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Microsoft's ERP Delays Could Affect Its RFID Efforts

Microsoft Business Solutions says it won't deliver the next version of Axapta until spring 2006 so it can add more features than originally planned. But that means Microsoft could lose ground in the RFID and enterprise-software markets.
This story was updated on Feb. 16 to correct an error regarding Microsoft's reasons for the Axapta product delay, which involves adding more features, rather than problems with integration as originally reported.

A consortium of resellers for Axapta, Navision, Great Plains, and Solomon gathered Tuesday to meet with Microsoft executives to discuss integration and time-line issues surrounding the well-publicized delays of Microsoft's next-generation ERP software. The delays could undercut Microsoft's efforts in the radio-frequency identification market.

Microsoft Business Solutions has said its release of Axapta 4.0, originally due out the first half of this year, has been postponed until October, when a test version be released. Widespread commercial availability isn't expected until spring 2006. The reason for the delay is posted in a notice on the company's Web site: "We've decided to include functionality and improvements beyond the enhancements originally planned."

The Axapta delay could cost Microsoft ground in the RFID and enterprise-software markets, both of which Microsoft has aggressively pursued. Microsoft Business Solutions offers four ERP platforms--Axapta, Navision, Great Plains, and Solomon--all acquired through buyouts. It has far-reaching plans to consolidate functions and rewrite the applications onto one platform with technology and code base common to Microsoft, code-named Project Green.

Axapta had been scheduled as the first to receive upgrades for RFID integration, with Great Plains and Navision to follow in 2006. The improvements would provide a more off-the-shelf warehouse-management application that would let companies process RFID data from readers and tags. The overhaul in Axapta would involve adding RFID specifications to the platform's warehouse-management module and sprucing up the inventory-tracking features to process data generated by RFID readers.

Many small and midsize businesses trying to meet retail and Department of Defense mandates rely on enterprise-software vendors for help. But the delay of Axapta means Microsoft won't have a widely released RFID application for small and midsize businesses during a year when many of them are gearing up to meet Wal-Mart Stores Inc.'s second phase to ship RFID-tagged cases and pallets by January.

Microsoft customers don't have to wait for the release of Axapta 4.0 to become RFID-enabled. That's because Axapta and Navision each have development environments that let system integrators easily set up RFID platforms, even though the ERP systems don't have off-the-shelf RFID capabilities. "If an existing Axapta customer wanted to enable themselves for RFID compliance, it would be done within a week," says Donavan Lane, CEO at ABC Computers Inc., a systems integrator for Navision. "We're not yet seeing customers clamoring at our doorstep saying this must be done, but toward the end of the year when it all trickles down to the second tier of midmarket companies, then you will.

"We recently brought Lacrosse online with RFID capabilities without involvement from Microsoft," Lane says. "The products are strategic for midmarket businesses, so they have a development environment that it's easy for our developers to interface directly with readers to comply with mandates from retailers such as Wal-Mart."

Giant Bicycle USA, which runs Axapta, is looking into using RFID in its global supply chain between the manufacturing sites and sales and distribution facilities. Microsoft's ERP delays don't concern Mike Forte, director of strategic information systems at Giant Bicycle, which sold approximately 350,000 bikes in the United States last year through about 1,200 dealers. Deep in the midst of rolling out Axapta 3.0, Giant Bicycle's IT division is focusing on making sure the sales and distribution facilities in Australia and Canada are up and running this year on the ERP platform.

Axapta 3.0 was rolled out in Europe two years ago and the United States last year. Taiwan, China, and Japan are scheduled for 2006, and the four manufacturing sites are next. Four out of the seven sales sites are running Axapta 3.0 today. "There is no critical update or improvement that we're anxiously waiting for," Forte says. "We are waiting for tighter integration with Target SFA, which is what we use for reporting, but it doesn't damage us to wait a little longer."

Analysts see it differently. The delay of the release of Axapta 4.0 is counterproductive to Microsoft's strategy to ramp up the platform's presence in the small and midsize space, but its reasons are sound, Nigel Montgomery, research director at AMR Research, wrote in a report. "By opening up the application programming interfaces so other products can interface with Axapta, Microsoft is reducing the hurdles for its partners when trying to bid and implement systems," he said. Microsoft wants its software to appeal to more companies that require between 50 and 1,000 licenses, Montgomery says.

Meanwhile, product delays could find Microsoft playing catch up with rivals Oracle and SAP, which released RFID capabilities in their software packages last year. Oracle released eBusiness Suite 11i.10, the latest version of its warehouse-management application, with RFID capabilities. The product began shipping in the fourth quarter last year. The second release of Oracle Application Server 10g R2, which became widely available in January, also provides RFID integration capabilities.

Even before Oracle, SAP in January 2004 revealed the first packaged RFID system for supply-chain management to help companies manage data and write to tags. The system packages include SAP Event Management, a component of mySAP Supply Chain Management, and SAP Enterprise Portal, a component of NetWeaver.

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