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Baan to cut 20 per cent of jobs

Baan to cut 20 per cent of jobs

Baan recently announced a firm-wide restructuring, which will result in a one-time charge of approximately $US110 million in the fourth quarter.

About 20 per cent of its global workforce will lose their jobs as a result of the restructuring, the company said last week.

As part of the restructuring, Mary Coleman, president and chief executive officer (CEO) of Aurum Software, which was acquired by Baan in 1997, has been appointed president of Baan, reporting to CEO Tom Tinsley.

The restructuring will involve more closely integrating the companies Baan acquires. Sales, marketing, consulting, support and engineering efforts of these companies will be integrated into those of Baan to present a single face to the customer, said Tinsley in a conference call for investors held last week.

The changes come as Baan posted a third-quarter loss of $US31.7 million, or 16 cents a diluted share, compared to a gain of $US18.3 million or 9 cents a share in the third quarter of 1997.

The restructuring moves were approved by Baan's management board in an all-day session, Tinsley said. Although Baan's leadership is confident of the company's business strategy, they recognised that the trends in the third quarter were not just one-time events, he said.

Turbulence

These trends include global economic turbulence, reductions in expenditures by large customers, increasing competition and customers' increased focus on year 2000 problems. Baan also increasingly sees that customers want lower up-front costs in purchasing ERP systems, Tinsley said.

The staff reductions, which will occur in all geographic locations, will mainly come from eliminating duplications in direct sales, marketing and overhead functions, Tinsley said.

"As you can see from our numbers, the overhead cost of acquisitions has been high," said Ingo Fleckenstein, product manager with Baan.

At least one analyst does not buy into the argument that Baan's woes are industry-wide.

"Baan has grown too rapidly, and is trying to do too many things at once," said RŸdiger Spies, an analyst with the Meta Group.


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