In a move that has surprised some, the long awaited rescue plan from Invensys did not include the divestiture of Baan.

Invensys has been losing money hand over fist for the last couple of years and Baan has been seen as a significant contributor to its costs. However, the rescue plan, announced on Tuesday, seems to favour increasing the reliance on Baan and selling off some of the engineering assets instead.

The all-new Invensys is writing off nearly a quarter of a billion pounds worth of assets and restructuring its organisation into two core divisions. This was presented as the final completion of the merger between BTR and Siebe that created Invensys back in February 1999. The two divisions will cover energy management and production management - where Baan resides. This will create a £4 billion business whilst the sale of the systems businesses should realise £2.3 billion to pay off some debts.

The reasoning behind some of these moves seemed a little tenuous. The basic thrust of the strategy is that Invensys believes that its core brands are strong and that the IT sector is on something of an upturn. It is more likely that the company believes that it might not make much by selling off Baan at this stage and that it might be better to wait a while.

There is no doubt that Baan represents something of a diversion to the core engineering skills that exist within Invensys. It has shown little or no ability to operate a software business - especially one that has a major industry profile.

The new strategy says little about how the restructured organisation will function. There are new management teams but there is nothing to show how previously failing parts of the business will be turned around. The only clues are in the management roles - project management, services delivery, customer development. These imply that it will be seeking out new service-based projects, presumably based upon the Baan production management features. Revenue expectations for 2001/2 have been halved.

The overall plan from Invensys was not well received. Analysts didn't like the lack of detail available and the stock value fell by 12 percent to less than £1. There seems to be a fear that the slimmed down business will find it difficult to maintain the margins that it needs to build long-term security. That would imply that Invensys will be expected to look for further investment at some time in the future - or it may yet decide to focus onto core skills and divest itself of Baan.