The rise and the fall of the Baan Company

Résumé du document

This case study focuses on the rise and fall of Baan Company which developed in the market of software technology. Baan was one of the leaders of the market in the beginning, but it crashed in 2000. Initially, Baan was especially strong with its manufacturing module, SAP with its finance module and PeopleSoft with its HRM module. Later, these differences became smaller because each company was in a continuing process of product improvement, imitation and innovation. In any case, Baan was the most visionary of the ERP vendors. It then (in the 80ss) positioned itself as a software manufacturer and gave up a part of the service sector. Contrary to the others ERP vendors, it chose to grow on the licenses market which was more volatile than the services market but the profit margins were much higher.

Extraits

[...] Organisational knowledge Shared experience accumulated to systems, routines and activities within the Baan Company Knowledge of the research scientist is the intellectual property of the organisation The value chain of Baan Company The value network of Baan Company The activity map of Baan's company The benchmarking Historical and industrial benchmarking: Initially, Baan was especially strong with its manufacturing module, SAP with its finance module and PeopleSoft with its HRM module. Later, these differences became smaller because each company was in a continuing process of product improvement, imitation and innovation. In any case, Baan was the most visionary of the ERP vendors. [...]

[...] Expected retaliation: There is no war of prices, but a new entrant will be confronted to customer's preferences and the popularity of the companies that he knows well. Differentiation: It would be hard to have customer shifting from their usual software provider because they are used to it Threat of substitutes WRONG! There is none since companies cannot make it without ERP systems Buyer power Buyer has limited power because today they do need an ERP. Thus they have to make this investment Supplier power None! 5. Competitive rivalry Competitors are in balance within fierce competition Markets are undifferentiated: Contracts can be given to any company. [...]

[...] Rates of obsolescence: New discoveries are made in a short lap; according to the Moore law the capacity of an electronic device is doubled regularly while its price hedges down Environmental The implementation of ecological taxes ( the eco-involvement) 6. Legal Competition law: Anti-trust regulations prevent companies from monopolies by merger and take over bid on the market. Bookkeeping regulation Five forces framework 1. The threat of entry Capital requirement of entry : High wages for high skilled workers Expensive material R and D Customer network Customer or supplier loyalty Customers have to rely on its software provider when they need to update their computer system. When bought the software is hope to last long, is a major investment. [...]

[...] Strategic capability and competitive advantage of Baan Company 1. Threshold capabilities Threshold resources Tangible : Human : skilled employees, highly skilled top management, experience of the ERP software Physical: computers with enough capacity Intangible: Financial: revenues of licenses, suppliers of money (risk capitals, bankers . ) Intellectual: several licences on ERP patterns, databases of the companies that have chosen ERP software Threshold competences Innovation: ERP software ( ex: “beyond Customer and supplier relationships Top management and the capacity to make quick decisions Quality and flexibility of the product 2. [...]

[...] Even an ERP is necessary, competition exists and without everyone efforts, the company may be supplanted by the competition. Functional and divisional subcultures The cultural web Paradigm Expensive but necessary at the time of the computing Age Help for efficiency Investment for the future Be careful about competition Most visionary of the ERP vendors Be leading global vendors of ERP software. Rituals and routines Be aware of inventions, innovations Be competitive Be in the leading edge of services Stories Adaptation to new technologies Help for firms to tie together and coordinate internal operations like manufacturing, purchasing and logistics and to replace old-fashioned functional systems. [...]