‘We Have Always Been Working with Microsoft’

While working with TEC Toshiba UK, Yash Nagpal,
MD of Navision India, currently managing director, Navision India, saw the
successful functioning of the Navision accounting software in Denmark. He was so
impressed with the software, that in April 1995, he decided to establish
Navision Software UK, which acted as a distributor in UK for Navision Software.
Subsequently, he came back to India to establish the Indian subsidiary.
Dataquest met with Nagpal to talk about the ERP market for the SME segment.
Excerpts.

l Can
you briefly describe the background of Navision?

Navision is a Denmark based company with $170 million in revenues. We have 1,300
employees in over 32 countries. Globally, we have over 2,400 Navision solution
centers and about 75 in India. In terms of customers we have grown from 18,000
in 1994 to about 270,000 in 2002. One of the strongest facets of Navision is our
R&D with about 25% of our revenues being used for the same. Microsoft
acquired the company in late 2002.

l Life
after Microsoft’s takeover?

We have always been great partners and we were their global gold partners, a
unique relationship. We have always been working with MS. However with the
acquisition, I think Microsoft is also more committed towards Navision. And this
has helped the customer. A single company can now offer end-to-end solutions
ranging from desktops to critical applications. And of course the companies also
feel reassured that it has to deal with a single vendor for all their support
and software agreement.

l What’s
the market size and potential of the SME segment?

Our definition of SME includes all companies with revenues over $5 million and
below $850 million. If we take a similar definition in India, it will cover a
majority of the businesses in India. For India, the starting point is companies
with a turnover of Rs 50 crore plus. I think that most of the big enterprises
have deployed some application, and the real potential remains in the medium
segment. According to analysts the ERP market is estimated at Rs 570 crore, and
I think that the potential of the SME segment could be a multiple of 10, 15 or
even 30 times this estimate. Given the fact that there will be thousands of
companies with a revenue of over Rs 50 crore and they don’t need the
traditional and costly ERP applications they will be happy to invest about Rs
10-15 lakh to get a high quality ERP application to meet all their requirements.

l What
about big ERP vendors moving down and trying to cater to the Medium enterprises?

Certainly as their market saturates, the big vendors are moving down the sales
pyramid. And they have a good marketing pitch. They can go to companies and say
‘look the biggest global and Indian companies are running our software and if
it is good enough for them, then it’s good for you too.’ The only problem–companies
are buying sledgehammers to crack a nut. What companies are not realizing is
that the needs of a SME customer is very different from that of a large
corporate and end up making huge investments without much returns.

Yograj Varma