Microsoft to Sink $850 Million into SMB Division

As part of Redmond's renewed focus on its Microsoft Business Solutions unit, the company is contemplating some kind of "global services" plan.

TORONTO—Microsoft plans to invest $850 million over the next year in sales, marketing and research and development programs dedicated to beefing up its Microsoft Business Solutions (MBS) division.

And as part of the renewed MBS focus, Microsoft is considering creating an MBS Global Services plan, via which the division will offer more consulting services around Microsofts MBS wares.

Microsoft Senior Vice President Orlando Ayala highlighted Microsofts plans to focus heavily on its SMB (small and midsize business) unit during the opening day of Microsofts annual Worldwide Partner Conference here. Microsoft is expecting 5,000 of its channel partners to attend its four-day conference.

The MBS division is Microsofts second smallest (revenue-wise) of its seven, independent profit and loss centers. In the third quarter of FY 2004, MBS revenues were $153 million, compared with $190 million in Q2. Officials have attributed the weak showing to too many new district sales folk in the United States, as well as a slow start for the companys merged MBS/corporate sales team. (Microsoft officially merged the teams as of July 1, 2003.)

Ayala—who recently added MBS chief-operating-officer responsibilities to his existing small and midmarket solutions and partner group ones— told conference attendees that Microsoft has designs on expanding and dominating the SMB markets in which it is playing. These include ERP, CRM, supply-chain-management and retail-management.

"We went through a year that was very painful," Ayala said, in a nod to Microsofts difficulties in merging its various channel programs and sales forces. In FY 2005 [which started July 1], we will hit our targets, but thats not enough. We want to scale to millions of customers."

Ayala said there are an estimated 40 million customers who potentially could purchase MBS products. "We want all of them," he told conference attendees. "Were going to win."

/zimages/3/28571.gifClick here to read more about Microsofts efforts to make over its MBS division.

In a move reminiscent of Microsoft CEO Steve Ballmers "developers, developers, developers" chant at a Microsoft sales meeting, Ayala led keynote attendees in a chorus of "We will, we will rock you." Ayala said the refrain from the "We Are the Champions" song by Queen was Microsofts fiscal 2005 theme song.

As part of the $850 million investment that Microsoft plans to make in MBS, Ayala said the company plans to:

  • Create a Solution Provider agreement "that reflects the value of MBS";
  • Add "solution specialists" in the field who specialize in CRM, ERP, retail and the like
  • Expand its telesales and lead-generation efforts on behalf of partners; and
  • Improve support.

Ayala did not offer any additional details on the possible MBS Global Services plan during his Saturday afternoon keynote—other than to say Microsoft wants to make it easier to reuse solutions and methodologies among customers.

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