Banking

Why Microsoft bought Great Plains Software

Microsoft's acquisition of Great Plains has ramifications for accounting software companies, value-added resellers, and other businesses that deal with them—in other words, almost everyone. Tim Landgrave discusses the long-term effects.


When Microsoft announced its acquisition of Great Plains Software at the end of 2000, many people began wondering: What does this mean for the future of Great Plains, other mid-market accounting software companies, and other accounting companies in general—and for the value-added reseller (VAR) channels that Microsoft and Great Plains have spent several years and millions of dollars to develop?

This acquisition also has significant ramifications for both the “big five” ERP vendors (Invensys/Baan, SAP, Oracle, JD Edwards, and PeopleSoft) and the little two (QuickBooks and NetLedger). Since almost all CIOs deal with one of these companies directly or indirectly, I think it makes sense for us to consider the possible outcomes of the acquisition.

What does this acquisition mean for the existing partner channels for Microsoft and Great Plains?
Microsoft needs to have an answer for customers who are seriously considering the Oracle database and financial products from the big five on the UNIX platform. This acquisition gives Microsoft the ability to give their medium to large enterprise customers "one-stop shopping" under the Microsoft brand, with the combination of Windows 2000, Microsoft Exchange, Microsoft SQL Server, and now Great Plains.

This selection is beneficial for companies that want integrated solutions and for Microsoft. I’ve talked to companies in the past year that originally purchased Great Plains as an interim solution on their way to SAP before dumping SAP halfway through the conversion when they realized that Great Plains could do everything they needed. They were also able to get it fully operational in a fraction of the time it took to implement SAP.

Companies that have invested heavily in training and certifying their companies to deliver Great Plains solutions on Microsoft technology are also positioned to take advantage of this acquisition. Those reaping the greatest benefits will be the handful of companies that are both Great Plains Certified Hosting Providers and Microsoft Solution Provider Partners; they will immediately benefit from the marketing and support economies that will be achieved through the merger.

In addition, the president of the Great Plains division of Microsoft, Doug Burgum, has stated that he will continue with his strategy of being selective in building the traditional VAR and applications hosting channel. Companies that have not already made an investment in being Great Plains partners but who represent other mid-market accounting systems now have a difficult choice to make about the financial software they will represent in the future.

This merger could also spell trouble for traditional Great Plains VARs. Microsoft’s .NET platform and emphasis on ASPs and Web-based technologies make many existing VARs obsolete. These VARs will either have to partner with an ASP, significantly beef up their consulting and development practices, or make a move down market.

What does this mean for the accounting software market?
If you’re a mid-market accounting software company on a Microsoft platform or a company that relies on one, then you should seriously consider your strategy. During the past year, Great Plains gobbled up Solomon Software and RealWorld. Companies like Sage and Hyperion have to be looking over their shoulders.

This will also make it more difficult for the big five to move into the medium enterprise market. All of them (except Oracle) were counting on using Microsoft’s leverage on the server and the cost of the database to help them move into this space. Microsoft was clearly tired of losing competitive bids to UNIX and Oracle in this space and decided to take matters into its own hands.

But perhaps the most interesting story will be unfolding on the low end of the market. Quicken.com (with QuickBooks on the Net) and NetLedger (based on Oracle database technology) have made significant inroads into the small and medium business market. But by combining Great Plains with its bCentral small business service, Microsoft may have finally found a way to crack this market. Before this can happen, however, Great Plains has to be re-architected to eliminate its dependency on its proprietary development tool (Dexterity) and to be more Net (or .NET) friendly.

The Great Rewrite—Great Plains on Microsoft's .NET platform
The acquisition is also great news for Microsoft’s .NET initiative. Great Plains had already announced a 24-month time frame to rewrite the entire Great Plains product line using .NET technology. This includes tight integration with all .NET Server products (specifically SQL Server 2000, BizTalk Server 2000, and Commerce Server 2000) and the replacement of Dexterity with C# as the core language.

I expect to see this timeline shrink dramatically. It's possible that by the end of this year, Microsoft and Great Plains will release an enterprise production-level .NET accounting application that really shows off the power of the .NET environment.

Can Great Plains pull it off? This isn’t the first time Great Plains has made a significant commitment to Microsoft technology. It was the first mid-market accounting company to make significant investments away from Novell’s Btrieve (now Pervasive SQL) when other companies bet the ranch on Novell.

Since then, they’ve been huge supporters of SQL Server. Great Plains’ home office in Fargo has been a testing center for every new version since 6.0. The company also developed its own Transaction Server technology (called the Process Server) before Microsoft released Microsoft Transaction Services.

Great Plains is a company with significant technology resources and a loyal employee base. And it has one more attribute that will hopefully make its way into the Microsoft culture—it actually releases its products on time!
Do you agree with Tim Landgrave’s assessment? Are you using Great Plains right now? How will the acquisition affect your organization? Send us an e-mail or start a discussion.

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