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David McCoy recently visited Jan Baan in the Netherlands and watched a man who could have easily retired to the solace of his wine cellar and paintings, but who instead was at work building a new technology company with a non-traditional culture. Jan's influence, through his success with his eponymous company, Baan, was obvious throughout the 1990s, and even now, after the Baan fires have died, Jan's energy level is not diminished. This interview, on 9 September 2004, provides insight into a man driven by an urge to create, a man with a sense of humor. Jan's advice on becoming an instant multi-millionaire: "Start out as a billionaire, and then watch your fortune collapse overnight." Read on for Jan's plans for the future, his company Cordys, and his advice on education, CIOs and technology. Interview conducted 9 September 2004
David McCoy: Let's start the interview with a very simple question. I'm sure a lot of people would like to know what you have been doing post-Baan, the company.
Actually, I was acting as a VC, but I think I have some problems in my blood. I'm very entrepreneurial, and therefore being a VC is not exactly what fits my interests. I first invested in WebEx, and today the holding company is still the largest shareholder in WebEx. We picked up Top Tier and sold them for $400 million to SAP. They have been quite successful, although my interest is more in building a company than being a VC partner. McCoy: I know you're involved with a new company, called Cordys. Can you tell us a little about that organization? As I understand it, it's a bit unique in how you're managing it. Baan: That's true, yes. First of all, I'm founder, Chairman and CEO. The company belongs 100% to my foundation, and therefore, I have more independence from the financial world than ever before. Being CEO there, I'm still more entrepreneurial and more the coach. I'm quite involved with the "techies": I motivate them in the style of servant leadership, as we did before.
You mentioned the way you're running Cordys — being privately held, you're independent from some of the financial observers. Baan: David, that is a real blessing — the best blessing you can have. McCoy: I was going to say, I know in Baan that was a bit of a curse, wasn't it? Baan: Yes, it was. McCoy: Baan was a Cinderella story in a lot of respects. It came from small beginnings. You got the funding from Atlantic Partners. Then, as you say, it became one of the top ten companies. Then through the collapse of the dot.com sector, you were dragged along a little bit with that. Baan: Before. McCoy: Yes, exactly. Looking back, is there anything else you would have done differently about the management style or the market direction? Baan: Yes. Baan Company was in a very good position in the beginning of '98. I left the board in July, and then — in the third quarter in '98 — the company was hit tremendously. Shares went down. It missed the quota, but the good stuff was still there. At that moment the company was in a very strong position from a product standpoint. Technology was very good. It had $250 million in cash. But then I was out and the board had another agenda. Looking back, you see every cloud has a silver lining. I learned a lot. The silver lining now is that I could start again without the legacy. At the time, we were getting very aware at Baan that we should change a little of this complexity because systems slowly became like dinosaurs. You come to a point you've got 10% more functionality, and then you gain 90% more complexity. For the time, the data was king. Now we are living more in the time of the Internet world, with XML and new technologies. We can build solutions that are more business process-driven, instead of data-driven. That makes a lot of difference. McCoy: Yes, the process mentality is catching on. I want to ask you in a few moments about the preparedness of IT for that kind of thinking. One last question on Baan. You ran the company with your brother, and you had a strong vision for public service and for charitable work. Are you still trying to accomplish that same goal through the foundation and your charitable work?
Yes. My entire business belongs to the foundation. I was very happy because I came from a middle class family, and we anticipated the company could do well. In the beginning of the 90's we decided to sell the company to a foundation. That means the foundation is the owner of the business, and I'm only a steward on behalf of the foundation. That also means when BAAN grew to $10 billion and even went down, it never belonged at any time to me privately. I learned a lot. And lessons learned can be good for a man's ego. McCoy: Yes, ego is a very powerful story in this whole IT space. Let's look at one of the biggest ego trips in the past 200 years which was the whole dot com bubble. You look at this and think IT executives, CIO's, everyone should have learned something from this. They're certainly more jaded, but do you think they've learned some valuable lessons through that whole collapse? Baan: I hope so. The problem was that a lot of good stuff came in at one time because all the money was there. We worked with the Internet. The trouble was those who worked with the Internet had no experience with the back-end. It never became a business. McCoy: As an aside, I remember there was a story circulating during the dot com collapse about the similarities to a historical Tulip mania in Holland where you live. Baan: Oh, you're right. Yes. It was real, like what we have seen today. History always will repeat. McCoy: That's what I'm afraid of. I'm wondering when this next time — the next big wave of over-exuberance will reappear. Baan: But afterwards you see the opposite way. This is an over-reaction both ways. McCoy: Yes. We track this up and down swing. We use the concept of the hype cycle. We actually see this as a normal phase: you have the peak of inflated expectations. Baan: Yes. McCoy: The next is the trough of disillusionment. We're still coming out of that. Let's shift now to process. As you know, I'm very favorable on process being the driving force — how we change stovepipe applications. One of the big concepts right now is agility. Do you think it's a real driving force for IT, or is this just another buzz word we're going to forget about in two years? Baan: It's one of them. I think it's, of course, very important because the ability to change is tremendously important. I see this for me, and even more so for the corporation.
McCoy: You and I both have been involved recently in discussions with Erasmus University in the Netherlands. I also have spent time talking with vendors about what it takes to get into this process-centric mentality. If you look at what happens to application development going forward, with service orientation, event-driven architecture and process management, are we training people properly to adapt to this new kind of world? Baan: No, absolutely not. That's the problem. McCoy: I'm working with someone I think you know, Dr. Richard Welke. His Center for Process Innovation, in the States, is putting together a course on process innovation. This is an exciting idea — to train our next generation of leaders on the process view. But it's got to take place all over the spectrum, both at the MBA level and down at the programming level. Is there one bit of advice you would have for the academic community on how to prepare the world and IT for this event-driven architecture and process orientation? Baan: Learning will change totally. The best example is learning by doing, and having your mentor around if you have a problem. In today's collaborative world, you're moving to collaborative learning, where you stay in contact with all people you may need to solve your problem. McCoy: That probably implies then we're going to see a stronger relationship between the universities and vendors just because of the rapid volatility of this technology and what has to be learned to make it work. Baan: Absolutely. That's also what we see. Cordys is working very strongly with universities because we see the way of learning will change tremendously now that we can collaborate. Learning is no longer in one source by one university, but there are many dimensions where we can learn and have our communities. McCoy: Let's ask a question on a lot of peoples' minds right now. It's a very simple question. It only has three words. And it's Nicholas Carr's statement: Does IT matter?
Either it stops the business or it helps the business. Without IT, you can't do business. If you look at IT in the world of yesterday, it was maybe a kind of necessary illness. That means it was only sometimes a necessity and it did not help. If you look in tomorrow's world where we will have the opportunity to use the Internet — have everything Web-enabled around us and collaborate on our business processes — then we will see that IT helps, but it's more hidden. In my way of positioning Cordys, it's more like a kind of a business operating system. To the outside world, it's more hidden, like Intel. McCoy: We've decided, yes, IT does matter, but sometimes it can be a real annoyance. Baan: Yes. Or even it can stop your business. That means if we do it wrong, then it can be a dangerous element. McCoy: Let's talk now about SAP. SAP seems to have this Midas touch. Is there anything these guys can't do? Baan: Hmm. Depends how far they can move to the new game. It's not so easy. I have very much respect for what they're doing, but everything is becoming a little complicated. It's no longer that easy. McCoy: Let's talk about another strong company, Microsoft. They seem to also have a pretty good Midas touch. Do you think Microsoft's going to continue strong forays into the applications space?
Oh, yeah. McCoy: Do you think they'll ever actually try to go head-to-head with SAP? Baan: Absolutely. They will, but the question is then by what course? As you see now, they're struggling to create these enterprise applications, but they have deep pockets. If you look back, they created, Internet Explorer and SQL Server from nothing. On the other end at the moment, I do not see much progress for them to execute on the enterprise application area. They are serious and they will get there, but the question is, "Okay, on what course?" McCoy: Who do you think will be the major IT application players in the next five years? Baan: If you look at today and ask, "Who will still be there?" Of course SAP, in my opinion. Also, Microsoft will be there. PeopleSoft will continue. The leaders. The traditional ones will continue because there is so much legacy installation. A company can continue from all this installed-based stuff. It means you can live long even if you do no innovation; there's still a long time forward where you can stay in business. From a technology standpoint, it's easy to come with totally new solutions, but it's hard to replace the old technology. McCoy: I'm reading on a regular basis of political backlash to offshoring. What's your understanding of the backlash potential there in Europe? Baan: Absolutely, the backlash is coming. You see it. You see it in the States where some people are saying, "Instead of going to India, go to Indiana."
Yes. That's Joe Feiman's research. Baan: Yeah. (LAUGHING) McCoy: He's been quite popular with that statement. Baan: It's a nice statement, but no longer can you only go to one arena. I see more dimensions indicating specific outsourcing facilities go to specific areas. In the past, many people have seen India as cheap labor. I see India much more as a pool of high-talent developers. McCoy: That's a very good way of looking at it because if India is just seen as cheap programmers, then it becomes a cost factor. If we say India can do some of this process analysis, process design-centric modeling we're talking about, then suddenly it becomes a bargain at any price. I want to pick your brain as an observer of the market. What advice would you give to the IT worker down in the trenches who's just waiting and wondering what's going to happen next? Baan: First, it's very important to have the mentality to be creative and also be willing to work with exciting stuff. Do not choose the past paths. More importantly, instead of being too "techy", become a boundary-spanner. Understand more from business processes instead of only from logic and data models. I think that is a combination that could be very attractive in the future, where technology is becoming closer and more interesting for those who understand business processes. McCoy: What can you tell a CEO who's probably very jaded about what their CIO's are telling them — very jaded at what they've seen with this whole dot com collapse, and the Nicholas Carr question of, "Does IT matter?" Baan: It's very important for CEOs to use information technology to improve the business, but they should start to improve it only where the highest value propositions exist. In today's technology opportunities, you can work with traditional legacy, link them together, and build Web services on top of these. It's a very interesting opportunity. Maybe spend most of your energy on 10% of your most important business processes, where you have real value propositions. I think the ROI element is becoming more important. The other element also: eat your own dog food. Use it and learn from it and, again, that's also a tremendously important element. Sometimes don't be afraid to be an early adopter. McCoy: This is all good advice. One common theme I hear through here is the process has to become well-defined, well-understood and respected as a core method of both business and of communication.
Yes, that's correct. McCoy: What is your next big adventure? Baan: First, I'm looking forward in the next couple of years to build Cordys and put it on the map. It seems quite promising. I prefer that instead of playing golf anywhere and disturbing my wife. I think it's quite attractive. It's a blessing to do, especially because I can do it now with the experience of the past. It also gives me the flexibility to do it from a financial standpoint — let's say a strong financial standpoint — but still also with the experience of the past. I think we are well-positioned to come with a real breakaway story, and that's the biggest hobby you can have. I prefer this business. McCoy: Okay. We'll look forward to tracking your progress with your new efforts and seeing if you can do the same thing you did with your company, Baan. Baan: Wait and see. Wait and see, David. McCoy: I will. Jan, thank you very much for your time. Baan: David, thanks for the opportunity. It was a real pleasure.
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