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Thursday, October 03, 2002

First look at Microsoft's Axapta ERP system

Yesterday, we got a quick demo of the Axapta product, courtesy of mcaConnect, a new nationwide Axapta distributor. Microsoft obtained Axapta through its acquisition of Norwegian vendor Navision earlier this year. Axapta has not had very much market presence to this point in the US, with few people even having heard of it prior to 2001, when Navision obtained it through its acquisition of Damgaard in the Netherlands. However, Axapta has a fairly strong presence in Europe, where it is positioned toward mid-tier manufacturing firms. In the US, Microsoft Business Solutions is targeting Axapta at mid-tier manufacturing firms of $50-800M in annual sales. Based on what we saw, however, we think Microsoft would do best to aim at the lower end of that range, because the product is a mixed bag in terms of features and functions. It appears to have strong functionality in certain areas, such as a rule-based dimensional product configurator, a knowledge management module (including balanced scorecard), customer/supplier/employee survey instruments, an integrated project management module, and a Web self-service capability. On the other hand, the product is weak on multi-plant operations. For example, although it supports multiple warehouses for inventory control, it does not allow multiple facilities for planning and scheduling (i.e. multi-plant MPS and MRP). That last point alone could disqualify Axapta from many upper mid-market deals.

From a technology perspective, the Axapta product is built using its own development environment called Morphx, that generates a language called X++ (a blend of C++ and Java). I would speculate that, at some point, Microsoft may want to rewrite Axapta using its own development toolset (Visual Studio). But for the short term, Microsoft will probably be content just to run the X++ code through its .NET SDK so that it can operate within Microsoft's .NET framework. It is interesting to note that, because of their use of MS Visual Studio, other mid-market ERP vendors such as Frontstep (formerly Symix) and Made2Manage, are actually "more Microsoft than Microsoft" when compared to Axapta. And I would be surprised to see this change any time soon. It is not a trivial exercise to rewrite an entire ERP system in a new development tool set. Microsoft is more likely to devote new Axapta development efforts to address any gaps in functionality that will be required for it to compete in the US against more established players and to provide integration to Microsoft's new CRM solution. So, my advice to prospective buyers is this: if having Microsoft standing behind your ERP system is important to you, consider Axapta. But if a Microsoft-standard development environment is what you are looking for, look elsewhere for now.

Which brings us to the bottom line: the strongest point in favor of Axapta, of course, is that Microsoft is behind it. When considering the financial viability of many of the other mid-market ERP vendors, many buyers will find this a strong plus. Another strong point in Axapta's favor is its distributor network. There are reportedly 50 resellers in the US with rights to sell the product, of which about 20 are actively building Axapta sales and service groups. Many of these are former distributors of competing ERP Tier II or III products that have fallen on hard times. These resellers are experienced in selling and servicing the mid-market, and they are hungry. We have only seen Axapta in one deal so far in southern California (which it won), but we expect to see it more often as these distributors gain traction.

by Frank Scavo, 10/03/2002 03:27:00 PM | permalink | e-mail this!


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Independent analysis of issues and trends in enterprise applications software and the strengths, weaknesses, advantages, and disadvantages of the vendors that provide them.

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