By Morten Andersen*

Gazing out over the strait at the misty coast line of Skåne it is hard to come up with a more suitable scenery for an article about the Øresund Region as an IT magnet - the view from the recently constructed headquarters of Microsoft Denmark in Tuborg Harbour, close to Copenhagen city.

Microsoft made big headlines in local media when the group acquired the Danish software house Navision for around 1.5 billion euro in July 2002. The roughly 400 researchers and product developers from the former Navision now represent Microsoft’s largest development centre outside the US. They now have at their disposal almost half of the group’s total resources aimed at economy and customer development for small and medium seized businesses.

Together with the 500 product development staff working in Great Plains, that became part of the Microsoft about six months ago, the Danish development centre has become the second largest in the group.

It is obvious that the department in Vedbæk (north of Copenhagen on the coast) has become an important part of the Microsoft development efforts. “And I do not say so just because I am Danish myself”, states Klaus Holse Andersen, CEO Microsoft Denmark. With a professional background from the group’s headquarters in Redmont, US, he is familiar with the differences in the corporate cultures.

Stop to ask

“Scandinavians’ access to management and development is more open. Americans are disposed to saying “Okey, these are the specifications, let’s get them coded.”

”Here, people much more often stop to ask if we would get a better result going about it in a completely different way. This is a difference that has roots in our educational system. Team members are simply more sceptical – and it often generates results, which gives respect. These are some of the soft values that we have acquired through our investment.”

But, naturally, it is a case of carefully calculated and purely commercial motives behind the decision of bringing this, from a Danish point of view, massive investment to the table.

Going back ten, fifteen years, when everyone relied on DOS-systems – if anybody still remembers that time – the market for business systems for small and medium sized companies was incredibly scattered. There was no dominating supplier, in general you relied on a local IT firm.

Then Windows entered the scene, which meant that all suppliers had to adapt their systems to a graphic interface. A technology shift that brought on significant investment, making it a necessity to grow bigger on the market. Either you had to merge or you had to acquire. In Denmark, Navision Software A/S and Damgaard A/S (that later on merged and became Navision A/S) were left together with a few others.

New leap

“We are now looking at a new leap in technology, where the suppliers will develop systems that run over Internet. Again large investments are needed, something that will release a new wave of consolidations”, Klaus Holse Andersen analyses. This is the wave that Microsoft is now riding through the purchase of first Great Plains and now Navision.

“The two companies make a perfect fit, since Great Plains held a strong position in the US and Navision in Europe, with a small overlap”, says the Microsoft CEO who does not expect that more than 10-15 important players on the world market will exist when the new wave of consolidations is over. Only former Navison, with 1,400 employees in 30 countries ran rather large operations.

Klaus Holse Andersen illustrates with an example where the potential is even greater today: “Imagine that Navision is on their way into Switzerland where a customer is choosing between them and a local supplier. In the eyes of the Swiss customer it is a choice between two minor suppliers where it would be a simple choice to settle for the local one. Today they can instead do business with Microsoft Business Solutions that offers them a Navison product. This is to say, that together with the product he also gets reassurance of having a supplier that will be on the market for many years to come and that will be interested in continuous development of the product.”

From the Microsoft perspective a tempting aspect of Navision was that the company already relied on Microsoftproducts to a great extent. “They were already in the leading-edge in the application of our software”, says Klaus Holse Andersen.

The challenge today is to integrate the Navison-products with, for example, Windows and Office even closer. “Maybe you are writing a letter to a customer and want to paste a diagram from your economy or CRM system into it. We will make that type of interactions effortless for the user.”

Commuters are welcome

Klaus Holse Andersen is convinced that the market for systems targeting small and medium sized businesses will be interesting for many years to come: “Consequently, I expect that we will continue to grow. That is, we will need more developers on our staff. I am convinced that we will be able to attract them”, says Klaus Holse Andersen. “It was part of our assessment to invest where there is an educational system to ensure that we will be able to find skilled developers of the kind we want also in the future.”

Klaus Holse Andersen nods towards the view out over the water. “It is likely that we will get some of the new people across the Øresund strait. The commuting systems might need to work a little bit smoother. The tax systems will have to be further integrated as well.

This article was originally published by Øresund IT Magasine (Autumn 2002). In Publications, you can download the magazine in PDF format.

* Morten Andersen is a Danish journalist based in Copenhagen.