Invensys Sells Baan to SSA GT, Keeps Marcam Unit

by Alex Woodie

Rumors that the owners of SSA Global Technologies are buying Baan have turned out to be true. Baan, the struggling Dutch subsidiary of British electronics giant Invensys, has agreed to a $135 million sale of the company to Cerebrus Group and General Atlantic Partners, the two investment firms that own SSA GT and fund its growth.

The combined SSA GT and Baan organization will have revenues of $600 million per year and 16,500 customers, making it the fourth-largest ERP software company in the world, behind PeopleSoft, which surprised the business community by announcing its $1.7 billion acquisition of ERP software juggernaut J.D. Edwards the day before the SSA GT and Baan announcement. The largest ERP software company, by far, remains SAP of Germany, and now SSA GT and Baan has its sights set on becoming the third-largest ERP player, supplanting Oracle from that spot.

According to Baan president Laurence van der Tang, Baan will operate as a separate unit within the SSA GT organization. There will be some sharing of office space and consolidation of accounting, human resources, and other infrastructure, but Baan will operate, more or less, as it has been operating, with its own sales and marketing, support and maintenance, and research and development staff. In terms of synergies, there will be some, officials assure, including sharing of customer lists and some cross-selling--Baan has a more well-rounded suite of products that cover CRM, supply chain management (SCM), and product lifecycle management (PLM), and it has an important new product launch coming this fall--whereas SSA GT has formed partnerships with other ISVs to develop those extensions for its core product lines, rather than develop its own e-business applications.

For the most part, however, SSA GT's and Baan's product offerings overlap, in that they are ERP suites used by manufacturers. This is fits perfectly according to SSA GT's plan to become the largest provider of manufacturing-specific software solutions in the industry. Along these lines, the acquisition of Baan does offer SSA GT some things it did not have, such as a large European installed base, an established development center in India, more focus on Windows and open systems, and a heavier focus on discrete manufacturing, van der Tang says. These differences make the two entities stronger than they would be if Baan was still owned by Invensys, and this benefits Baan's customers as well, van der Tang says.

In terms of products, SSA GT will acquire the iBaan Enterprise suite, a collection of "backbone" ERP software and surrounding CRM, SCM, PLM, and business-intelligence products. The software was designed for open systems and has its largest installed base on Windows and Unix operating systems, although it also runs on OS/400. The ERP suite has its largest user base among discrete manufacturers, although Baan claims some 500 of its 6,500 customers are process manufacturers. The launch of Gemini, Baan's "next generation" ERP suite, slated for release this fall, will go forward according to schedule, the companies say. Management of the Baan side of the SSA GT house has not yet been decided. The deal is expected to close in five weeks.

There was some confusion as to whether Baan's ERP suites for process manufacturers, PRISM and Protean, were included with this announcement, or were even on the block along with Baan in the first place. The Invensys conglomerate previously grouped these two product suites in a subsidiary of Baan, called Baan Process Solutions, and they were also included in Baan's iBaan extension strategy for collaborative commerce with a big announcement last year. However, Invensys adapted its press release to indicate that the disposition does not include "Baan Process, formerly Marcam." Today, the PRISM and Protean suites--which run on OS/400 and Windows respectively, and were acquired from Marcam in 1999, before Invensys's acquisition of Baan, in 2000--are listed as products of the conglomerate's Invensys Production Solutions subsidiary.

During his presentation last week, Baan's van der Tang left little doubt about his new company's business model. "The logic behind the combination of the two companies is that we fully expect there to be more consolidation of the software industry in the next several years," he says. "It provides us with an excellent foundation for more acquisitions. We're taking a leading role in the industry consolidation that will happen, and which is happening, by the acquisition of J.D. Edwards by PeopleSoft."

As for potential acquisition targets entering the sites of his new colleagues at SSA GT, Van der Tang didn't name names, saying anything was game. In light of the SSA GT/Baan and PeopleSoft/J.D. Edwards acquisitions, van der Tang said it should put small and midsized ERP software makers--companies with anywhere from $10 million to $200 million in annual revenues--on notice of the coming consolidation and what it means to their future.

It is worth noting that General Atlantic Partners, the Greenwich, Connecticut, investment firm that bought a $75 million stake in SSA GT this spring from majority owner Cerebrus Partners, and which has been involved in funding Baan since its inception, also owns almost 20 percent of MAPICS. MAPICS acquired a Windows-based ERP software maker, called FrontStep, last November.

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