Damgaard and Navision set to merge

Damgaard and Navision set to merge

Enterprise resource planning rivals roll on together, leaving local channel partners in doubt over ramificationsDanish ERP arch rivals Damgaard and Navision have finally buried the hatchet and announced plans to merge.

The revelations made last week surprised many in the industry and have left the companies' Australian channel partners wondering what the future may hold.

The new company, to be called NavisionDamgaard, will have combined revenues of around $265 million and marries two significant forces in the mid-market ERP space. Both companies intend to retain core product lines including Damgaard's Axapta, XAL and C5 products as well as Navision's Solutions range.

From a product perspective, Damgaard is being positioned in the mid-to-higher enterprise market with strengths in CRM and e-commerce - a bonus for Navision partners. Navision on the other hand scales from five to 300 users and is seen as a sales-driven organisation, according to financial reports in Europe. More than 80 per cent of Navision's revenues come from international sales.

Despite the sentiment from some analysts that Navision and Damgaard have very different corporate cultures which could lead to problems, the announcement follows a raft of consolidation occurring in the enterprise software market. A high number of vendors suffered poor results this year and overseas analysts believe the trend will continue, as with applications vendor Invensys acquiring Baan earlier this year.

Steve Wright, director of Damgaard reseller Global Software, is unsure how the merger will pan out for the channel. "I was very surprised - they've been arch rivals for a long time," Wright said. "There certainly wasn't any love lost before the announcement. No one knows the answer [to how it will affect the channel] yet. I didn't know Navision's prices and Navision resellers didn't know Damgaard prices so it will be interesting to see what happens when they merge," claims Wright. "As a reseller, you're always a little nervous when your supplier merges."

Wright believes Damgaard, which has only been in Australia since March last year, will be using the merger to piggyback on Navision's stronger branding and presence in the local market. Damgaard has six partners in Australia including Globe Software, Ipex Information Technology Group, Gibson & Beebe, Xapt Australia, Powerlan and Scalable Data Systems - compared to Navision's 21 Solutions Centres.

Meanwhile, Navision resellers seem to be optimistic about picking up additional technology without facing increased competition. John Tataro, director of Navision reseller Information Outlook in Victoria, claims the merger comes when Damgaard is still trying to establish itself as a player in the Australian market.

"Effectively they're going through the stages of setting up a strong distribution model here," said Tataro. "In this product range you really don't learn about the product - you can go to a lot of training - but you don't really learn about it until you have installed a few sites.

"Overall we don't see it as a threat. If anything, they [Damgaard and Navision] will be commanding a stronger position in the market," added Tataro, who has not faced off against a Damgaard reseller for a potential tender yet.

Navision has taken a 72 per cent stake in Damgaard, which in turn has taken a 28 per cent stake in Navision. Damgaard's Preben Damgaard and Navision's Jesper Balser will assume the roles of joint CEOs.

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