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JDA, Baan form joint venture

Through the joint venture, Dutch vendor Baan becomes the last of the major business software vendors to enter the retail market.

And then there was Baan.

The Dutch vendor today became the last of the major business software vendors to enter the retail market. Baan and JDA Software Group signed a letter of intent to form a 50-50 joint venture to sell software for retailers with worldwide operations.

JDA, with customers like The Gap, Staples, and Gucci, will team up with Barnevald, Netherlands-based Baan to produce a new generation of global-retail software, the companies said in a joint statement.

The deal is subject to the execution of a definitive agreement, which is expected to be finalized in the next few weeks.

Financial terms were not disclosed in the statement. Company executives were not immediately available for comment.

The proposed agreement will create a new organization, known as Baan-JDA Retail. The venture will produce software for retailers with their own brands, manufacturers that have their own retail operations, and businesses with wholesale and retail operations as well as catalogue, mail order, and electronic commerce needs.

With the $3 billion market up for grabs, Baan's competitors, like software titan SAP and PeopleSoft, are already fighting for retailers' business. SAP and Oracle have developed several off-the-rack versions of their systems for various types of retailers and PeopleSoft bought long time partner Intrepid Systems.

"Many retailers historically have established competitive advantage by developing their own software," said Dennis Byron, analyst at International Data Corporation in Framingham, Massachusetts. "The thing pushing them to packaged applications now is the supply chain effort driven by manufacturers who want to hook everything up to their system from point of production to point of sale."

JDA is a major competitor of Intrepid. Analysts said Baan's deal should give it a significant leg up on its enterprise resource planning cohorts and more than make up for its late entry into the market. It also marks an expansion of Baan beyond its core markets. But Baan isn't losing too much of its focus on manufacturers by targeting only those retailers who make their own product.

Shares of JDA closed at 15 yesterday on the Nasdaq exchange, down 3/8. Baan closed at 32-7/16, down 1-7/16.

Reuters contributed to this report.