Microsoft Customers Impatient for Midmarket Products

By John Pallatto  |  Posted 2005-09-07

Microsoft Customers Impatient for Midmarket Products

REDMOND, Wash.—Microsoft customers who attended the companys business summit here Wednesday said they are pleased the company is making a major commitment to the midmarket segment.

However, they expressed impatience that it would take several more years for them to see the full results of this strategy.

Microsoft has been hard-pressed to bump up its midmarket support, which has been generally underserved, said Paula Paul, senior vice president global architecture with Scottish Re (U.S.) Inc. a reinsurance company based in Charlotte, N.C.

Microsoft made its first tentative move with its Small Business Server three years ago, but it really didnt serve the needs of midmarket customers, she said.

Scottish Re has between 300 and 400 desktop computers and an IT staff of about 35 to support the hardware and applications, she said.

Wednesdays midsize business products announcements show Microsoft is making a major commitment to serve the market, she said.

"They still have a long way to go" to provide the breadth of systems midmarket companies need.

"But they have the patience and tenacity to do it, and they can afford to take their time," Paul said.

Paul noted that some customers are impatient that they have to wait for the midmarket servers and Dynamics enterprise resource planning products until Windows Vista is delivered in late 2006.

Customers are asking "what do we do in the meantime," she said.

Microsofts answer that customers should work with their partners and get ready to deploy the products when they are ready isnt helpful to companies need the products now, she said.

Microsoft CEO Steve Ballmers disclosure that the company is going to give customers the option of acquiring some products as hosted subscription services as well as installed premises is an important development, she said.

Companies such as, Salesnet Inc., Siebel Systems Inc., and Ketera Systems Inc., which sell all or part of their product lines as hosted subscription services, are providing increasing competition for software companies that have long licensed their software for installation at the customers offices.

Paul questioned whether a subscription service would be the right option for most midsize customers.

"They are going to have to provide the economic justification for them" to move in that direction, she said.

Click here to read more about Microsoft CEO Steve Ballmers thoughts on the midmarket from the business summit.

Its really a question of whether its the kind of application that must be managed in house by the IT staff and whether there are compelling economic reasons for using a subscription service.

Microsofts announcement that it will market the "Project Green" customer relationship management, supply chain management and financial applications under the "Dynamics" brand name, provided little new information about the future evolution of these products, noted Paul J. Connolly Jr. CIO with Oakhurst Dairy Inc. in Portland, Maine.

The 250-employee dairy company is actively moving into Great Plains accounting software and is keenly interested in seeing how the Dynamics products develop the next three or four years, said Connolly.

Next Page: Left out in the cold.

Left Out in the


"We would like to know which one of the four products will become the anchor" of the Dynamics product line and which of the other products will end up "out in the cold."

There is still a lot of integration work that Microsoft has to perform on these products, he noted. It is inevitable that one product or another will in effect be absorbed by the other.

"Its really good to hear" that Microsoft is making a long-term commitment to the midmarket in terms of being prepared to provide support for this application and server platform for up to 15 years, he said.

However, there is another issue that Microsoft has yet to address, and that is its dependence on the partner channel to provide deployment and integration services for its server products.

Its very much a problem for midmarket customers that they face the prospect of working with a VAR or an integrator that is capable of delivering a complete system on a schedule and at a cost the customer can afford, he said.

They need some kind of simplified integration services that fit into their budgets, he said.

"I dont know what the answer is to that question," because it is clear that Microsoft has no intention of getting into the integration business, Connolly said.

One midmarket vertical that is yet to be served by Microsoft is the legal profession, noted Mark Schneider, director off information systems with Carlton Fields, a law firm based in Tampa, Fla.

He says that the Microsoft Dynamics announcement has little relevance for the legal profession.

Carlton Fields, like many law firms, is a major user of the Microsoft Office applications, Schneider said.

But so far Microsoft hasnt developed specific vertical applications for the legal profession, he noted.

Read more here from columnist David Coursey about Microsoft targeting the midmarket.

This is a missed opportunity for Microsoft, he said, because currently there are just a few vertical software companies that dominate the legal market.

The main concern of his law firm is the need for finer control over license management, Schneider said.

Law firms, like many other customers, have to buy a certain number server licenses and those servers are concurrently populated with data whether they are actually used or not.

Schneider said he saw little encouragement from Wednesdays announcements that Microsoft will address this issue soon.

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