Microsoft Corp. made a serious move into the small-to-midsize business applications space and bolstered its .Net strategy at the same time with its purchase late last month of Great Plains Software Inc.
Once the $1.1 billion acquisition is completed later this year, Great Plains will continue to enhance, market and support its existing back-office applications for the midmarket, officials of both companies said. But down the road, the group is expected to provide new capabilities that complement Microsofts bCentral online service for small businesses and help create a fully interconnected generation of business applications built on Microsofts .Net platform.
.Net is the Redmond, Wash., companys plan to sell software as an Internet service rather than as a licensed desktop application.
Microsoft officials said Great Plains shares Microsofts vision of software as Internet-based services rather than as licensed offerings, a vision expected to take shape over the next three to seven years.
Last month, Great Plains, of Fargo, N.D., launched a hosted e-commerce solution called Great Plains eSell, which provides small businesses with e-commerce storefronts integrated with Great Plains Dynamics, eEnterprise or Solomon IV back-office applications.
The first Great Plains applications built on .Net are expected to be released by September, Great Plains officials said. They also said customers will benefit by tighter integration of Great Plains products with Microsofts back-end technology.
One Great Plains customer could see the potential.
"I would hope that one benefit [of the acquisition] would be the optimization of the [Great Plains] applications to the [Microsoft] SQL [Server] back end," said Robert Falco, vice president of sales operations at United Messaging Inc., in West Chester, Pa. "Anything that would improve the reliability, scalability and performance of the system, we would definitely see as a good thing."
Microsoft, too, should benefit.
"In order to make .Net work, Microsoft has to understand the way business processes work, and thats what theyre getting in Great Plains," said Tom Brennan, vice president at ManagedOps, in Bedford, N.H. The company is Great Plains largest application service provider.
Great Plains will become the Great Plains division of Microsoft, headed by Great Plains CEO Doug Burgum.
Analysts noted that Microsoft, like Oracle Corp., will become an application vendor as well as a database vendor. Despite Microsoft officials claims that Great Plains competes in a different customer segment from Microsofts other application partners, Microsoft could run into the same conflicts of interest that Oracle has, they said.
"Great Plains and J.D. Edwards [& Co.] do run into each other on a lot of deals. I can see it causing some friction there," said Tom Cook, an analyst at AMR Research Inc., in Boston. "The important thing is that Microsoft leave Great Plains management alone to continue running their company."