Microsoft Buffs Up Mid-Market Apps

Microsoft announced Monday two new releases from its business-management unit, targeted at medium-sized businesses, as the launch of its much-anticipated customer relationship management (CRM) product nears.

Microsoft Business Solutions released Axapta 3.0, a suite of online business productivity applications, and Navision 3.60, a supply-chain management solution. Both releases target the mid-market, which Microsoft has focused on as a lucrative potential market for its growing business-management unit.

Axapta 3.0 has added manufacturing, distribution and financial applications, including an enhanced portal tool for employees, partners and customers. Navision 3.60 offers more supply-chain tools, including a warehouse management system and an automated data capture system for inventorying.

“Companies are under increasing pressure to become more efficient,” Niels Bo Theilgaard, general manager of Microsoft Business Solutions in Denmark, said in a statement. “Their internal process must keep evolving to maintain a competitive position.”

Both the Axapta and Navision products come from Microsoft’s acquisition in May of Danish enterprise software maker Navision for $1.3 billion. Navision 3.60 was formerly known as Attain.

The deal for Navision rounded out Microsoft’s 18-month effort to build a business-management software unit geared to the mid-market. In December 2000, Microsoft shelled out $1.1 billion in stock to buy Great Plains Software, a Fargo, N.D.-based enterprise-software company.

Now combined as Microsoft Business Solutions, the two companies give Microsoft a strong presence domestically and in Europe. Both Great Plains and Navision served small-and medium-sized companies, but mostly focused on their home markets: Great Plains did 80 percent of its business in the U.S. and Navision did 86 percent of its business in Europe.

Microsoft Business Solutions will make its biggest splash at the end of the year, when it plans to air its CRM tool. Built on the .Net framework, Microsoft is positioning it as an easy-to-use application for small-and medium-sized businesses for a full range of sales and customer-service functions. According the Gartner Group, as little as 2 percent of small businesses and 20 percent of medium-sized businesses use CRM.

Customers would be able to use Microsoft CRM through Outlook or another browser-based client to interweave their systems for checking credit, tracking sales leads, and streamlining marketing.

While Microsoft’s enthusiasm for the CRM market will pose an immediate challenge to smaller players like and, CRM giants (and Microsoft partners) like Siebel Systems, have eyed Microsoft’s move warily. Following its tactics in other software area, Microsoft recently unveiled aggressive pricing plans for the CRM software, beginning at $395 per user plus $995 for the server.

Researcher IDC expects the worldwide CRM market to grow at a brisk 18.9 percent annual clip, reaching $45.6 billion in 2006. With such a lucrative market out there, industry analysts have questioned whether Microsoft will eventually move upstream to catch bigger fish.

Microsoft has said its CRM product will begin as a standalone application, but will eventually be integrated with its business-solutions unit’s other precuts, including Axapta and Navision.