FRAMINGHAM (03/29/2000) - Setting the stage for a possible spin-off of the Aurum Software Inc. unit it bought with great fanfare three years ago, struggling Baan Co. NV today said it's creating a separate customer relationship management (CRM) subsidiary.
Baan officials said the Netherlands-based applications vendor hasn't made a definite decision to sell off all or part of the CRM operation. But they said that a range of financial options are being considered as part of Baan's attempt to rebound from six straight quarters of losses.
The CRM subsidiary will continue to rely on Baan's sales force to sell its sales-force automation tools and other front-office software products. But Baan said the new company will operate with global autonomy from Aurum's facility in Golden, Colo.
The legal work needed to set up the subsidiary should be completed by June, Baan added. It has yet to name a management team for the CRM operation.
Laurie Orlov, an analyst at Forrrester Research Inc. in Cambridge, Mass., said spinning off Aurum could give Baan a fast financial windfall because of the high stock-market valuation that CRM vendors such as Siebel Systems Inc. in San Mateo, Calif., enjoy.
But it also would be "a throw-up-your-hands move" that shows Baan couldn't succeed in its effort to put together an integrated suite of front-office and back-office applications, Orlov added. "It's basically an admission of defeat," she said.
For users, Orlov said, separating the CRM applications could further erode Baan's credibility and viability as an enterprise resource planning (ERP) vendor.
"Customers are very concerned, and Baan has to give them reasons to buy (more software)," she said. "Otherwise, it's looking like there might be only four ERP vendors in the top five."
David Dobrin, an analyst at Benchmarking Partners Inc. in Cambridge, Mass., also described the potential CRM spin-off as a sign that Baan's financial problems are forcing the company to abandon its vision of offering a full suite of applications similar to what Oracle Corp. and SAP AG sell.
"It's sort of sad," Dobrin said. "They're essentially giving up on an ambitious and difficult thing."
Baan also said that it has signed an agreement with financial investment firm Bear Stearns International Ltd., under which it can ask Bear Stearns to buy up to 150 million euros ($142.8 million) worth of stock during the next 18 months.
Bear Stearns was given 1.5 million shares in return for signing the agreement, Baan said.
The company also announced another departure from its supervisory board of directors - the second this week and the fourth during March. Joop Janssen, who has been the interim chairman of the board, is taking a leave of absence for health reasons.