Navision Executes At a Slower Pace
In September, Navision Software a/c (CSE: NAVI.CO), a Danish provider
of enterprise business solutions for mid-sized companies, released annual
report for fiscal 2000 that ended on June 30, 2000 (See Figures 1 and
2). Navision Software achieved 36.8% annual revenue growth in fiscal 2000.
Navision Software's solutions are sold exclusively through a worldwide
network of close to 1000 partners called Navision Solution Centers (NSCs),
whose number increased by 170 compared to the previous year. The company
currently has local representation in 24 countries as well as more than
41,000 installations in 108 countries, and derives 83% of its revenue
from the international market outside of Denmark.
during the year included the Web Shop e-business application in September
1999, support for Microsoft's SQL Server 7 in November 1999 (with 234
customers embracing the new product within the six months time period)
and Windows 2000 support in March 2000 (for more information, see Navision
Becoming More Visible). However, the company reported a net income
of approximately $8.1 million, which represents a decline of 25% compared
to fiscal 1999.
Fiscal 2000 was a very unusual year for Navision with sharply contrasting
year halves. The main theme depicting Navision's business during recent
years has been fast growth and international expansion, which continued
throughout the first half of fiscal 2000. However, the unexpectedly higher
revenue slowdown in the second half of the year damaged the company's
overall results (See Figure 2). Nevertheless, while the majority of its
peers have been struggling Navision has continually been increasing its
market share and product offerings while remaining constantly profitable.
We believe that its recipe for success was a good balance of the following
required elements of the game - a flexible and technologically advanced
object oriented product, a tightly integrated horizontal extended-ERP
functionality that matches the SMEs' needs, a strong channel and reputable
customer service and support, and very competitive pricing for its target
company has recently addressed the missing functionality that we outlined
in TEC's vendor research note (see Navision
Software a/s: Mid-market invasion). Its worldwide agreement with Siebel
Systems has provided it with a reputable CRM functionality (for more information,
Has Done It Again - This Time with Navision). The company touts its
forthcoming product release 3.0 that will feature a browser-based GUI,
a generalized commerce portal, WAP support and functionality, a B2B collaborative
e-commerce solution, and full integration of CRM and back-office applications.
Significantly increased R&D investment in 2000 speaks to the commitment
to this release.
also continues to expand its channel in the US, which should help it boost
its much-needed North American presence and market awareness. To that
end, its North American business unit, with headquarters in Atlanta, GA,
achieved notable results of a 29.1% revenue increase from the same period
of the last year. Navision has also started pursuing alliances with ASPs
to further its penetration into this increasingly popular marketplace.
Nevertheless, the challenge of further international expansion and brand
awareness remains. While Navision has done a respectable job of establishing
its North American network, it has been facing a fierce challenge from
domestic competitors like Great Plains and Epicor Software.
the perception of poor scalability within the higher-end of the market
is yet to be overcome. Users should also be aware of other challenges
that the company is facing. In addition to delivering the new functionality
and the channel training issues, the company must be concerned about its
payroll, distribution and manufacturing modules, which are currently available
only in a limited number of country-specific versions, and there is no
functionality for service-related industries. In addition to this product
functionality gap, Navision does not exhibit much of a vertical focus.
Its distributors (NSCs) offer vertical solutions on an opportunity-by-opportunity
has also long depended on its proprietary development tools (the Navision
Server database and 4GL), a strategy that is becoming less and less attractive
to customers as interconnectivity becomes critical. While its recently
released MS SQL Server version of the product has mitigated the above
concerns, it is likely to exhibit glitches related to its product immaturity.
Also, Navision's two-pronged product database strategy, although creating
more options for the customer, inevitably creates some duplication of
its R&D and Service & Support resources.
Navision customers should certainly consider the new offering, but must
avoid selecting it without looking at what the other vendors have to offer.
We recommend identifying your unique needs and doing comparison shopping,
at least for the sake of negotiation leverage. As with all new releases,
users should employ a critical approach in their evaluation of Navision,
and require all potential vendors to demonstrate specific business processes.
for potential customers, we generally recommend including Navision in
a long list of an enterprise application selection in the lower-end of
the mid-market companies ($5M-$250M in revenue) and divisions of larger
enterprises which have limited IT budgets, smaller communities of users
(less than 75), and have significant financial accounting, distribution,
and discrete manufacturing requirements - so long as they don't currently
need complex B2B e-commerce functionality. Organizations seeking a Web-based
solution and out-of-box functionality with little customization effort
may benefit from evaluating Navision's ASP offering.
centrally managed organizations that need a unique single-code product
for all their international business units (whereas Navision offers country-localized
products), enterprises in service-related industries, and companies looking
for a broader functionality and a particular industry focus from a single
vendor may benefit from evaluating other products at this stage.
and future users interested in running on the MS SQL Server database may
want to inquire about Navision's strategy regarding the product's business
intelligence and data warehousing capabilities, bearing in mind that those
are innate within the proprietary Navision Server database.
organization evaluating Navision Software should consider existing functionality
only, and, in the case of final selection, should negotiate incorporation
of new applications components now at negotiated license fees, in expectation
of Navision's future product introductions. Potential clients, particularly
those outside Europe and the United States should also conduct preliminary
research on the industry expertise of a regional Navision Solution Center
(NSC), and speak with its reference clients.
for the new added CRM functionality through the partnership with Siebel,
users are advised to ask for firm assurances on the availability and timeframes
for future upgrades, and more detailed scope of the combined product functionality.
One caveat to bear in mind is that although this suite was developed from
existing Siebel products, it is a first version release. This means there
are inevitable bug fixes to be made over the next few months.