gemini and OpenWorldX (and Ironside in part) can help in that regard, both as glue for disparate divisional systems and as a long-needed upgrade for some legacy products. At least, the Ironside purchase might indicate, more than others, that SSA GT is not a mere �bone collector'. Ironside was more an acquisition of a good fringe technology, since its fledgling customer base will not be a major support revenue contributor.
Still, the new combined company's profit margins will likely be under pressure given that vendors such as IFS, J.D. Edwards, SAP, Oracle, Intentia, QAD, Ross Systems, Geac, MAPICS and even Microsoft Business Solutions (coming from the lower end), most of which offer more unified solutions and that have strong vertical presence, may therefore give Baan/SSA GT's prospects a value proposition that can be difficult to decline. This will make the task of concurrent organizational restructuring and product development much more difficult for SSA GT/Baan.
On the other hand, SSA GT with Mike Greenough at the helm has many times surprised even the biggest skeptics by turning around seemingly non-viable vantage products (which iBaan and Ironside certainly are not) and/or ailing vendors (which Baan has been, and Ironworks will have likely become). We impatiently expect the next quarterly report that should include Baan's operations to see whether this is becoming the tradition. Assuming the huge venture capital funding philosophy holds out and profitability continues to grow, the combined company might move faster than many could currently comprehend and give it credit.
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