Gary Boomer, a CPA and CEO of Boomer Consulting.

"I think it was a very smart move for Great Plains, particularly for the larger stockholders," said Gary Boomer, a CPA and chief executive of Manhattan, Kan.-based Boomer Consulting. "Microsoft certainly has the resources to develop and market accounting software in the (application service provider) model and Great Plains is the leader in the middle market."

Microsoft made headlines in December when the company announced that it is acquiring Great Plains, a software vendor based in frigid Fargo, N.D. The deal is structured as a stock purchase and is valued at about $1.1 billion. Each share of Great Plains common stock will be exchanged for 1.1 shares of Microsoft common stock, said Microsoft. The acquisition, which is subject to regulatory review, is expected to close around the spring of 2001.

While some may see it as Microsoft acquiring an enterprise resource planning (ERP) application provider, Microsoft apparently doesn't see it that way. According to the software giant, the acquisition arms the company with a small-business accounting application supplier.

"(The acquisition) flushes out a small business service offering," said Andrew Goloboy, a research manager for IDC, a Framingham, Mass.-based research firm. "I don't see it as an enterprise play. This Great Plains deal is definitely a small business deal."

Word is also spreading that ASPs should keep their senses keen and their eyes open as the acquisition facilitates Microsoft's plans to make its .Net strategy a go.

"The significance of this acquisition to me is that the trend toward having accounting programs offered on the Internet as direct applications is accelerating," said John Tyler,  of Cambridge, Mass.-based John A. Tyler Associates, P.C.

"I surmise that Microsoft has concluded that it has to offer major league Internet software for business use, and that Great Plains realized that if you are part of the company, or one of the companies, that controls the platform you might have an advantage over your competitors," Tyler continued.

Speaking of competitors, most likely a good number of current Microsoft partners who are also competitors of Great Plains cringed at the news of the acquisition.

"The action sets Microsoft into direct competition with some of its long-time partners and takes a major evolution in the growing (small and medium-size enterprise) business management solutions market from the spotlight into the floodlight," according to Accpac International, a Microsoft partner and a business unit of Computer Associates International Inc.

IDC's Goloboy stated that, "the competitive dynamics will play out in the channels. It will be up to the vendors to build exclusive channels to keep people interested (in their products)."

So what does life after the Microsoft/Great Plains marriage look like?

"I believe you will see more consolidation among accounting software vendors," said Boomer, of Boomer Consulting. "Accounting software is much like plumbing. You need it, but most people don't want to spend any money on it unless it doesn't work. Software that increases sales and manages people/resources is viewed differently by business and is an easier sale."

-- By Antoinette Alexander

Send comments to information@smartpros.com.

Back to NewsLine