Microsoft bosses Bill Gates and Steve Ballmer have drawn up battle lines in the enterprise software market with its announcement of the Microsoft Dynamics initiative, and it is likely to have profound effects for users.
Last week, the company rebranded ERP packages bought from Navision and Great Plains under the Dynamics brand. With the next release of Office, due in 2006, Microsoft will integrate these products and its CRM software with Word, Outlook and Excel.
Microsoft believes this can deliver productivity gains by, for example, avoiding the need to re-key data or train staff on new systems. IT departments will be able to define their own business processes in the software and offer users tools based on their business roles, it said.
Although Microsoft is initially targeting medium-sized businesses, the same integration strategy will apply in big business, said Natalie Ayres, Microsoft senior director, small and medium solutions and partners.
Microsoft has a track record of conquering new markets, such as networking software, server operating systems, e-mail and web browsers. This has sometimes created integration issues with existing software.
Owen Williams, IT director at property agency Knight Frank, was not worried by this. "Microsoft's roadmap fits into my view of where we need to go," he said. "We have just finished Office 2003 and we intend to sit on it for a while and see how successful Microsoft's strategy is. I do not think compatibility will be any more of a problem than if it was not going into this market."
Teresa Jones, senior analyst at Butler Group, said many businesses would be reluctant to rely solely on one supplier. "Most large organisations like the idea of choice." She predicted such firms would prefer a dual-supplier strategy for enterprise software.
One area Microsoft will have to address is long-term support, said Jones. "Users will not upgrade unless they have to as it takes too long. People who upgraded their ERP for Y2K will not want to switch again swiftly," she said.
David Bradshaw, principal analyst at Ovum, said the move into business applications would present new challenges for Microsoft. "I think it is a very different proposition with business applications. Microsoft has to get into vertical business applications more strongly. It is easy to configure the software, but medium-sized businesses do not have the business analysts to know how to do it."