Microsoft's Navision Deal Extends Application Reach

Acquisition will add users, broaden product offerings

Microsoft Corp. last week agreed to buy Denmark-based business software vendor Navision A/S for $1.3 billion, the latest in a series of moves it's making to piece together a full suite of enterprise resource planning and customer relationship management (CRM) applications.

Microsoft said Navision will complement the Fargo, N.D.-based Great Plains Business Solutions unit it acquired in April last year. Although not well known in the U.S., Navision says it has about 130,000 users of its applications, which are aimed at small and midsize companies.

Despite some obvious overlaps in the software lines of Great Plains and Navision, there are no plans to kill any products at this time, said David Thacher, general manager of global CRM at Microsoft. He added that the two application vendors have very different revenue bases geographically: 85% of Great Plains' sales are in North America, while 79% of Navision's business is in Europe.

CRM Market Maneuvers

There will be cross-fertilization of technologies between the two operations, according to Thacher. "We'll be able to scale globally as we build out the next generation of products," he said, adding that Great Plains plans to start work aimed at leveraging Navision's distribution and manufacturing applications as soon as the buyout is completed.

The Navision deal follows Microsoft's February announcement that Great Plains will enter the CRM market later this year. An unresolved issue is how Microsoft's strategy will affect its overall relationship with key application vendors, particularly SAP AG.

"This is the latest salvo in the growing Microsoft and SAP war for the low end [of the applications market]," said Joshua Greenbaum, an analyst at Enterprise Applications Consulting in Daly City, Calif.

The previous salvo came from SAP, which said in March that it had purchased the assets of Israeli software vendor TopManage Financial Solutions Ltd. as part of a plan to roll out a set of applications for small and midsize businesses.

Henning Kagermann, SAP's co-chairman and CEO, said in a statement that the firm's relationship with Microsoft "is typical of business today, with companies partnering in certain areas while they compete in other areas." Thacher made similar comments for Microsoft.

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AT A GLANCE

Navision A/S

HEADQUARTERS:

Vedbaek, Denmark

PRIMARY PRODUCT:

Business applications for use by small and midsize companies

REVENUE:

$46M in Q3, ended March 31

EMPLOYEES:

1,300

NUMBER OF USERS:

130,000

Copyright © 2002 IDG Communications, Inc.

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