Baan, the Dutch software company, has leapt forward in recent years to seventh place in the sales volume and market value rating of world software companies. Not satisfied with that, however, the Dutch company is planning to reach second place world-wide in the next few years.
In the past year, the market has evinced a growing appetite for the organisational information management software developed by Baan, as part of its preparation for 2000 conversion, since old software packages will function poorly in the third millennium. Conversion of the old software will not be a worthwhile investment, and many organisations are deciding to replace it by more efficient, state-of-the-art systems.
All this is providing a fillip to leading ERP manufacturers such as SAP and Baan. Oracle, most of whose activity is still based on infrastructure products, is not posting such rapid growth rates as its competitors in the ERP market.
Baan has invested some $25 million in Israel, in acquiring 90% of Bain, in the setting up of a Baan company in Israel, in co-operation with Applicom which co-ordinates the marketing of its ERP system, and so forth.
It recently invested in the Top Tier software firm of Raanana, which is developing a link between databases for information retrieval applications and Internet. These systems will facilitate faster access than the big organisational software packages to decision support systems and "information mines".
In a special interview with "Globes", company President Ian Baan said that in conversation with Prime Minister Benjamin Netanyahu, agreement had been reached to increase the company’s investments in Israel to $75 million. Part will serve for setting up the marketing, instruction and technical system, but the bulk of the money will go to corporate investment and to the procurement of technologies.
"Globes": Israel is a small market, why are you investing so much here?
Ian Baan: "Israel is becoming the third Silicone Valley; after the ones in San Francisco and Boston, Israel is the most dynamic and outstanding development centre. We started with some aggressive activity here this year. Even though Israel is not a dominant market for our sales, we are investing a great deal here. As I see it, this is a particularly important market, because we will be able to learn faster and better about new technologies, market requirements and users’ preferences.
The Israeli market is not foreign to Ian Baan. He is familiar with the Israelis’ idiosyncrasies, and, in his opinion, the Israeli manager resembles the Dutch manager in character. He is, however, critical of the way Israelis rush straight for issuance. "There are a lot of small companies here, and plenty of incubators that can succeed very well if their arrival in the market has been thoroughly and securely well prepared. But they prefer to rush into the stock exchange and reach the skies by making an issuance.
"Baan, in its way, has realised precisely the Israeli dream. It started with an application idea, shortly became established in the Netherlands, came out on the stock exchange in Holland and the United States and now has a market value of more than $7 billion".
Can young Israeli companies come to resemble Baan?
"What we are seeking here are technologies that can exert an influence and flourish within our product and marketing system. Schedule products, advanced mathematical and statistical applications and Internet technologies can dovetail nicely with our products".
Baan has decided to set up a fund for investing in Israeli developments, which will focus mainly on seed (initial development) stages. It intends to provide a wide umbrella of services, starting from development directions, definition of needs and market approach, through the financing required to commence business operations. The fund will be financed by an initial investment of $20 million. Last week, preliminary meetings took place with entrepreneurs who are in line to receive aid from the fund.
What will the fund invest in?
"We are looking to develop business applications, electronic trading and Internet technologies. Each investment will amount to hundreds of thousands of dollars".