Navision Enhances Its e-Vision And Looks To Expand Vertically - Part 2: Market Impact

Part 2: Market Impact
P.J. Jakovljevic - November 30, 2001

Market Impact of Navision Developments 

In November 2001, Navision (CSE: NAVI), a Danish provider of enterprise business solutions for mid-sized companies, extended its business-to-business (B2B) solution, Commerce Gateway, to the Navision Axapta product line, giving Navision Axapta customers the opportunity to save time, lower costs and orchestrate business processes more effectively. With Commerce Gateway, Navision Axapta customers should supposedly be able to work more proactively with customers, partners and vendors. They join the Navision Attain and Navision Financials customers who were introduced to Commerce Gateway earlier this year.

Recent Navision developments discussed in Part One of this note include:

• Navision Axapta Line Extended
  
  
• Navision Financials Expanded
  
  
• Navision/Damgaard Merger Financial Results
  
  
• Other Product Developments

This is Part Two of a three-part note on Navision. Part One detailed the announcements. Part Three will discuss the Challenges faced by Navision and make User Recommendations.

Market Impact 

Many vendors with high aspirations for the mid market, particularly the likes of Microsoft Great Plains, Sage, Syspro, and Epicor, should be on a high alert and watch over their shoulder. Navision has indeed been expanding its coverage in terms of geography, vertical industries, and product functionality. Globally, it has become one of the largest independent small-to-mid-market enterprise system providers.

The closeness of corporate cultures and business models of former Navision Software and Damgaard (oriented mainly toward license revenue rather than revenue from services, and consequently leveraging a strong indirect channels for sales, local services and support, and product localization) has facilitated the merger to progress faster than planned. Former Navision Software brought to the merger a strong international presence, proven execution and a profitable business model, whereas Damgaard contributed a more scalable, technologically more sophisticated and functionally stronger product for the higher end of the market, called Axapta. Note that small manufacturing companies have typically used Navision Financials for order fulfillment and accounting, rather than for manufacturing control.

The head offices and all major subsidiaries worldwide have merged, and a common Navision corporate vision and values is developing. Further, planned staff reductions took place in December 2000, well before the latest onslaught of layoffs at many competitors' organizations. Globally, the Navision brand seems to be taking hold.

Two Flagship Product Lines 

Owing to the merger Navision now features two flagship product lines - Navision Attain/Navision Financials, and what used to be known as Damgaard Axapta (now Navision Axapta). Between the two lines, the company now offers products for enterprises across a broad spectrum of sizes-from $5 million to $500 million. Both product lines are technologically compatible (Microsoft-centric) and have lately been maintained concurrently.

Navision has not that long ago committed itself to follow Microsoft's guidelines for application development. The company claims that, by becoming the first solution that was awarded Windows 95, Windows 98 and Windows 2000 certification, as well as by being one of the first to incorporate eXtensible Business Reporting Language (XBRL) standard and the Microsoft Digital Dashboard and Microsoft BizTalk solutions. Despite jumping much later than other, for example, Microsoft Great Plains on the Microsoft bandwagon, Navision has proven its superior flexibility and adaptability.

Navision Attain Offers Simplicity 

Navision Attain is a lean, agile solution easy to implement and without the overkill often associated with large ERP solutions deployment. Navision touts that its product does not enforce "best practices," but rather enables a "your practices" approach. While Navision Financials has traditionally offered relatively straightforward financial transaction processing, covering finance, inventory management, job costing and some HR/payroll functions, recently released Navision Attain is a fully integrated suite that includes financials, manufacturing, distribution, and some native customer relationship management (CRM), all in one product.

Strengths of Navision Attain/Navision Financials still include its intuitive user interface and customization tool -- customers can modify the user interface via a drag-and-drop forms designer. Moreover, for a relatively inexpensive product, Navision has comparatively strong analytical features using Sum Indexed Flow Technology (SIFT). Given that it contains only less than approximately 500,000 lines of code, it lends itself well to customization and verticalization.

The product was built using Navision's proprietary integrated development environment C/SIDE, which includes a proprietary Navision Server database and a proprietary 4GL programming language. Still, Navision Financials' proprietary technology had long made integration with third-party products relatively difficult and had limited its scalability (generally, the product was used by sites with 75 or fewer concurrent users). Also, as individual country offices would localize Navision Financials, it used to be suitable for single-site or single-country companies rather than for multi-national corporations looking to roll out the same code base to multiple countries. Many of the above limitations have been mitigated with recent Navision's support for the Microsoft SQL Server. It also supports Windows 98/2000/NT and Unix server platforms

Navision Axapta Offers Scalability 

While the main theme for Navision Attain is simplicity, Navision Axapta deals with scalability and it is suitable for multi-site companies, featuring a component-based three-tier architecture using Microsoft's COM (component object model) integration technology, and featuring the proprietary MorphX graphical development suite. Axapta includes functionality for human resources (HR), sales force automation (SFA) and warehouse management system (WMS), and is therefore positioned by the company as providing "a complete ERP solution."

Axapta version 2.5, released last December, supports Oracle and SQL Server database platforms. Constructed on object-oriented technology, it is an open-source product (the source code is shipped to partners and customers), which renders it also as easy to customize, and it also provides support both for a Windows client and a Web browser-only client. Moreover, the above-mentioned e-commerce functionality is fully integrated and shares the same database as the application itself.

Legacy Products Maintained 

Despite decline in its license revenue, the company still maintains Navision XAL (formerly Damgaard XAL), which is an integrated business solution with strong material requirements planning (MRP) module. The latest release 3.1 features e-business functionality too. The product is positioned as suitable for customers with less than 100 concurrent users and less than 500 employees. A typical customer would be a discrete manufacturing company with relatively simple internal processes. Another legacy-like product is Navision C4/C5, which is marketed only in Denmark.

Research & Development 

In addition to the above, the Navision Research and Development (R&D) team has been busy for close to two years delivering the above-mentioned new and improved e-Business functionality. The list includes:

• A new User Portal, based on Microsoft's Digital Dashboard technology, to provide users with easy access to enterprise data.
  
  
• A Commerce Portal, built on Microsoft Commerce Server, designed to enable transactions between customers and their business partners (e.g., reverse auctioning and online storefront).
  
  
• A Commerce Gateway to facilitate B2B marketplace and information sharing and collaboration across the supply chain.
  
  
• A WAP (wireless application protocol) toolkit that provides wireless access to enterprise data from cell phones and personal digital assistants (PDAs).

While the idea to enable the R&D team to gain economies of scale by building common application components that can be deployed within the entire product portfolio was initially tempting, the flagship back-office product lines will have to remain on separate tracks owing to their disparate proprietary technologies and large user bases that are still using these. However, leveraging additional e-business and e-collaboration initiatives for both flagship products should be expected, Commerce Gateway being a good example.

This concludes Part Two of a three-part note on Navision. Part One discussed recent developments. Part Three will discuss the Challenges faced by Navision and make User Recommendations.