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Microsoft Great Plains Procures eProcure At Last

Written By: Predrag Jakovljevic
Published On: August 13 2001

Microsoft Great Plains Procures eProcure At Last
P.J. Jakovljevic - August 13, 2001

Event Summary

On July 10, Microsoft Great Plains Business Solutions, a business applications division of Microsoft Corporation (NASDAQ: MSFT), announced a strategic relationship with Clarus Corporation (NASDAQ: CLRS) to deliver a customized Internet-based procurement solution for direct and indirect products and services, providing real-time purchase-order creation, approval workflow and order processing. Microsoft Great Plains Business Solutions will OEM Clarus Corporation's eProcurement product. The joint solution, named Microsoft Great Plains eProcure, will also include Clarus' Fusion integration toolkit and its View analytics product. Envisioned as a seamless integration with Microsoft Great Plains' financials, payables management, fixed assets and reporting solutions, eProcure should result in a complete, end-to-end purchasing solution.

eProcure can be deployed in-house or hosted through a Microsoft Great Plains certified Application Service Provider (ASP). eProcure will be delivered exclusively by authorized channel partners within Microsoft Great Plains' extensive global network of more than 2,200 channel partners. eProcure will be fully integrated with Microsoft Great Plains' eEnterprise, Solomon and Dynamics products operating on Microsoft SQL Server and is scheduled to be available in the fourth calendar quarter of 2001.

The company believes eProcure will provide significant cost savings and fast delivery for small and midsize customers requiring a more streamlined, Web-based purchasing and approval process. The combination of eProcure and Microsoft Great Plains supply chain, distribution, e-commerce and customer relationship management (CRM) applications could potentially provide a complete, end-to-end e-business solution for small and midsize companies, with functionality matching or exceeding solutions that cost much more.

"Common procurement processes are costly and inefficient as a result of bottlenecks, maverick spending and time-consuming paper-based processes," said Lynne Stockstad, VP of e-business at Microsoft Great Plains. "With eProcure, organizations can reduce costs by gaining control of interacting with and purchasing from a multitude of suppliers and enhancing productivity by defining purchasing standards, taking the guesswork out of procurement."

eProcure could reduce significantly the costs of goods and services by enabling supplier performance analysis and tracking and cost analysis and directing purchasing to more profitable sources. eProcure also enables search capabilities internally and externally to both online marketplaces and directly to suppliers for more strategic product selection and pricing. Integration with an online marketplace enables organizations to conduct auctions, reverse auctions and comparison shop, ensuring a competitive price. eProcure features an architecture that can be configured to mirror almost any organization's operating structure, by using strong mapping capabilities for unlimited levels of approval. Purchase orders can be routed according to price, category, job classification or a number of other attributes.

Market Impact

Microsoft Great Plains is possibly the leading provider of enterprise applications to small-to-medium enterprises (Tier 2 and Tier 3) companies with fiscal year 2001 sales at the level of $300 million. Currently, it has one of the largest customer bases in the market segment, but primarily in North America. Owing to a number of acquisitions in 2000, especially these of a report writing vendor FRx, its reseller PWA, and the direct accounting software competitor Solomon, enabled Great Plains to post 54% annual growth, with estimated 10% organic growth.

Some companies with similar histories and/or products that are also its fierce competitors include Epicor, Sage, Navision, and Kewill. To date, Great Plains has been more successful than most of these at addressing the needs of Tier 2 and Tier 3 companies, but mainly in accounting and back-office functions and only occasionally within the discrete manufacturing sector, which has become the company's focus since the end of 2000 (for more information, see How Great Is Great Plains' Manufacturing Offering (Did Somebody Say Microsoft)?). The second strategic focus global expansion, particularly in Europe and Asia/Pacific.

In a slew of advantages of becoming part of Microsoft in 2001, one possible downside would be prolonged decision-making most likely owing to the approval process now having to be routed through the 'big brother' that also has to satisfy the bCentral business community needs. TEC was aware over a year ago of then independent Great Plains' intentions of striking an alliance for an e-procurement product, in the wake of Epicor's partnership agreement with Clarus in 2000. Although the decision was sidetracked by more urgent acquisition issues, which likely gave Epicor a significant lead in offering e-procurement, the delay does not seem to be that grave given that other competitors have yet to make similar announcements.

The partnership should be mutually beneficial. Clarus seems to be a slick e-procurement product for small to medium enterprises (SME) rather than an overkill application with unneeded, complex functionality demanded by trading exchanges. Clarus' Microsoft-centric product architecture, the support for many languages and alliances with trading exchanges that do not charge transaction fees should be additional attraction for the intended customers.

The alliance has possibly greater meaning for the recently struggling Clarus, which should gain access to Microsoft Great Plains' global network of over 2,200 channel partners. Clarus has long desired to host its e-procurement application and to sell it through large channel partners, something it was not able to do because of its reputation as a generalist ASP. Microsoft Great Plains, on the other hand, has a successful certified ASP partner channel.

Nevertheless, the job of gaining traction will by no means be easy for the alliance. The competition will be fierce, primarily from IBM that, on top of an attractive hosted e-procurement offering alliance with Ariba called Leveraged Procurement Services, also features the group-buying contracts functionality generally lacking in most mid-market e-procurement products. One should not discount the Oracle's recent aggressive online offerings for small business either (see, Oracle Claims The Worst Is Over And Turns To KISS For A Boost).

Furthermore, Although Microsoft Great Plains has an impressive track record of integrating partners' products with its products (see, Siebel: Great Plans for Great Plains and Great Plains Supply Chain Series To Be Powered By Logility), integrating the eProcure application to all major back office products, as well as to a broader set of trading services such as content management, suppliers' integration, procurement cards, and payment settlement services, remains a major undertaking. However, the company has been there many times, witness the challenge of training the affiliate channel in the new application for the Siebel and/or Logility modules.

User Recommendations

Organizations using Microsoft Great Plains back office applications that have an e-procurement initiative should react positively to this news. Existing Microsoft Great Plains customers should evaluate the eProcure platform as a way to add value to their existing applications whether with an impending integration effort now or by waiting for the company to supply a generally available integrated solution.

Although neither organization announced formal plans to integrate Microsoft Great Plains back office applications with Clarus, we estimate with 70% probability that both companies will focus a significant amount of research and development dollars towards linking their applications. The catch 22 will be to obtain the firm delivery schedule of eProcure for all Microsoft Great Plains flagship back-office applications.

SME companies considering new enterprise solutions should place Microsoft Great Plains on their list. These companies should consider the added functionality from this alliance for an addition to their requirements list. Some companies might find this combination as one holding significant value in terms of both cost savings and increased procurement efficiency.

Upper mid-market organizations using eEnterprise or Solomon in the back office may consider taking a wait and see stance with their e-procurement initiative to determine if purchasing eProcure through a Microsoft Great Plains VAR will have more value than purchasing e-procurement applications (Ariba or other) through different channels. Include these factors when considering a wait and see stance with your e-procurement initiative:

  • The urgency and the complexity level of the e-procurement initiative

  • The organization's internal IT resource availability to integrate e-procurement applications with existing back office applications

  • The level of integration required between the existing back office and the new e-procurement applications

 
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