Back-Office Dealings
Navision, a Danish provider of manufacturing and supply chain applications, gives Microsoft's back-office applications effort a boost globally, but the purchase worries Microsoft allies SAP, Siebel Systems and PeopleSoft, analysts and resellers said. Microsoft has courted these companies in its bid to gain respect for Windows 2000 and .Net in the enterprise.
HIGHLIGHTS OF MICROSOFT APPLICATION-BY-ACQUISTION PUSH
March 1992: Microsoft buys Fox Software--and place at the PC database table, for $173 million.
October 1994: Microsoft says it plans to buy Intuit, market-leader in personal finance software, for $2.3 billion.
Early 1995: U.S. Department Of Justice files suit to block deal. Microsoft pulls out soon thereafter.
September 15, 1999: Microsoft says it will buy Visio, maker of graphical presentation software, for $1.5 billion in stock. Deal closes January 7, 2000.
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December 21, 2000: Microsoft says it will buy Great Plains, accounting software maker, for $1.1 billion in stock. Deal closes April 15, 2001.
May 7, 2002: Microsoft says it will buy Navision, Danish financial software developer, for about $1.3 billion in cash-and-stock. Deal expected to close in August.
Jeff Young, vice president of U.S. sales and services for Microsoft's Business Solutions Group, said Microsoft needs to field applications to foster acceptance of its .Net platform. In the early Windows days, Microsoft jumped into the application fray with Word and Excel as Lotus Development and WordPerfect dragged their feet.
Doug Burgum, senior vice president at Microsoft, reiterated the company's assertion that it is not out to compete with enterprise application vendors or to circumvent integrator or reseller partners.
"It is not our intention to build out a direct-sales force and sell directly into the enterprise," Burgum said. Microsoft will retain its back-office application focus on midmarket companies with up to $800 million in revenue, he said.
Some VARs are skeptical. "Microsoft is trying to move up the food chain with what they consider to be small-business applications. I guess if you have $10 billion in the bank and a market cap of $288 billion, you would consider $800 million small," said Adam Honig, president of Akibia Consulting, a Boston CRM specialist that works with Siebel and other applications.
Industry observers agree that while there is overlap between products from Great Plains Software, which Microsoft purchased last year, and Navision, the two entities are a good geographical fit. Eighty-five percent of Navision's business is outside North America, while 85 percent of Great Plains' business is domestic. Both companies sell through partners.
Other integrators said the company must field reputable applications in the space. "It's good for there to be a unified back-office solution for the worldwide market, and this certainly makes Microsoft the leading back-office vendor," said Jay Fruin, president of Leveraged Technology, a New York CRM integrator.
Ed Kwan, CEO of Infogenetics, a Redwood City, Calif., Great Plains partner, is bullish. "We think in the long run it will be better for our branding because, as I understand it, Navision, Great Plains and Solomon [business application software will be merged together under one code base," he said.