Microsoft to offer role-based tools to midmarket

News Analysis

Microsoft to offer role-based tools to midmarket

Linda Tucci, Senior News Writer

In an effort to drum up more business among customers with fewer than 1,000 seats, Microsoft revealed plans for fleshing out an existing bundle of server software today, and introduced a suite of role-based business software and pared-down contracts.

The products are designed to appeal to midmarket business customers who don't have the cash and people on hand who have the

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skills to integrate and install technology.

Rather than pitching the software to a specialist "buried in the IT department of a $10 billion corporation," Microsoft is aiming this suite to business people who run their companies in a much more hands-on way, said Orlando Ayala, senior vice president for small and midmarket solutions at Microsoft.

In a briefing last week, Ayala said that Microsoft has spent the last five years trying to better understand the medium-sized business.

"We found that a number of customers don't adopt technology because it is too complex and too hard to manage," he added. "Customers tend to give up and go hire three more people to do it by hand. It is possible to do these business processes in a totally automated way, and that is what we will be showing Wednesday."

Just how much value the bundle brings to customers is debatable. But analysts agree the campaign indicates the growing importance of the midmarket customer, not only for Microsoft but its chief rivals, including SAP AG, IBM and Oracle Corp.

"A lot of companies are speaking about the midmarket," said Michael Speyer, an analyst at Forrester Research, who covers

We found that a number of customers don't adopt technology because it is too complex and too hard to manage.

Orlando Ayala


Senior vice president for small and midmarket solutions

Microsoft

the SMB market. "Microsoft with this announcement is putting a stake firmly in the ground about this market. They're saying, we've got a service strategy, we've got an application strategy, and if you want to dig beneath the covers, you'll see a lot of research to back up what we're doing."

Mika Yamamoto Krammer, an SMB analyst at Gartner Research, says she believes the announcements today are "more of name change than anything else for end users."

"But what it does say for the future is that Microsoft is finally willing to bring under one umbrella all of their disparate parts that make up their Business Solutions group," Krammer said.

The new midmarket server software bundle, code-named Centro, will combine the Windows Server operating system, tools for management and the Exchange e-mail server. This package, based on the Longhorn version of Windows Server, won't be available until after the server OS ships in 2007, according to Microsoft.

In addition, Microsoft said new releases of existing Microsoft Business Solutions products are getting a new name -- Microsoft Dynamics -- as it incorporates the role based technology during the next year. Microsoft plans to release versions of Microsoft Dynamics GP (formerly Great Plains) and Microsoft Dynamics CRM (formerly Microsoft CRM) later this year, and versions of Microsoft Dynamics AX (formerly Axapta), Microsoft Dynamics NAV (formerly Navision), and Microsoft Dynamics SL (formerly Solomon) in 2006.

Ayala said one of the advantages of the server bundle is it provides the ability to consolidate licenses. In the midmarket segment Microsoft offered a multiplicity of licensing options, and now those are reduced to just one. Contracts are also being simplified from 35 pages to just five pages written in simple language. "We heard back from our customers, who said, 'you know I don't have an army of lawyers. You give me a 35-page contract. What do you want me to do with it?'" Ayala said. Microsoft not only simplified its contract, but also claims the cost of entry will be lower, which will give customers better cash flow.

The midmarket applications are by far, the fastest-growing part of company, Ayala said.

According to research conducted by AMI-Partners Inc., the midmarket segment consists of 1.4 million businesses worldwide with a projected annual growth rate of 5%. Midsize companies have an installed base of 68 million PCs, with an average of 49 PCs per company and 4.8 million servers, or 3.4 per company. In 2004, midsize businesses spent $162 billion on IT services, and that is expected to increase to $235 billion by 2009.


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