When Siebe and BTR announced their impending merger in 1998, critics (and there were plenty of them) were quick to write off the whole idea.
There was too much overlap, they complained, too little focus and BTR was in particularly bad shape. Was bigger really better?
Since then some of those critics have been silenced. Invensys, as it is now known, has managed to follow up to some degree on its promise to provide `high-value services and solutions’ rather than just dull old low-margin products. It has also shown a fair bit of focus with a series of divestments.
Buying the crisis-hit software giant Baan, which has lost 90% of its market value in the past two years, has caused no end of jitters within the financial community here. But on the face of it, there is plenty of logic in this deal.
Invensys has wanted to get its hands on a major software supplier, and has got one at a knock-down price. But while Baan as a whole has been struggling, with big losses every quarter for almost two years, the bits of Baan that Invensys was interested in seem to have worked OK.
Invensys engineers, after all, have been tinkering about with all the major enterprise resource planning suppliers’ systems at its hundreds of manufacturing plants. They know what is good and they rated Baan’s systems highly.
If their experience is typical, there is now a real opportunity for Invensys to bring its industrial applications technology into line with Baan’s software services in enterprise systems, logistics and customer-facing software. The result will be a fully integrated system with a seamless join between suppliers, the shopfloor and customers.
Of course, getting the lumbering giant that is Baan into shape will prove no easy task for Invensys’ management, and could prove costly. The other risk is that it could hold up the ongoing streamlining of the company that up to now has been going pretty well.
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