Forrester predicts second Baan takeover

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Forrester Research is predicting that Baan could be the victim of a bargain basement purchase by Oracle, Microsoft or PeopleSoft because its current owner Invensys lacks the focus to make a success of the business.

"Today, Invensys struggles with a 41 percent year-on-year decline in operating profits, and, under Invensys' ownership, Baan will not deliver positive results because Invensys will fail to restructure its software businesses; software is a specialist business -- not a hobby; and Baan will struggle to increase license revenues," said Forrester Senior Analyst Charles Homs.

“Users suffer from a ragbag collection of software with high operating costs and nonstandard user interfaces. But Invensys lacks the financial muscle to rearchitect its software assets. Invensys saw the need for software to support its engineering products and acquired an entire software business to achieve that goal, but with profit margins of less than 4 percent, software is no longer a profitable hobby.”

Forrester also suggested that Baan is surviving on maintenance fees from existing contracts with only 32 per cent of its revenue coming from new software licence sales. In contrast SAP reports 41 per cent of revenues as coming from new sales.

The analyst firm urges that Baan should create a sell-off task force that will enhance its prospects for sale. It lists likely buyers as Microsoft, Oracle and Peoplesoft.

It agues that a Baan purchase would cement Microsoft’s enterprise applications ambitions in a way that the purchase of Navision and Great Plains could not. For Oracle the potential would lie in kickstarting its apps business with a new installed base, while PeopleSoft would have a greater channel into Europe than it currently has.

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