Microsoft now proud owner of Navision ERP

Microsoft, the largest software company on the planet, has finalised its acquisition of Danish enterprise software vendor Navision Software. The firm says it expects to buy Navision’s shares for around $1.45 billion £0.94 billion in stock and cash, and bring it into the Microsoft fold alongside its existing Microsoft Great Plains operation. Navision becomes part of Microsoft Business Solutions under Doug Burgum, senior vice president of Microsoft and former chairman and CEO of Great Plains, itself acquired by Microsoft in April 2001. Navision co-CEOs Jesper Balser and Preben Damgaard remain with the firm. Balser becomes director of global strategy, and Damgaard, director for operations in EMEA, based at Navision’s HQ in Denmark. “Combining the businesses of Navision … and Microsoft Great Plains to create Microsoft Business Solutions will produce superb business opportunities for our partners and an outstanding array of solutions for our customers,” says Burgum. “Together, we have the people, products and technologies to bring to life Microsoft’s mission of enabling people and businesses around the globe to realise their full potential.” Microsoft says it will continue to develop, market and support Navision’s applications now called Microsoft Navision Axapta, Microsoft Navision Attain, Microsoft Navision C5 and Microsoft Navision XAL. What’s not yet clear is where the different applications will be sold. Great Plains in the US serves the SME business sector, but has achieved little penetration over here. Navision is on a strong growth curve throughout Europe, but has failed to make the grade in the US. There will be issues around application support, integration, system merging and the rest in the longer term, but for now, Microsoft could finally dominate SME enterprise software in business and industry with Office-like ‘commodity’ software, while also dominating the technology level in bigger businesses with the rest of the ISVs (independent software vendors). Microsoft is reported as sitting on a $39 billion cash mountain; and its issues with the US Department of Justice are looking a lot more predictable. Other purchases have been much smaller, focused on technology or market acquisitions, apart from its stakes in telecoms firms. For competitors like Sage and SAP, at opposite ends of the ERP vendor community market, the folding of Navision into Microsoft is a blow. Navision, which includes formerly competitor Damgaard since their merger over a year ago, was already a healthy adversary. Navision published 2001 global revenues (to June 30 2001) as £124 million and net income at £13 million. Its forecast for this year is £146.3 million, with net income at £15 million. With Microsoft in the driving seat, this is likely to be revised up. Certainly, the markets think so – Navision’s shares rose 21% on initial reports of the news. Sage, although also bucking the trend of IT industry downturn and reporting a 16% increase in operating profits for its first half with considerable new sales into its extensive customer base, will have to fight harder to repeat the performance. For SAP, with its aspirations for growth among SMEs clearly stated, and then restated following its purchase of Israeli software firm TopManage Financial Solutions, again the acquisition will make realisation of its dream that much tougher. There are also relationship issues to sort out. Both Sage and SAP, like many throughout the ERP ISVs are Microsoft partners, as indeed has Navision been until now. And Navision also has a global alliance with IBM to provide implementation and support services. As part of that deal, Navision was being ported to the IBM iSeries (formerly AS/400), with general release scheduled about now. But there is a world of difference between partnering and owning, which may lead to discomfort for the vendors and polarising views for potential manufacturing users. There is strength in Great Plains’ current assertion that direct and favoured access to all Microsoft’s technology both safeguards and advantages its users. Although little has happened with Great Plains in the UK and Europe so far – manufacturing businesses are still awaiting the first fruits of a close alliance with Great Plains VAR Syscom – the same is not the case in the US. There, the injection of Microsoft muscle, both technological and marketing, has catapulted the firm into the SME sector. But others might be concerned about too much total reliance on one dominant software provider – particularly at a time when there is disquiet over Microsoft’ new license pricing model and freeware and other Microsoft alternatives are being sought.