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Is Baan trying to unload The Coda Group?

Though Baan denies it, analysts say the company is quietly trying to sell off The Coda Group, a financial applications company the Dutch firm bought last year.

Kim Girard
Kim Girard has written about business and technology for more than a decade, as an editor at CNET News.com, senior writer at Business 2.0 magazine and online writer at Red Herring. As a freelancer, she's written for publications including Fast Company, CIO and Berkeley's Haas School of Business. She also assisted Business Week's Peter Burrows with his 2003 book Backfire, which covered the travails of controversial Hewlett-Packard CEO Carly Fiorina. An avid cook, she's blogged about the joy of cheap wine and thinks about food most days in ways some find obsessive.
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Kim Girard
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Though Baan denies it, analysts say the company is quietly trying to sell off The Coda Group, a financial applications company the Dutch firm bought last year that has turned into more headache than help.

Business applications maker Baan today said it has no intention of selling Coda, which it bought last February in a deal valued at about $87 million.

"At the time, Baan was flying high and they needed to use the stock currency to go out and buy something," said Harry Tse, analyst at Boston-based Yankee Group. But Tse questioned why Baan bought Coda in the first place, given that the company's products were very mainframe-centric and didn't fit with Baan's client needs.

After acquiring Coda, Baan founded Baan Corporate Office Solutions (BaanCOS), a division which sells both Coda and BaanFinance applications that automate a companies accounts payable, sales invoicing, and general ledger, among other functions. BaanCOS president Andrew Nash, appointed last year, has since left.

After Baan hit hard financial times last fall and laid off about 20 percent of the workforce, the firm shelved development plans to integrate Coda financials with the Baan back-end ERP product.

"It's very, very clear that they will have to sell it off," Tse said.

Baan said the company plans to hang on to Coda and has included a plan to integrate the company's financial applications into its long-term road map.

"We feel that Coda is still an extremely important part of Baan's strategic product line," Baan spokesman Andrew Hoerner said. "There are no plans at this time to spin that division off."

Much of the management that joined Baan from Coda after the acquisition have since left the company, most recently research and development head Phil Dawes, who resigned this week.

Fueling speculation that Coda will be sold off is Baan's recent affirmation that the firm will focus its efforts solely on three areas: front office products developed by Aurum, which the company acquired in 1997; their core ERP products, and supply chain management. Under this plan, Coda's financial applications stick out like a sore thumb, analysts said.

Bruce Richardson, a vice president at AMR Research, speculated that Coda is "quietly being shopped" and the firm has already hired an investment banker.

"I think they're going to sell," he said. Sniffing out a good deal in a rocky ERP market may not be easy, though. Richardson said interested buyers may include QAD, former Coda partner and manufacturing systems supplier SSI, Symix Systems or Mapics.

"The problem is most of the ERP companies' stock has been completely whapped," he said. "Their stock doesn't have the purchasing power."

Besides Baan, PeopleSoft, SAP, J.D. Edwards, and others have all watched their stock value tumble for a host of reasons including a slowdown in license sales, Asia Pacific economic troubles, delays in corporate buying due to Year 2000 projects, and some market saturation.