If ERP is a dirty word in large corporations, Navision is working hard to clean it up.
Rumour has it that the firm is in talks with another major software company (read: Microsoft) to pursue a “”strategic transaction”” (read: merger). Nothing has been confirmed, but Navision’s U.S. executives
have been eagerly speaking to the media lately about its close ties with the Redmond, Wash.-based juggernaut. If a marriage is not imminent, it seems likely that a courtship is at least underway.
If the buyout occurs, Navision will be following in the footsteps of one of its old competitors, Great Plains, which joined the Microsoft fold last year. Indeed, both Navision and Great Plains began making important steps towards a Windows-centric strategy in 1998. Solomon Software (which was absorbed by Great Plains prior to its own Microsoft takeover) switched over to SQL Server 7 and stopped developing applications based on its Pervasive.SQL database and Novell’s NetWare. Navision switched to SQL Server 7 in the testing period for its Financials product. At the time, Navision said it wanted to improve ease of use by standardizing on a single platform. Now, as it finds itself surrounded by ERP (enterprise resource planning) competitors like Oracle and J.D. Edwards, it may be realizing that it might as well become a part of the platform as well.
The deal would be a boon for Microsoft, and not just because it would gain the applications and expertise of the two dominant players in the mid-size market. Navision boasts an impressive customer base of some 135,000 organizations, many of them overseas. Perhaps more important than expanding its European presence, however, Microsoft would also inherit a well-managed channel organization, which has proven itself, particularly in the Canadian market.
When it first made inroads here a few years ago, for example, Navision deliberately sought out chartered accounts, who it identified as strong influencers in corporate enterprise, and developed solution centres across the country that matched them up with the appropriate resellers. Last year, it launched a reseller program with free training. This is not unprecedented in the industry, but the reaction from some its channel partners was rare. Many of them sounded like they’d been put through boot camp, describing it as exhausting but ultimately more fulfilling than some of the education typical of major vendors. Navision doesn’t just teach technology but requires all resellers opening a solution centre to adopt its business plan methodology. Little more than a month after it launched, the company said it had signed up more than eight partners. This too is not the norm for many VAR programs. It also created a VAR portal that it said was the first to deliver on Microsoft’s Digital Dashboard 2.01.
When it bought Great Plains, Microsoft began offering product through its BCentral Web site for small businesses. In this case, the company has an opportunity to build on the strength of Navision’s channel relationships by integrating this kind of training into its Gold Partner certification program. If anyone should feel somewhat left out, it’s Oracle, J.D. Edwards, PeopleSoft or SAP. Microsoft traditionally nurtured these development partners and focused on the operating system. Its Great Plains buyout may have been a way of testing the waters, but if it buys Navision, it will be in a much more competitive situation vis-a-vis these ERP specialists. Of course, software developers will no doubt continue to receive early versions of new OS releases, but some of the frills — road shows, marketing support, etc. — could be curtailed. It is also more than likely that Microsoft will explore ways of turning ERP into a Web service. This way, it can offer Navision and Great Plains products through a subscription-style service to cash-strapped midsize companies who have heard the horror stories from their colleagues in larger organizations about how difficult it can be to implement solutions.
In many ways this merger, if it is going to happen, would be a good fit. The great irony about the challenges of ERP is that it is supposed to help businesses run better. By exploring a union with Microsoft, Navision may wisely by greasing its own wheels to make good on that promise.