The first week of February 2009 was marked by two notable product launches, from vendors touting their respective simplified, more flexible, and intuitive products as exactly “what the doctor ordered” for the current economic malaise. While the unveiling of SAP Business Suite 7 has caused a flurry of media articles and blog posts like the ones from Ray Wang and Brian Sommer  (and one of mine might still come down the track when all the dust settles), it is interesting that the North American launch of Microsoft Dynamics NAV 2009 a day later went with comparably much less buzz.

There were related Dynamics NAV 2009 events in some other world regions, but I cannot say much about their attendance and noise level. Despite the Microsoft Dynamics NAV 2009 launch in the US proceeding somewhat quietly (the replay of the event can be seen here), I think it might have as much future impact in the market as SAP’s mega-counterpart.

Namely, the clout SAP Business Suite [evaluate this product] has in the upper end of the enterprise resource planning (ERP) market, Microsoft Dynamics NAV (formerly called Navision and Attain) [evaluate this product] has in the lower end of the market.

A cult ERP product in the small-to-medium business (SMB) market, Dynamics NAV has long been a well-oiled and growing business within the entire Microsoft Dynamics enterprise applications group. Although not necessarily a trailblazer in terms of product technology and scalability compared to its fellow Microsoft Dynamics products, Dynamics NAV can boast an impressive global popularity and presence (with dominance in continental Europe), a large global partner network. In addition, it is the most widely localized Dynamics product.

The US Microsoft Convergence 2008 user conference was mostly about the upcoming Microsoft Dynamics AX 2009 release with the “upper mid-market product” themes of globalization (multinational and multisite capabilities), regulatory compliance, and user experience (UX) design (via personalized Role Centers). However, Dynamics NAV 2009 took the spotlight at European Microsoft Convergence 2008 last fall, and will likely repeat the feat during the upcoming US Microsoft Convergence 2009 event in March in New Orleans.

Microsoft Dynamics NAV (née Navision)

Before delving into the enhancements of the latest product release, it might be useful to reflect a bit on the product’s genesis. The global numbers below speak volumes, since today Microsoft Dynamics NAV has

• more than 70,000 customers (and over 1.25 million licensed users)
• more than 3,400 certified partners, including both value added resellers (VARs) and independent software vendors (ISVs)
• more than 2,000 add-on partner solutions
• more than 40 localized versions sold in over 150 countries

From its inception in 1984, the erstwhile Navision Software company has made efforts to enable its software platform and applications to go hand-in-hand. This has meant providing enough native functional footprint to serve as a foundation while also leaving sufficient “white spaces” for partners’ add-on industry solutions (and intellectual property entitlements).

The very first release of what is today Microsoft Dynamics NAV appeared in the early 1990s, and featured a command line interface (CLI) appearance. That product was all about getting the basics right in terms of the financial management functionality.

The second generation of Navision in 1995 featured a Microsoft Windows  graphical user interface (GUI). That release added a number of industry solutions from partners and Navision’s own business management functional modules (i.e., manufacturing and distribution). However, as a limitation, there were two separate product variants (instances) for manufacturing and distribution environments at that stage.

The third generation of Navision in the early 2000s (prior to being acquired by Microsoft in 2002) was mostly about integration and pulling all of the native modules into a unified suite on a single database. The choice of database has remained until today: either Microsoft SQL Server or the proprietary Navision C/SIDE database.

The Navision 3.0 suite then offered natively the following functional modules: Financial management; Distribution; Manufacturing; Customer Relationship Management (CRM); Service management; and E-Business solutions. The native functional footprint has largely remained unchanged. For more details on the product, you may want to read Scott Hamilton’s book entitled “Managing Your Supply Chain Using Microsoft Navision. One chapter is reprinted on TEC’s site here.

In Microsoft Dynamics NAV’s target market are those nimble companies with distinct business processes and a strong need for a flexible, vertically focused solution. Core market segments are: wholesale distribution (with about 45 percent of the customer base), manufacturing (with about 30 percent of the install base), and business services taking the rest of customers.

Some high profile customers include Steinway & Sons, GfK Aktiengesellschaft, Jack Wolfskin,  EXHAUSTO, CF Chefs Inc., Seventh Generation, and FC Köln. But my estimate is that about two thirds of NAV customers are in the lower midsize business segment (under 50 employees), often with only a few IT staff members or power users. Another unconfirmed estimate is that the product’s average sales price in terms of software license fees has been around US$ 27,000.

In still another frequent scenario, Dynamics NAV is often used for divisions of multinational companies in a hub-and-spoke manner. Microsoft defines the Corporate Accounts Segment (CAS) as those companies with over 1,000 employees.

In this setup, the corporation’s HQ or the “hub” will use Oracle or SAP (or even possibly Microsoft Dynamics AX) for financials and human resource (HR) management in a centralized shared services mode.  On the other hand, Dynamics NAV will serve autonomous divisions (“spokes of the hub”) and integrate (or “talk”) to the HQ, especially at the financial reporting and consolidation level. Microsoft Dynamics NAV CAS customers include Harger Lightning & Grounding, Asian Paints, Goldschmidt-Thermit-Group,  Salonit Anhovo, and Brush Wellman (Japan) Ltd.

The product’s core values have always been adaptability and customization for both users and partners due to its flexible and granular product composition. Consequently, there is an extensive library of industry solutions, country localizations, and languages, with an impressive international scope as a result. Microsoft Dynamics NAV has good penetration (i.e., a few hundreds of customers) even in some tough and possibly esoteric markets like the Balkans.

The remaining parts of this blog series will analyze the product’s life under Microsoft’s wing. In the meantime, your views and comments are welcome as usual. If you are existing users of Microsoft Dynamics NAV or its former Navision incarnations, what have been your experiences with these products and what is your take on the product’s future?