Microsoft Business Solutions Buys Public-Sector Accounting Expertise

In the deal, MBS gets technology for grant management, encumbrance management and fund accounting, said Glenn Bray, director of vertical strategies for MBS.

Encore is a small Winnipeg, Manitoba-based company. Terms were not disclosed.

The technology will manifest itself first in Great Plains version 8, due this summer, Bray said. Fund accounting and grant

management will be new Great Plains modules. Encumbrance management will flow into existing Great Plains' offerings, he noted.

Grant management helps organizations track receipt and reimbursement of grant money. Should a city get a federal grant for homeland security, for example, it will need to document how that grant is consumed. This software allows tracking of those expenses and revenue, Bray noted. Encumbrance management adds more budgeting and financial reporting capacity to purchasing applications. If a given business or municipality has to assign budget dollars to an upcoming event, the money has been committed but not yet spent. Encumbrance management takes care of that.

Since Encore was already a Great Plains/MBS partner and its technology was built atop Great Plains "Dexterity" code base, integrating into the upcoming product line will not be a huge issue, Bray noted. On the flip side, the features will not soon work with MBS' other Navision, Solomon or Axapta accounting/ERP lineup.

Microsoft pitched the added functionality as a win for ISV partners in the public sector and nonprofit world, although the ever-rising line of functionality in MBS products is viewed as a competitive threat by many ISVs. (See related story.) Bray maintained that the acquisition was a response to ISV requests for just this type of functionality. "This foundation will allow partners to serve a wider range of verticals," he noted.

The Encore-based capabilities will further bulk up what Microsoft is calling MBS' "industry-enabling layer." Over time, Microsoft has also promised ISVs that its Microsoft Business Framework, delayed along with the next-generation Visual Studio, will be a feature-rich foundation for their custom vertical applications.

Microsoft's ever-deeper infrastructure layer could pose a risk for some third party players, but there are a couple of mitigating factors, said Chris Alliegro, analyst for Directions On Microsoft, a Kirkland, Wash. researcher.

He said he expects third parties already building atop Encore to continue to do so.

"Not having the ability to natively support public-sector accounting was making it hard for large channel partners to sell Great Plains into accounts like schools and big non-profits," he said. This acquisition mainly serves to plug the feature gap that keep Great Plains out of a good sized market, he added.

For more on the MBS road map see CRN.

This story was updated with analyst comments.