TMR - Invensys chief plans new look for Baan

Posted July 6, 2000

Manufacturing News

Invensys chief plans new look for Baan

The chief of British automation-equipment maker Invensys (www.Invensys.com), Allen Yurko, has stated that he will turn around loss-making Dutch software firm Baan (www.baan.com) within 12 months of taking it over.
A June 20 Reuters article posted on CNET New.com (http://news.cnet.com/news/0-1007-200-2113611.html) reported that Yurko sees layoffs, cost cutting and overhaul of production systems as ways to help reverse Baan's fortunes.
Invensys has offered to pay $733.4 million in cash and to take on $95.5 million in net debt to acquire the software company. Unless it is extended, the offer will close on July 13.
"Baan software is actually in very good shape and up to date...Customer satisfaction was also reasonably good...(but) the financial situation was quite frankly awful," Yurko is quoted as saying in the article.
Baan has seen seven consecutive quarterly losses and shares have fallen from an April 1998 peack of $46.79 to a May 2000 low of $1.05.
The article also reported that Yurko wants to shave about 1,000 employees off the total Invensys/Baan staff of around 12,000. More of the job cuts would likely be in marketing and administration than in sales.
Yurko wants to change production systems in order to speed up output and increase the company's competitive advantage.
One idea includes alerting factory workers in real time when a product is sold so that work to replace the product starts long before the customer places a replacement order. Factory suppliers will also be alerted so components are available in time.
The articles reported that Invensys will integrate Baan's enterprise resource planning (ERP) and relationship management software with its own software that controls manufacturing and shipping processes. Currently, no other company manages the entire production-to-sales market in the way.
Invensys will also spend around $300,000 to cut costs, such as closing offices, and to settle or fight pending litigation, Yurko said. Baan is facing a series of long-standing class-action shareholder suits in the United States, as well as claims from customers over software.
Yurko is reported as saying he would be satisfied with boosting Baan's market share for ERP software to 6 percent from the current 4 percent. Dutch media reported that Ernst Sondveldt, who said he controlled 19.6 percent of Baan shares, would launch a bid to keep Baan independent. So far, he has not delivered a rescue plan to Baan executives.
The article states that while many Baan customers have grown nervous about the company's prospects and have started to consider other options, Yurko said no large accounts have yet asked other software companies to bid for work.

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