Microsoft has released its first product based on the Navision software suite since its 2002 purchase of the company.

Microsoft Navision 4.0 will target small and medium-sized businesses and marks the software giant's aggressive efforts to break into the business app market. It has been trying to carve a niche in it for the past few years, investing $2.4 billion by buying Navision and Great Plains Software.

Navision 4.0 includes financial, manufacturing, customer management, supply chain, analytics and e-commerce data tools and comes with a new interface modelled on Microsoft's Office Outlook 2003. The main change is a tighter integration with Microsoft technology.

"To a large extent integration with Microsoft is what the release of 4.0 is about," said Jen Silleman, business manager for Microsoft Business Solutions Navision. For example, Excel is used as a viewer for the business analytics graphing tools, Silleman said, and new notification services are built on Microsoft's SQL Server.

The update is also aimed at connecting partners and customers, offering an XML port so customers can customise the software for document exchange. The suite is aimed at companies' inventory, manufacturing and business services needs, and although it is for SMBs, Microsoft is also pushing it for subsidiaries and divisions or branch offices of larger companies.

"A lot of the needs of small businesses are the same as the needs in big business," Silleman said. However, Microsoft has been adamant that it is not setting its sights on the enterprise market dominated by the likes of SAP and Oracle, although one one former user begs to differ.

The SMB market is highly fragmented, with one or two leading players in each country or region, according to RedMonk analyst James Governor. With no global leader and an estimated 40 million small business and 600,000 mid=sized companies worldwide, Microsoft predicts enormous market potential. It has said that it is investing $10 billion in its SMB efforts over the next five years, in addition to $1.7 billion for its partners program and $850 million for the Microsoft Business Solutions group in fiscal 2005. "We truly believe that we have a huge potential in that marketplace," Silleman said.

Navision 4.0 was developed at Microsoft's Denmark, campus - Navision's former headquarters, and now Microsoft's largest development center outside of the US - and is clearly aimed at replicating the success Navision has had in Denmark in other international markets.

Microsoft CEO Steve Ballmer said recently that he "wants to make the whole world Danish," adding that if Microsoft had the same success with its business applications products as it did there, revenues from its Business Solutions unit would rocket. The Business Solutions unit reported revenue of $667 million in fiscal 2004 and is projecting nine percent growth this year to $820 million.

Navision already had a strong customer base when Microsoft snatched up the company for around $1.3 billion. Some 45,000 organisations around the world already use the product suite. Silleman sees potential in all global markets, but said that Eastern European countries that just joined the European Union appear particularly ripe for the picking.

The new suite is available in 39 languages and 41 local versions. A typical configuration for a single user starts at about €1,995 for the software licence, Microsoft said, while implementation and consulting fees are extra. Implementation typically takes nine days, Silleman said.

The new software will be available in Austria, Canada, Denmark, Germany, Ireland, the Netherlands, South Africa, Sweden, the UK, and the US on Monday, with roll-outs to other countries coming later on.