Microsoft targets midmarket with Navision update

Microsoft Corp. is building on its 2002 buy of Danish business application developer Navision A/S with the release Monday of its first major product built on the Navision software suite.

Dubbed Microsoft Navision 4.0, the software is aimed at strengthening the Redmond, Wash., company’s position in the business application market targeting small and medium-sized businesses (SMBs). Microsoft has been trying to carve a niche in the category over the past few years, investing US$2.4 billion (all figures U.S.) to enter the market with its buy of Navision and U.S. midmarket business application provider Great Plains Software Inc.

The Navision 4.0 release includes financial, manufacturing, customer management, supply chain, analytics and e-commerce data tools and offers users a new interface modeled after Microsoft’s Office Outlook 2003. The main change in the suite is its tighter integration with Microsoft’s technology stack.

“To a large extent integration with Microsoft is what the release of 4.0 is about,” said Jen Silleman, business manager for Microsoft Business Solutions Navision.

For example, Excel is used as a viewer for the business analytics graphing tools, Silleman said, and new notification services are built on Microsoft’s SQL Server. The update is also aimed at connecting partners and customers, offering an XML (Extensible Markup Language) port so customers can customize the software for document exchange.

The suite is aimed at companies’ inventory, manufacturing and business services needs, and although it is for SMBs, Microsoft is also pushing it for subsidiaries and divisions or branch offices of larger companies.

“A lot of the needs of small businesses are the same as the needs in big business,” Silleman said. However, Microsoft has been adamant that it is not setting its sights on the enterprise market dominated by the likes of SAP AG and Oracle Corp.

The SMB market is highly fragmented, with one or two leading players in each country or region, according to RedMonk LLC analyst James Governor.

With no global leader and an estimated 40 million small business and 600,000 midsized companies worldwide, Microsoft predicts enormous market potential. It has said that it is investing $10 billion in its SMB efforts over the next five years, in addition to $1.7 billion for its partners program and $850 million for the Microsoft Business Solutions group in fiscal 2005.

“We truly believe that we have a huge potential in that marketplace,” Silleman said.

Navision 4.0 was developed at Microsoft’s Vedbaek, Denmark, campus — Navision’s former headquarters, and now Microsoft’s largest development centre outside of the U.S. — and is clearly aimed at replicating the success Navision has had in Denmark in other international markets.

Microsoft chief executive officer Steve Ballmer said recently that he “wants to make the whole world Danish,” adding that if Microsoft had the same success with its business applications products as it did there, revenues from its Business Solutions unit would rocket. The Business Solutions unit reported revenue of $667 million for fiscal 2004 and is projecting revenue growth of 9 percent this year, to $820 million in 2005.

Navision already had a strong customer base when Microsoft snatched up the company for around $1.3 billion. Some 45,000 organizations around the world already use the Navision product suite, Microsoft said. Silleman sees potential in all global markets, but said that Eastern European countries that just joined the European Union appear particularly ripe for the picking.

The new suite is available in 39 languages and 41 local versions. A typical configuration for a single user starts at about US$2,500 for the sofwtare license, Microsoft said, while implementation and consulting fees are extra. Implementation typically takes nine days, Silleman said.

The new software is now available in Canada.

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