NavisionDamgaard Reverts To Navision, But In Name Only

NavisionDamgaard Reverts To Navision, But In Name Only
P.J. Jakovljevic - July 6, 2001

Event Summary

On June 19, Navision Canada, a subsidiary of Navision (CSE: NAVI), a Danish provider of enterprise business solutions for mid-sized companies, announced the planned release of multi-language versions 2.60 for Navision Manufacturing, Navision Financials and Navision Advanced Distribution. Navision 2.60 includes both English and Canadian French language versions, allowing users to conduct business in the language of their choice. Users can switch languages "on-the-fly," providing greater flexibility and interoperability. Customers also gain simultaneous access to business processes in different languages.

"The new multi-lingual English/Canadian French functionality of Navision 2.60 gives Navision, our Navision Solution Centres and our customers a true competitive advantage," said Dawson Lane, President, Navision Canada. "This product strengthens our overall offering to mid-sized companies, particularly those in Quebec looking to implement an enterprise management solution in the language of their choice."

The company touts that its latest version of Navision Manufacturing 2.60 is a modern ERP solution based on the concepts of agility and flexibility that should enable manufacturers to manage change and realize new revenue opportunities. In addition, Navision Manufacturing's reservation, tracking and action messaging functionality, combined with the closed-loop manufacturing resource planning (MRP) functionality, offers an alternative to traditional planning systems while adhering to the accepted industry standards. These innovative tools are fully integrated with MRP, MPS (Master Production Schedule), and Forecasting.

The most significant enhancement to Navision Financials is the addition of XBRL coding (eXtensible Business Reporting Language), which will be used to exchange financial reports across all software, including the Web. Navision claims XBRL is now standard and will allow customers to more easily and efficiently connect and communicate with all types of products in the ERP space.

Navision Advanced Distribution 2.60, as its part, is optimized to manage the physical inventory for companies that require high levels of inventory control. It allows wholesalers to process orders along the entire delivery chain, thereby strengthening overall business partner loyalties. For example, with the new enhancements, a salesperson can select which customers to call based on entered criteria, and determine from past history what they are most likely to need now. Tele-sales representatives can then guide customers through the process of selecting items to purchase, suggesting alternatives, negotiating the price and scheduling delivery. Customer service representatives can also check the status of an order and expedite delivery if necessary.

The products are slated for general availability release to its resellers called Navision Solution Centres (NSCs) in July 2001. The product release follows shortly after the company released satisfactory quarterly results. In May, Navision released financial results for Q3 2001 that ended on March 31, 2001. The merger of Navision Software and Damgaard (for more information, see Does NavisionDamgaard Merger Mark Further Mid-Market Consolidation?) is reportedly proceeding according to the plans. In March, the company name was changed from NavisionDamgaard to Navision in an effort to build a new global brand.

Navision achieved a 20% combined quarterly revenue growth to DKK 326 million (~$40.3 million) compared to the combined last year's results of then separate companies. Navision has seen growth in all markets except in its domestic Danish market. Despite fierce competition and difficult market conditions, the company sustained 12% growth in the US market. While, for the first nine months to date, revenues from Navision Financials showed a fair increase of 15%, revenues from Navision Axapta (formerly Damgaard Axapta) flagship product showed a whopping 122% increase. However, the other former Damgaard product lines, Navision C4/C5 (marketed solely in Denmark) and Navision XAL continued to decline. Combined income before tax was DKK 46 million (~$5.7 million), compared to the combined last year's loss of DKK 10 million of then separate companies. Navision's solutions are sold exclusively through a worldwide network of close to 2100 partners. The company currently has close to 125,000 installations worldwide, and derives 74% of its revenue from the international market outside of Denmark.

In the second half of calendar 2000, Navision released a number of new versions and products specifically targeted to customers' needs for e-business and CRM functionality. It introduced new versions of Navision Axapta (2.5) and Navision XAL (3.1), both with notable enhancements. In April, the B2B e-commerce application, Commerce Gateway, for Navision Financials was released, and it will soon be available also for Navision Axapta. The company plans to introduce in the remainder of fiscal 2001 the integrated Navision Financials/Siebel eBusiness MidMarket Edition, and the new version of Navision Solutions 3.0, which is a new substantially enhanced version of Navision Financials. An early adopter program, which included five customers, for Navision Solutions 3.0 was initiated in March.

Market Impact

Reverting to the Navision brand name could be seen as a backward move only to the uninformed. In fact, the merger of former fellow Danish competitors has been moving forward ever since. Former Navision Software brought to the merger a strong international presence, proven execution and a profitable business model, whereas Damgaard contributed a more scalable and functionally stronger product for the higher end of the market, Axapta. Both product lines are technologically compatible (Microsoft-centric) and have been maintained concurrently. While the idea is to enable the Research and Development (R&D) team to gain economies of scale by building common application components that can be deployed within the entire product portfolio, the products are still mainly on separate tracks. However, leveraging additional e-business and e-collaboration initiatives for both flagship products should be expected, Commerce Gateway being a good example.

But it was the closeness of corporate cultures and business models that facilitated the merger success. Navision's current focus is to quickly integrate the two former R&D and sales organizations. The company will have to leverage its combined partner network of close to 2,100 resellers (NSCs) to create brand awareness in the global market. Despite the complementary nature and different target markets of the main product lines, the growing pains in appropriate positioning of these remains.

While forsaking Damgaard brand will have inevitably caused emotional reactions and internal competition/politics, promoting Navision brand should help the cause of showing 'one face' to customers and by preempting the possibility of brand recognition/confusion, which was likely with the cumbersome NavisionDamgaard brand name.

Leveraging the NSC network should be of key importance for global expansion too. The practice of allowing end users to partner with the local representative (NSC) to develop locally endemic functionality, as is the above case of bilingual system in Quebec, has long been one of Navision's keys of success. This practice proves particularly useful when product time-to-market is critical.

User Recommendations

While the M&A activity in the mid-market continues (for more information, see The Mid-Market Is Consolidating, Lo And Behold), not all the mergers are slated for success. The current market trend is towards vendors that can provide comprehensive solutions for medium-sized companies. Navision seems to have a fair shot at delivering that. The merger outline was sound, the common groundwork has been identified, and now the time has come to build upon it.

Potential and existing Navision and/or Damgaard customers should certainly consider the offered product lines, bearing in mind what the competitors have to offer. As with all new releases, users should employ a critical approach in their evaluation of Navision, and require the company representative to demonstrate specific technological and functional capabilities. As a general rule of thumb, consider Navision Financials if you are a rapidly changing small or medium enterprise. The product is open-source and customizable; it features a proprietary integrated development environment, which is very user-friendly and easy to learn. Navision also has great ODBC connectivity features. On the other hand, Navision Axapta (formerly Damgaard Axapta) should be evaluated in less aggressive and changing medium and large enterprises where the traditional product feature-functions and scalability still play a very important part of the selection.

More comprehensive recommendations for both current and potential Navision users can be found in Navision Software a/s: Mid-market iNvasion and Does NavisionDamgaard Merger Mark Further Mid-Market Consolidation?

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