Microsoft going after Sage/QuickBooks

Guest post:  AccMan blogger and deep thinker on enterprise software Dennis Howlett ponders Microsoft's next move. He's an  Enterprise Irregular:

One of the less talked about pieces to come out of Microsoft's World Wide Partner Conference was the understated announcement that the Redmond Giant is readying to roll out Dynamics Entrepreneur Edition. What's that you might ask and in truth, details are a tad sketchy. In fact, if Jason Carter of AbridgedMind had not Twittered it, I would be none the wiser.

From what I understand, it's a stripped down version of NAV (Navision) aimed at reaching the single user market. In conversation with Jason, I learned it has been piloted in four (unspecified) European countries. My guess is these are UK, Germany, Denmark and possibly Netherlands.

Jason was of the view this represents a direct attack on Sage/QuickBooks. I agree. He also sees this as a 'filler' offering, designed to reach the kind of business that wants limited functionality but for which the jump from say Sage Line 50 to the full NAV, GP or AX offerings might be too much.

Such an offering allows Microsoft the opportunity to trade up customers as they grow because a switch to the full blown product will likely involve little more than a flip on the registration key switch. This makes a lot of sense and could also serve as a beachhead against SAP's upcoming A1S offering.

SAP watchers may argue that A1S isn't designed for the market at which Microsoft is aiming but I think that misses the point. In taking this position, Microsoft is paving the way for future Dynamics upgrades and so insulating both its channel and users from the attention of competitors. That's a smart move. But...it will require Microsoft builds out a distribution channel that doesn't really exist right today.

More broadly, it seems that Microsoft is shaping up to become a genuine SMB competitor, capable of challenging Intuit/Sage. In the past, I've not been convinced it was serious but from the way it is organising its US channel, it is clear Microsoft has both a different approach and clearer business level messaging. For instance, during the roadmap Q&A, James Utzschneider, head of Dynamics marketing strategy acknowledged Microsoft hasn't done enough to integrate CRM Live to the main ERP products. That would have been unthinkable even a year ago.

James Carter says that in his go to market engagements, Microsoft has a much better business proposition for those companies that want to standardize on Microsoft technology with richer offerings: "Customers get things like order acknowledgment delivered through Outlook."

Microsoft has been steadily chipping away at Sage's higher end customers, migrating those who are ready to take the next step on the applications ladder but who find Sage's more upmarket offerings lacking. Recently Microsoft has crowed about double digit uplift in sales on the business apps front while Sage license sales are not exactly sparkling.

Microsoft may not be changing the world as the Blue Monster campaigners might like just yet, but if this is a taste of things to come, then those conversations will take on greater poignancy as the business apps division momentum gathers more steam.