Like any company with a strong survival instinct, Microsoft is constantly looking for growth. The latest target is the amorphous mid-market, and Microsoft is launching a major initiative tomorrow (Wednesday), trotting out Gates, Ballmer and other executives to deliver the details. Consider this: Microsoft already has a massive mid-market share with Windows/Office (AMI-Partners estimates about 1.4 million organizations worldwide with 25 to 500 PCs fit the mid-size profile), and generates billions of dollars. The company has made previous attempts to further crack the mid-market with an array of business applications--Great Plains, Axapta, Navision, Solomon, CRM--which haven't been successful.
In hopes of reversing losses, the company commissioned in-depth research to find out what mid-size company users need. According to the research, they typically don’t have the resources and cash of larger enterprises, but they aren’t small companies either. They often have multiple branch offices, address global markets and have to deal with regulatory compliance. You probably already knew that.
"Today’s business software doesn’t look enough like today’s businesses," CEO Steve Ballmer said in an e-mail prefacing tomorrow's event. Productivity software doesn’t map to the specific job functions, and business automation software (accounting, supply chain, CRM, operations, human resource, etc.) is overly complex for customizing in ways that match how individual companies work.
Drum roll: Microsoft will bridge the gap with a new generation of business solutions (now called Dynamics, e.g., Microsoft Dynamic GP, AX, NAV, SL, CRM ) and eventually 50 common roles/ business scenarios (sales, marketing, finance, operation, productivity, human resources, and IT management). Around 2008, the client and server technologies will share a common base and the best parts of Axapta, Great Plains, Navision and Solomon will be integrated into a second release stage of Microsoft Dynamics. From Ballmer’s e-mail: "As a new order flows from sales to finance, billing, production and shipping, people should have simple tools to see what the process looks like – and to dynamically adapt the supporting software if the process needs to change."
Also, a new Longhorn-flavored server, code-named Centro, that will simplify management and automating tasks, and a new licensing program for mid-size companies to simplify license tracking, upgrades and management of software costs.
The strategy no doubt will deal with connecting to other platforms, but at its heart Dynamics and role-based solutions is simplification through standardizing on Microsoft client and server technologies and an attempt to catch up with competitors like Oracle and SAP. Businesses that already have Windows and Office can be lured by open source alternatives on the desktop, but the inertia of the installed base gives Microsoft some breathing room for now. A key part of the Dynamics strategy will be leveraging the Office installed base. Dynamics will have deep integration with Office, and in some ways will be an extension of Office.
But, it's not an easy target. Orlando Ayala, a long time Microsoft sales executive and currently—take a deep breath-- senior vice president, Small and Midmarket Solutions & Partner Group and COO, Microsoft Business Solutions, who is heading Microsoft’s mid-market expedition, cited lots of competitors coming from above and below engaged at some level in trying to win mid-size company contracts. In the CRM market, for example, large enterprises and the high end of the mid-market lean on Siebel, SAP, Oracle and a few other billion dollar software vendors. A growing number of upstart CRM vendors, led by salesforce.com, NetSuite, SugarCRM and others, are capturing small and mid-size company share and going after larger enterprises. Microsoft CRM 3.0 is somewhere in the mix, but isn’t considered among the market leaders.
Major competitors have been talking up similar strategies, focusing on roles, business scenarios across industries, easy customization of business processes and simplifying management and task automation. Microsoft's fully integrated Dynamics platform is about three years out, which puts it behind companies like Oracle, which acquired mid-market player J.D. Edwards, and SAP that are focused on cultivating mid-size customers. Microsoft’s reputation has also been hurt by the ongoing security problems, and open source alternatives are chipping away at Windows. It will take new arch rival Google a while to get around to competing in this space as part of its do-no-evil software domination effort.
Alaya told me that focusing on people and role-based software is the center of success. It's good to hear that after 30 years of existence, understanding how people work and tailoring software for them is viewed as critical to success...
I'll be at the event on the Microsoft campus tomorrow and see if there is anything more to the story....