Baan Spins Off Its CRM Unit In Bid For Profitability

Beleaguered enterprise resource planning software company Baan said Wednesday it will spin off its customer- relationship management unit as a subsidiary this summer in a bid to regain profitability. It's the latest in a series of retrenching moves designed to focus the company on its ERP strengths.

The subsidiary, based in Golden, Colo., will manage the sale, service, and development of three products that Baan has acquired during the last several years:

- A CRM suite from Aurum - Product-configuration software from Bealogix of Denmark - Sales-force support software from Matrix in Holland

The move indicates just how dire Baan's financial situation remains after almost two years of red ink and a stock valuation so low that it might be delisted. In fact, the spin-off might be a prelude to an outright sale of the unit. Sheila Gibson, Baan's VP of marketing in Europe, says potential investors have approached the company about the soon-to-be subsidiary. "We are looking at those offers."

It might be the right move, AMR Research director John Bermudez says, but "competitors will play this against them." Rivals Oracle, SAP, and PeopleSoft are all working toward tighter integration of their back-office transaction systems and customer-management software. "Breaking out CRM is maybe the right move to save the two pieces, but it's more of a last-ditch effort." Baan is expected to reveal more organizational changes April 20 when it reports its first-quarter earnings.