The Dutch software vendor with U.S. headquarters in Reston, Virginia, announced this week that its Baan Midmarket Solutions spin-off is launching a new outsourcing business for smaller companies.
Baan is the last of the top four enterprise resource planning vendors to announce an outsourcing strategy. The outsourcing programs are designed to let smaller companies take advantage of transactional software that automates such business functions as order entry, general ledger, and human resource management.
The idea is for an outside company--like the newly formed Baan Midmarket Outsourcing--to run the software system on servers at a central location, taking on all the implementation and maintenance responsibilities itself. The company using the service would then access the software through the Internet or some other similar network and load its data into the system. It is a similar to the way Automated Data Processing (ADP) handles payroll services for companies.
"Midmarket manufacturers need a quick, cost-effective enterprise resource planning solution that is easy to implement and maintain," said Marvin Newell, president of Baan Midmarket Solutions. "Outsourcing allows them to stay focused on their core competencies."
But it isn't a huge revenue stream for the vendors. Analysts agree that this is a must and not a big profit-making venture for the vendors.
"It's an expansion of their channels and meeting the demand for it from customers looking for cures to Year 2000 problems," said Harry Tse, analyst at the Yankee Group in Boston. "It's a matter of, 'If you don't do it someone else will,' so why not hold on to those accounts one way or the other?"
Baan Midmarket Outsourcing will be headquarted in Newton, Massachusetts. Its parent company is jointly owned by the Baan Company and venture capital firm Vanenburg Ventures, which until recently was a subsidiary of Baan and is still run by the Baan family.
The outsourcing firm is to be run by Jim Worley, former president of Mantix Systems, a project management software firm, and former manager of outsourcing business units at IBM and Coopers and Lybrand.