If Microsoft keeps trying, it might eventually get its enterprise resource application strategy in order.
But it is apparent from the announcements Wednesday at Microsofts Business Summit at its Redmond, Wash. headquarters that the company is still years away from having a truly integrated product set.
The development of a new generation of its Microsoft Business Solutions applications (now branded as the Dynamics product line), even with its integration with Microsoft Office through the Information Bridge Framework, doesnt solve or hide a fundamental problem.
The product line still looks like the mishmash of rather redundant products that Microsoft has acquired piecemeal over the past four years. Microsoft is still essentially pitching to midmarket companies four different financial and ERP product lines: Axapta, Great Plains, Navision and Solomon.
It has done little to rationalize these product lines besides providing better back-end data integration among them. How many different ERP products do small and midsize companies really need?
This leaves customers with the task of assembling a combination of applications, features and functions that will best suit their organizations, or relying on integrators and VARs to advise them on what combinations of applications and features are best suited for their operations. Customers are left wondering whether Microsoft is committed to supporting all these products into the indefinite future, or whether it they will be left to vote with their dollars on which products prosper and which ones wither on the vine.
The introduction of the Dynamics brand name doesnt cure the curious condition that finds Microsoft marketing products under the old brand names rather than under ERP product categories. Wouldnt it be better to be marketing these products under the companys own household brand name—Microsoft Financials, Microsoft Supply Chain, Microsoft Customer Relationship Management—as it does with all its other products?
Naming them Dynamics GP, Dynamic AX and so on does nothing to reinforce the product categories that they occupied when they were marketed by independent companies.
This is an advantage that all Microsofts competitors can take advantage of. Everybody knows that SAP and Oracle sell ERP software. The world knows that Siebel Systems or Salesforce.com sell CRM.
Microsoft hasnt solidified its identity as a company that sells SCM, CRM or financial management software in the same way it sells word processing, spreadsheet or project management software. When it does, Microsoft will have arrived as an ERP software vendor to be reckoned with in the small and midsize enterprise market.
Keeping Close to SAP
There is no question that even at the present stage of the product lines development, Microsoft has the marketing power to win over a lot of SMB customers. But it hasnt yet reached the stage where it can strongly challenge SAP or Oracle in this market.
If fact, these days Microsoft is more content to cooperate with SAP to build links between their technologies.
That is the goal of the Mendocino Project, which will enable Microsoft Office and MySAP to share data; and also of their joint effort to provide Web services integration between .Net and SAPs Netweaver application development technologies.
Another significant development in Microsofts ERP strategy is CEO Steve Ballmers disclosure that Microsoft will offer on-demand subscription versions of some its products that are a good fit for that marketing model. CRM, the FrontBridge secure messaging services and its Live Meeting Web conference service are good candidates for subscription distribution, according to Ballmer.
“I think that, increasingly, from a midmarket customers perspective the best piece of software is the piece of software that they can subscribe to as opposed to implement,” Ballmer said Wednesday during the Microsoft Business Summit conference.
“Midmarket customers are the most open to subscribing to and using hosted business services with FrontBridge, Live meeting and with a set of other things that you will see us bring to market over the course of the next year or two years,” he said.
Microsoft will make further announcements about its plans for on-demand CRM when it is ready, Ballmer added.
Offering a hosted service for these applications certainly makes sense, especially for SMBs who frequently dont have sufficient in-house IT staff to install and manage these applications on-site.
The trick for any software company providing on-demand subscription software is to ensure that customers are getting the same features, functions and reliability that they would get from an on-premises version. This is essential to ensure that the on-demand product is competitive with existing hosted CRM services from RightNow Technologies or Salesforce.com that were designed from the ground up as on-demand products.
Or the company could find itself in the same position as Siebel Systems, which is still in the process of synchronizing the on-premises and on-demand versions of its CRM applications.
John Pallatto is a veteran journalist in the field of enterprise software and Internet technology. He can be reached at [email protected]