Microsoft Corp. added to its shopping wish list as the Redmond, Wash., giant recently agreed to buy Danish business software developer Navision for a cool US$1.3 billion.
This deal resembles the acquisition the company made last year when it bought application vendor Great Plains Software Inc. and the deal is expected to extend Microsoft’s reach in the business software offerings for small- and medium-sized customers.
Navision does the bulk of its business in Europe. The continent accounted for 79 per cent of its 380.1 million kroner revenue reported for the quarter ending March 31. The U.S. accounted for 14 per cent of revenue, with the rest of the world taking seven per cent.
In Canada, Navision is limited to one office in Richmond Hill, Ont., that currently staffs 15 employees, while in Vancouver and Montreal, employees work remotely with its channel partners. It remains unclear what will happen to Navision employees north of the 49 th parallel.
“It’s way too early to be looking at (layoffs) right now. Navision Canada is not a large development office. We are largely a channel, sales, marketing and product services office. We’re working with our partners to grow their business. We expect the effect to be on the people here to be very minimal,” said John Macdonald, general manager at Navision Canada in Richmond Hill.
Navision’s board of directors has already recommended the take-over to the company’s shareholders. At press time, 60.5 per cent of shareholders had already voted in favour but it will take 90 per cent of shareholder approval for the deal to be finalized, expected at the end of this summer.
Assuming that the board indeed approves the bid, Navision will become part of Microsoft’s business solutions division. Its headquarters in Vedbaek, Denmark will become Microsoft’s largest product development centre outside the U.S. and the centre of development and operations for the business solutions division for Europe, the Middle East and Africa, Microsoft said in a statement. And a company spokesperson added that they won’t rush to bring Navision under the Microsoft umbrella.
“One of the things we’ve learned from previous acquisitions is that it’s important not to bring them under the Microsoft fold too quickly….Over time there will be more integration with Navision but right off the bat the plan wouldn’t be to integrate them fully,” said David Willis, director of small business and channels at Microsoft in Toronto.
He added that Navision will fall into the same category as Great Plains and bCentral in creating solutions for the small- and medium-sized business market. Interestingly, the Great Plains deal last year represented an outfit that did 80 per cent of its business in the U.S., while Navison’s numbers are practically identical for Europe.
IDC director of software research Alister Sutherland said the buy for Microsoft represents an opportunity to become an enterprise management systems provider, a market that the company has been trying to enter. Navision represented a partner who could provide that entry point, he added. And, it could open up larger possibilities for Canada also.
“Given that Microsoft doesn’t have any expertise internally or anyone who is directly serving that market here or anywhere, it gives Microsoft any clients that Navision does have in Canada, those people are serving that market for Navision, and I expect that they will continue to do the same for Microsoft. If anything, they might expand it if they want to build out that market,” he said.
– With Files from IDG