Microsoft has no plans to acquire small ERP rivals in midmarket

Microsoft Corp., with its hands full integrating its Dynamics ERP (enterprise resource planning) line, does not plan to acquire any of the smaller vendors competing with the software giant in the midmarket area, a senior executive said.

Acquisitions are “not in our plan right now,” said Klaus Holse Andersen, the newly appointed corporate vice president for Microsoft Business Solutions Worldwide Sales and Operations, on Tuesday. “We think we have the technology we need.”

Microsoft sees double-digit growth from medium-size businesses for ERP applications, which can manage anything from payroll to inventory to the supply chain.

Microsoft faces competition from SAP AG and Oracle Corp., enterprise vendors that are also moving into the midmarket, in addition to the local companies that have traditionally produced ERP software, Andersen said. Microsoft is also banking on some consolidation among smaller vendors, he said.

Andersen is also the site leader for the Microsoft Development Center Copenhagen, the company’s largest software development site in Europe. A 900-person team there is developing the four products in the Dynamics family: AX, NAV, GP and SL.

That team — an increasing number of which include non-Danes, thanks to flexible immigration laws in Denmark — is taking each of those variations and merging them onto one code base, a long-term project that Andersen said could run through 2012 or even 2015.

Andersen downplayed the end date, saying that customers are “all going to get to the same place at the same point.”

The applications have already been woven into one of Microsoft’s core products, Office 2007, and can pull in e-mail from Outlook and export forms to Excel.

Eventually, the four Dynamics applications will share a “horizontal” code base onto which Microsoft’s partners can build specialized functions needed for specific industries, Andersen said.

For example, a mining company may want software modules that deal with shipping and storage issues specific to mining, Andersen said. Microsoft has granted access to the source code for its products to partners so features can be directly integrated into the software, he said.

Microsoft is heavily pushing the buzz phrase “role-tailored interface” with Dynamics, the company’s term for how people can customize the software. The company studied about 100 positions, such as payroll and sales managers, examining how people do their jobs and what information they access, Andersen said.

Many of those roles are the same regardless of the industry, Klaus said. But the software is being designed so, for example, a sales manager for a car dealership can customize the software to easily see various inventories rather that diving into different subsystems and drawing out the information, Andersen said.

Since completing the first so-called first wave of integration of the Nav line, wave two will focus on developing a common client base and more tools for developers to add customized features, Andersen said.

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