MICROSOFT MAKES A move into the mid-market for ERP (enterprise resource planning) applications with its announcement Thursday that it is acquiring Great Plains Software, a long-time business partner of Microsoft.

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Microsoft will buy the Fargo, N.D.-based company in a stock purchase agreement valued at approximately $1.1 billion, company officials said. Each share of Great Plains' common stock will be exchanged for 1.1 shares of Microsoft common stock.

Great Plains provides software for financials, distribution, enterprise reporting, project accounting, electronic commerce, human resources and payroll, manufacturing, sales and marketing management, and customer service and support functions.

Microsoft officials said the acquisition of Great Plains will help its fortunes in the business applications software market for small and medium-size companies. The combined offerings will comprise the ".NET foundation of small and medium business applications," officials said.

The .NET platform of business applications is accessible via PCs, terminals, handhelds, and wireless devices and can be deployed as hosted applications or in the conventional manner.

The joint efforts of the two companies are meant to lead to "solutions for automating interconnected business processes," said Jeff Raikes, group vice president of Microsoft's Productivity and Business Services Group, in a prepared statement.

Great Plains is set to become the Great Plains division of Microsoft, and will be overseen by Raikes and David Vaskevitch, senior vice president for the business application division, Microsoft officials said. The Great Plains division will offer services as part of Microsoft's bCentral online service for small companies.

In a separate but related move, PeopleSoft is planning to move aggressively into the mid-market with product/consulting packages targeted at firms with revenues of $500 million or less, PeopleSoft officials said. Among the first partners in this effort will be IBM, which will offer its systems integration services and its NetFinity series servers running Microsoft Windows NT.