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
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.
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
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."
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.
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.
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
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.
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
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
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).
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.
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.
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.
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.
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