Acquisition immediately gives software behemoth a global presence
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Microsoft Corp.'s $1.3 billion proposed buy out of Danish ERP vendor Navision is expected to give a big boost to the Redmond, Wash.--based software giant's forthcoming CRM product, due out later this year.
Microsoft's deal to acquire Navision is a way to strengthen its global position in mid-market business, industry executives say. Barring any regulatory hurdles, the deal is slated to close in August.
Although Microsoft's own Great Plains Business Solutions group and Navision are focused on the same market, offering similar products, and both sell entirely through the channel, there is virtually no geographical overlap. Eighty percent of revenue from the Great Plains division comes from the United States, while 86 percent of Navision's sales are in Europe, says David Thacher, general manager, MS CRM, at Microsoft.
As a result, the acquisition represents a huge opportunity for Microsoft in the CRM space, Thacher says. In February Microsoft unveiled its MS CRM offering, which is aimed at small and medium-size businesses. The product is slated to ship by the end of the year, according to Microsoft executives.
"Navision has built basic CRM functionality into the heart of its ERM products. That's great for those that need a low-end CRM solution, but in cases where customers need more CRM functionality, we will be able to bring that to Navision customers with MS CRM," Thacher says. Navision is the combination of two leading Danish software companies that merged a year and half ago. The firm now has 1,300 employees, 2,400 partners, 130 customers, and subsidiaries in 30 countries.
Meanwhile, Doug Burgum, senior vice president of Microsoft and president of Microsoft Great Plains says Microsoft is sticking with its plans to roll out MS CRM to a half-dozen countries in Europe at the beginning of 2003. "We are going forward with those plans and you can expect some kind of cooperative marketing with Navision on that," he says.
This is a good move for Microsoft says Robert Anderson, a research director for Gartner Inc., a research firm. "In order to be successful or dominate the mid-market you have to have global coverage. Microsoft was late getting into the CRM market, so they are looking for a quick path to revenue and success. By selling MS CRM to Navision's customer base they have a chance to gain some ground in Europe," Anderson says.
Benny Lorenzo, general partner of Aspira Capital LLC, in Fort Lee, N.J. says this is a way for Microsoft to pull all of its offerings together. "Over time, this will be very successful in helping Microsoft put together all the pieces--CRM, ERP, and supply chain management."
Also, Navision's strong presence in the lucrative manufacturing industry will be a boon for its MS CRM offering, Gartner's Anderson says. "Navision already has the respect of the manufacturing industry with its Axapta product--this means MS CRM will be better positioned to get in the door," he says.
In the event that Microsoft is looking to push its CRM solution into enterprise accounts, Navision's ability to scale up will help there as well, Anderson says. "Microsoft is very concerned about getting into the enterprise market because of its partnerships with SAP and Siebel, so it needs to tread very softly if it decides to go up market. But Navision could easily help in that area," he says.
Microsoft's Burgum stresses that the combined companies have no plans to enter the enterprise market. "If anything, we are more interested in bringing products down market, than moving up market," he says, adding that everyone seems to have a theory on Microsoft going into the enterprise. "We are not interested in going into the enterprise market. It's a very different market from the mid-market. We will continue to work with our partners--Siebel and SAP--to service enterprise customers."