Microsoft is preparing a new edition of Office to help small businesses operate better, and taking on Intuit and its QuickBooks product in the process.
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An edition of Office for small business management will include the familiar Office 2003 applications along with a new financial management product called Office Small Business Accounting and an updated version of Outlook 2003 with Business Contact Manager. It will be available in the US at the end of next year.
Microsoft said the new Office edition would let small businesses manage customer, financial and business processes. Payroll will come through integration with services from outsourced payroll services provider Automatic Data Processing.
Microsoft's Office group developed the new edition jointly with the Microsoft group that sells business applications, and will offer an easy migration path to the latter products.
Analyst Paul DeGroot said that by offering a path up to its more sophisticated business products such as Great Plains and Microsoft CRM, Microsoft was filling a significant gap in its product range and taking on Intuit.
"Microsoft has basically left small business to Intuit, and QuickBooks is the dominant product in that area," said DeGroot. "As a consequence there has not been a ladder for small businesses to climb on and get to Great Plains. This is an important gap that Microsoft needs to fill."
For the smallest businesses, Microsoft today offers a simple chequebook-type application called Money Small Business. The next step up is Small Business Manager, an entry-level enterprise resource planning product.
"There is a gap today where people need an entry-level accounting system, but don’t need entry-level ERP," said Microsoft vice-president Steven Guggenheimer.
"There are standalone accounting applications out there today, but they do not connect very well with the other applications most people use in their business. They don't have the seamless connection with contact management or Excel, which some people use for their accounting."
The new Office suite will be able to mark hours as billable when a calendar entry is created in Outlook. The information can then easily be transferred to the accounting application.
Guggenheimer said easy invoicing would be available from Word. Data from the accounting application will be pushed to Word for use in invoice templates.
Microsoft will offer tools for users of QuickBooks and Excel to migrate to the new suite.
According to Terry Hicks, director of product management for QuickBooks, more than 2.6 million small businesses in the US alone use QuickBooks. He said that Intuit had competed successfully with Microsoft before, maintaining its leadership in the market for small business accounting software.
Aside from winning more customers for Microsoft's business products, the new suite also fits in with Microsoft's strategy to grow its Office business by tailoring product bundles for specific audiences. The company already sells a Small Business edition of Office 2003, introduced last year, which includes Excel, Outlook with Business Contact Manager, PowerPoint, Publisher and Word.
Guggenheimer said the bundled updated Outlook with Business Contact Manager would support peer-to-peer networking, the new Microsoft Small Business Accounting product and Pocket PCs. Outlook with Business Contact Manager will be updated for all markets where it is currently available.
Microsoft did not disclose pricing for the new Office edition and said it was too early to discuss plans for international availability.
A beta test version of Microsoft Small Business Accounting is available from today. Those interested can sign up online at: http://www.microsoft.com/office/accounting.
Joris Evers writes for IDG News Service