Jan Baan's second coming

Failure is a turning point for many leaders. Some lick their wounds, give up and move on while some learn the bitter lessons from the events and don't hesitate to risk their fortune in future endeavors. Jan Baan, chairman and founder of Cordys, belongs to the latter category

This energetic Dutchman founded and headed Baan, the biggest and most powerful enterprise software firms to come out of his country. Back in the 1980s and through the mid 90s - before SAP and Oracle gained traction - ERP almost always meant Baan. When the company went for an IPO in the mid-90s, its market capitalization touched $10 billion. But this was not to be the happy ending.

The law of gravity came into play. The company suffered a loss of reputation and lots of money when accounting scandals and discrepancies were discovered.

Jan and his brother Paul Baan left the company and soon the firm changed hands via mergers and acquisitions to Invensys and then to SSA Global which was acquired last year by Infor.

Jan Baan went on a self-imposed media silence on his activities in the years following the Baan fiasco. He reveals the dark days with amazing candor. "There was a high and then a low. It (Baan's fall) was good for my ego. I learnt my lessons. Before that I thought that it was only me who can run very fast. But learnt that it was not so."

Undeterred, he maintained a low profile investing his time and money in making Shai Agassi-led TopTier a successful company. This firm was later snapped up by SAP for $400 million and became the core foundation for SAP NetWeaver. He also supported web conferencing company Webex that was recently bought out by Cisco for $3 billion. He is now busy pushing his firm Cordys (started in 2001) that hopes to give Microsoft and other Business Process Management (BPM) vendors a run for their money.

With a staggering 45-year work experience behind him, the indefatigable Baan exudes nervous energy and drive that could put many a youngster to shame. A self-confessed connoisseur of arts, his castle home in the Netherlands houses an enviable collection of original paintings of Dutch masters including his favorite Rembrandt.

His admiration for Rembrandt also extends to the way he approaches work. "Rembrandt would destroy his paintings and paint it again and again to be perfect. It's a little in the DNA of the Dutch. Like him, we reconsider and redefine ideas and architecture in the pursuit of excellence."

Cordys recently received $80 million in funding from Argonaut Private Equity.

In an exclusive interview with Priya Padmanabhan from CyberMedia News, Baan dwelt on topics ranging from his former life with Baan and why he is betting his millions on his Cordys. Excerpts:

In retrospect, how do you view the rise and fall of Baan?

We started the company in 1978 and in 1981 were the earliest company to go on Unix, relational databases and new technologies. Then we became one of the big four companies along with Oracle, PeopleSoft and SAP. We all desired to be once-in-a- lifetime entrepreneurs and change the world. There is a big difference between these entrepreneurs and serial entrepreneurs who use money and do M&A. Life-time entrepreneurs find it hard to build enough pace to stay in the market. I'm somewhere mid-way between the two. Being early in the business, we were successful. But 20 years later - in the 90s - we saw the limitations in relational databases.

I was made the CEO. I wanted to recover the company as an entrepreneur. Fortunately or unfortunately, we had less than 40 percent stake in the company. But I had differences with the Board.

What is your take on innovation in the industry especially among start-ups?

Initially we had no customers. I think you can only be innovative when you have no customers. When you are customer-driven you are great but not innovative. When you have good ideas, try to engineer the product. Being customer-specific is the enemy of innovation. It is better to acquire IP and get customer-specific. At the end of the product life cycle, you can milk old technology and but how long can you go on? Every industry today is best-of-breed. IT is monolithic, it is poorly managed, and its low on technology and everything is project based. Oracle may call its offerings best-of-breed but in reality it is based on brand. If the old IP is strong, one can milk it for 20 years. It is possible to create this kind of dependency and maintenance.

I believe in three Is- innovation, Integrity and Initiative. You must have the freedom to make a mistake.

Could you tell us about the Cordys business platform and how it can help enterprises?

From the Webex experience, we learnt about how to offer a service from a business process.

We built the Cordys technology architecture from scratch. We realized that the scalability of an Enterprise Service Bus (ESB) is not enough and what is needed is the Grid. Point-to -point integration is fast but not full scale integration. The industry is looking for a hub and spoke integration model. The market is moving towards Service Oriented Architecture (SOA) for IT and integration. So we came up with real-time SOA software architecture and also the grid that bridges the gap between the IT team and business requirements. It is entirely business process oriented and is cost efficient.

Enterprise processes are moving away from silos because of the Internet. We integrate it using XML. Business processes are fragmented. You have many views and no single view. We have built a business operating platform that is central. My vision for information is that if you are looking for business information if you can't describe it in a business process it is not interesting. It can be decoupled from all IT layers. Enterprises can design, execute, monitor and improve everything around business processes.

The platform has all the best practices and processes are centralized and can be used on any system-SAP NetWeaver or Oracle. It works like a Philharmonic Orchestra that can go any place with other artists playing the same symphony.

Andy Grove once said that the future is like a block in a circle. Now we have many circles in a block- that is many business processes in an enterprise. From cross-process companies, we are moving to cross-company processes. One can model the data as they want.

We support everything on one stack. Analysts claim that no one in the world has done this in one stack. We have built an xml container and also a business operating platform elevator that respects every server.

Crystal-gazing into the future, what tech trends do you think will dominate?

Twenty years hence, you will see more of the grid and business processes. Around 50 per cent of ERP functionalities will be become Software-as-a-Service (SaaS). ERP would become model and process driven.

In the next 20 years, we would have an XML container over the Internet. Business would be device independent. From my mobile phone, I would have access to a lot of business processes.

In 1998, we had 1600 engineers in R&D then and around $250 million in cash. I wanted to reduce the size to 600 in R&D. The company at that point was no longer expanding more in R&D, and depended on M&A. This is a dangerous thing and spells the end of innovation.

ERP was different in the days before the Internet. Departmental Resource Planning (DRP) was a better word to describe the software. For long, it was departmental planning. Then the Internet happened in the 90s. At the backend there were the departments and at the front end was the Internet. You could collaborate and bring everything together. But the biggest constraint was that we had technology from the 70s that only provided departmental info.

I wanted Baan to get into Y2K services and save costs for the company by downsizing the R&D team. The Board decided against it and M&A was more important for them. I was always different, I bought a company TopTier to link it to Baan and make the software Internet ready.

I quit and continued with TopTier.

If your company's first product is good, I say, poor you, because you can't be successful. All of my career, at first I did well but could not sustain it. When you start from scratch-you need to change things along the way to keep pace of the industry or else its better to throw it away before you go bankrupt. We were lucky since TopTier became successful.

You said that you are midway between a lifetime entrepreneur and a serial entrepreneur. Could you elaborate?

Once-in-a-lifetime entrepreneurs are at the end of innovation in 20 years. Continuous innovation is hard. It is hard for a company to go through two-three technology waves. Take the example of IBM that was dominating the mainframe business in the 60s and the 70s.

People are afraid to try new brands and technologies. They are afraid of innovative stuff, which has to do with the lack of maturity in the industry. Lifetime entrepreneurs are unique where as the VC route is not about building something substantial. There is exit (strategy) even before you start. I learnt my lessons and started over again. I decided to have a big expectation. You need a crazy man one who has passion. A little crazy is not too bad. You also need passion and perseverance.

The two other companies that you invested in -TopTier and Webex have done very well. Could you tell us about that experience?

After quitting Baan, I continued with TopTier and this became successful. It grew to have an IPO of $1 billion when its revenue was just $10 million. TopTier was bought by SAP for $400 million and it helped SAP in their Internet strategy to become the foundation for SAP NetWeaver.

We concluded that the future is not Microsoft and the backend, but in the Internet.

Similarly Webex was also successful. It helped us do cyber demos in Baan and then later on with web meetings we sold the company for $3 billon to Cisco.

The strategy was to take a new Internet technology and link it together.