Can you briefly discuss the issues that affected Baan from 1997 onwards?

It is wrong to think that only Baan was affected while all other ERP vendors were doing well. No, the market in general was down, corporates were going through difficult timesand hence there were few orders. The corporates were more keen on Y2K compliant solutions, which are part of the ERP. But towards late 1997, this demand suddenly began shrinking and went into a negative growth as most of them thought it was too late to implement the compliance projects and tests. The crucial US market became saturated while south Asian countries whittled under the financial crisis there. Many projects did not take off or were put off and revenue was hit badly.

Despite all this we recorded a growth of 5-7 per cent here. Our revenue for the first quarter of 1999 is $176 million compared $179 million last year. So the impact has been minimal this year.

Analysts blame your company for its `unnecessary acquisitions' which became a burden later. How do you react to that?

We have been growing faster than the industry and working with a 50-per cent growth target in the overall market. We felt the need to make few acquisitions to expand our reach and products.

Baan did make fewacquisitions in 1997, which we thought would be critical to our growth since these offer a wider suite of enterprise applications like that of Aurum, a front-office solutions company. Yes, we committed a mistake here by integrating the company's cost structure and financials into Baan instead of its operations and other functions. Ultimately this company's burdens got added to that of Baan. In a nutshell, the drastic change in the market required Baan to consolidate sales, marketing and R&D operations of the companies we had acquired to rationalise the cost structure, and to better address the market.

Another area, where we did not focus was services, which today constitute a big business of some well known names. We remained essentially a software vendor, which I believe was not the right strategy.

What is Baan's status now?

Baan is a sound company with a cash reserves of $125 million and another $60 million earned through the restructuring. We cut down our operating cost by another 20 per cent.Interestingly, we have seen a 28-per cent increase in maintenance and service revenues to a post $111 million, or 63 per cent of total revenue as compared to 48 per cent the year earlier. Deferred revenue for the first quarter 1999 was $163 million, approximately equal to the year-end 1998 levels. The major improvement was in cutting down operating expense and cost of revenues, which fell by approximately 20 per cent to $202 million, compared to the third quarter 1998 prior to the commencement of the restructuring. Our ERP solution has become far more comprehensive with the inclusion of modules like dynamic enterprise modelling strategic execution (DEM-SE), extended enterprise models, business models, data models and tools. We are selling far more products than SAP or PeopleSoft.

Look at SAP, the company is selling far few products and licences and in fact, PeopleSoft is having a negative growth in licences also. Baan sold over 600 licences during first quarter of this year at $65 million, which is anincrease of 75 per cent.

What are the reasons for the tremendous growth of Baan in India?

Indian operations did extremely well last year with a sales growth of over 160 per cent. Last year, the company won some major orders. This market is growing as there has been an increase in awareness about ERP.

Indian market is matured and companies know that they need technological advancements to grow. Small and medium level companies are accepting ERP solutions and we expect a growth of 100 per cent growth this year in India.

What does the future hold for Baan?

We have learnt a few lessons. Baan will go for aggressive front-office products like Baan FrontOffice'99 and Baan InternetConfigurator with better value. We are looking for providing SAP compatible products like Caplogistics and e-commerce products like e-sales, e-procurement and e-collaboration to complete the supply chain management for this critical segment. We are looking for more re-sellers and partners in the country.

Baan willalso come out with ERP out of boxes and other new products. These are 12-week implementation packages inclusive of all costs. The company will increasingly concentrate on outsourcing of essential services as part of the package.