Microsoft-Navision Deal Benefits All

In Joy Paul Tharakan’s opinion, the acquisition of 19-year old Danish software company, Navision, by Microsoft, announced om May 7, will bring about a win-win situation for all involved – the company, its customers and partners.

On the company level, Microsoft and Navision already have the technologies that complement each other well, with Navision solutions supporting the Microsoft Windows NT, Windows 2000 and Microsoft SQL Server.

The deal would enable Microsoft to further advance into the small-to-medium-sized-enterprises (SMEs) market with its .Net offerings at a much quicker pace.

Tharakan, managing director of Navision South East Asia (SEA) Pte Ltd, next commented that because both Microsoft and Navision share a similar business model – that is selling their products through partners – the acquisition will not pose a threat to Navision’s partners’ business but ensures their continuity.

Currently, Navision has 38 channel partners, known as Navision Solution Centers, in the region, and three offices in Asia – one in Singapore, one in Australia and a newly opened office in India. In the world, it has more than 2,200 channel partners.

As for its employees, Tharakan assured: “It is not a situation where we are acquired because we are debt-ridden – that would have different repercussions. We are acquired because Microsoft sees value in our technology and company. This could mean increased opportunities for the Navision employees as they are now part of a larger organization. The opportunities of learning and taking up newer roles and being in different components of technology, not just in enterprise resource planning (ERP), are much higher.”

Navision, Great Plains Under One Roof

The US$1.3 billion transaction between the two companies, targeted to complete by July under ‘optimistic’ conditions, will see Navision becoming a part of Microsoft’s Business Solutions division which also includes Great Plains acquired by Microsoft last year.

Although there may be concerns that there are overlaps of products between Navision and Great Plains, both are in fact strong in different markets. While Navision is strong in Europe, Great Plains is strong in the US.

Industry watchers see the Microsoft-Navision deal as an attempt by Microsoft to strengthen its base in Europe and Doug Burgum, Microsoft senior vice president and leader of Microsoft’s Business Solutions team, has confirmed it, said the Accounting Web.

He was quoted in Accounting Web saying: “The geographic share and many aspects of the product lines are highly complementary. For example, 86 percent of Navision’s business comes from Europe, and 80 percent of Great Plains business is in the United States.”

Where the Asian market is concerned, Tharakan remains optimistic.

He said: “As things are at the moment, the objective is to continue with the products and there are no intentions of ‘killing’ of any of them. But it is only natural that we will have to review the situation in due time. If there are overlaps, we will have to see how can we make it exciting enough to have job rotations and maybe have the employees take up different profiles.”

Opportunities Abound In Asia

The future for Navision in Asia is certainly a promising one, with or without Microsoft’s acquisition as growth in Asia’s enterprise resource planning (ERP) market is no longer driven by large enterprises but SMEs – a space in which Navision plays in.

Navision’s strategy is to move into parts of Asia, market by market, because of the need to develop highly localized products to suit the different legislation and business practices of each market. For this reason, the company has set up a localization technology center for Asia in Singapore where experts can work on the individual needs of a country.

Currently, it has about 300 customers in South East Asia (SEA) alone and another 400 in Australia and New Zealand out of a worldwide customer base of almost 128,000.

Although Asia made up only three percent of its worldwide net revenues of US$189.5 million in its financial year 2000/2001 (ending June 30, 2002), up 18.7 percent over the previous year, it will be the fastest growing market for the company in the years ahead.

Already in FY01, revenue from Asia exceeded the annual target by 38 percent.

“For FY2002, budget-to-budget, we are looking at 170 percent growth for SEA alone. Again, we are ahead of target and this is a great feeling taking into account of the tough market conditions,” said Tharakan.

The two new markets included in its FY2002 are Malaysia and Thailand. Going forward into the next fiscal year, Indonesia will be the next market it plans to move into.

As for its fastest growing market in Asia, like many other technology vendors, Navision has China singled out.

“Our closure rate is amazingly high in China where 40 percent of the proposals made ended up in closure,” said Tharakan.

The company therefore plans on setting up two offices in North Asia to provide stronger support to its partners who are already taking care of Greater China, Korea and Japan. These will take place within the next 12-18 months.

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