Microsoft buying business applications vendor Great Plains

Microsoft Corp. today said it will buy business software developer Great Plains Software Inc. in a $1.1 billion stock-swap deal that propels Microsoft into the corporate applications market -- potentially putting it in competition with other vendors that support its operating systems and SQL Server database.

Fargo, N.D.-based Great Plains makes applications that support finance, manufacturing and other corporate-level functions for small and midsize users. Earlier this week, the company reported a $4.2 million profit on revenue of $75.5 million for its second fiscal quarter ended Nov. 30.

Once the acquisition has been completed, Great Plains will become a division of Microsoft, reporting jointly to Jeff Raikes, group vice president of the software giant's Productivity and Business Services Group, and David Vaskevitch, senior vice president of its Business Application Division. Great Plains will continue to develop, market and support its current line of business management software, Microsoft said.

In the future, it added, Great Plains will develop new functionality that will be added to the bCentral online service Microsoft set up for use by small companies. The two companies also plan to create an interconnected set of business applications that will be built on top of Microsoft's Internet-based .Net technology, which was announced earlier this year and is still largely under development.

Until now, Microsoft had avoided a direct entry into the corporate applications market in order to avoid competitive conflicts with business partners such as SAP AG. In a Q&A that was posted on Microsoft's Web site today, Raikes said the company plans to continue making relationships with other software vendors "a priority" despite the move to acquire Great Plains.

Laurie Orlov, an analyst at Forrester Research Inc. in Cambridge, Mass., said the deal was a great move by Microsoft, which gets a ready-made customer base and the opportunity to sell other bCentral services to those customers.

"In terms of the two vendors, it's smiles all around," Orlov said, "In terms of the customers, I don't see a down side."

Orlov added that this deal makes Microsoft the biggest player in the small- and medium-sized business software field, and the only one to offer a complete line of commerce, procurement, customer service and financial software.

"I think that's a fair statement -- that Microsoft has shrunk the playing field. It wasn't a big playing field [before the acquisition]," she said.

Great Plains went on a shopping spree of its own earlier this year, buying four software vendors and a product line from a fifth company (see story). Today's acquisition announcement comes just a week after Microsoft warned that its financial results would likely be below expectations in the current quarter (see story).

Related stories:

For more coverage of financial news from vendor companies, visit our Financial News page.

Copyright © 2000 IDG Communications, Inc.

7 inconvenient truths about the hybrid work trend
Shop Tech Products at Amazon