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Baan announces major restructuring

Baan announces major restructuring

Applications vendor Baan has blamed its less-than- impressive performance in 1998 on the slowing down in the purchase of ERP licences.

Simultaneously announcing his appointment as the new general manager for the Asia-Pacific region and relocation of Baan's Asia-Pacific headquarters to Sydney, Thomas Erickson used last week's media briefing to report the company's 1998 fourth-quarter revenue of $142 million has not stopped accountants from completing Baan's balance sheets in red ink.

In contrast with the performance of the remaining three ERP market leaders, Baan has reported a $40 million loss for the last quarter of 1998.

"The reason we hit the wall was our reliance on licence revenues," Erickson said.

"While some of our competitors get up to 70 per cent of their revenues from services, we were getting almost 60 per cent of ours from licence sales."

The Dutch-American company ended last year with the announcement of a major restruc-turing program that has cost Baan $160 million in charges incurred by restructuring, asset write-downs and sale of subsidiaries.

As part of the program, the com-pany closed or consolidated 50 offices and sold 14 subsidiaries mainly in Russia, Poland and other emerging markets, losing 20 per cent of its workforce in the process.

Injecting a bit of optimism into predictions for Baan's post-restructure performance, Erickson said that despite the seemingly bleak state of affairs, Baan has recently won 340 new accounts and has $100 million in new licence contract commitments.

He nevertheless conceded that the restructuring process was "an expensive exercise", but said the latest results were to be expected.

Baan will now focus on growing the services side of the business, trying to present "one face" and "one sales model" to its customers in Asia-Pacific, which was one of the reasons behind the decision to move its headquarters to Sydney.

"Locating near [our partners] will allow for closer working relationships and better leverage for our customers throughout the region," Erickson said about the move.

To allow it to focus on the market "as a whole", Baan Australia will soon complete the merger with Baan Business Systems. The companies have been working on the details since January.


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