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    Report: Microsoft Courting Navision

    By
    Dennis Callaghan
    -
    April 30, 2002
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      Microsoft Corp. will buy Denmark-based Navision SA, which develops accounting and ERP software for small and midsize businesses, in a $1.2 billion deal expected to be announced next week, according to published reports.

      Navision issued a statement on its Website that it was indeed considering a “possible strategic transaction,” but issued no further guidance.

      “The Board of Directors of Navision has decided to investigate the merits of any such transaction,” the statement reads. “Such investigations may or may not result in any agreement on a proposed transaction.”

      The report comes just a year after Microsoft closed on its $1.1 billion acquisition of Great Plains Software Corp., giving it its first foothold in the SMB application software market. Ironically, that acquisition was announced the same week in December 2000 when Navision was formed from the merger of rival Danish SMB software vendors Navision Software A/S and Damgaard A/S.

      If it buys Navision, Microsoft would be able to better access the European SMB market, where Great Plains really doesnt play today, according to Nigel Montgomery, European research director for AMR Research Inc., in London.

      Montgomery explained that Navisions products-for ERP, financial management, human resources management, supply chain management, CRM, e-commerce and knowledge management-are “kernels,” built on Microsofts .Net platform, that its resellers add function to thats specific to the SMB markets they serve.

      “Their channel would be of interest to Microsoft,” said Montgomery. “It understands .Net. Its a ready-made go-to market for them.”

      Tapping into that channel would be easier for Microsoft than trying to penetrate the European market with Great Plains, Montgomery said.

      “Great Plains is not positioned for the European market at all,” Montgomery said. “Its functionally lacking for the European market. Navision is better suited for the European market.”

      Ironically, Navision announced plans at its resellers conference in January to unseat Microsoft Great Plains as the top mid-market ERP vendor in North America. According to the companys Web site, about 3,000 of its 133,000 customers worldwide are in North America.

      Navision targets customers with between $5 million and $500 million in annual revenue. Its U.S. division, Navision U.S. Inc., is based in Duluth, Ga.

      Montgomery said Navision has an “uphill battle” trying to unseat MSGP in North America.

      “If this acquisition is going to happen, I wouldnt see it as Microsoft trying to kill Navision, its more of a springboard to give them a boost into the European market,” he said.

      Navision has 2,300 resellers, known as Navision Solution Centers, worldwide. About 2,000 of those are in Europe, Montgomery said. The company recorded $170 million in revenues in its most recent fiscal year.

      Microsoft Great Plains did not respond to requests for comment.

      Dennis Callaghan
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