September 18, 2002 5:30 PM PDT

Microsoft reveals business software plans

Microsoft laid out its plan Wednesday for expanding its reach in the business applications market, with a software suite meant to help companies do everything from cut paychecks to ring up customers at the checkout counter.

Over the next 12 months, Microsoft plans to release five new sets of business applications, adding to the bookkeeping software it already sells through its Great Plains division. By year's end the company will release three of them, said Tami Reller, vice president for Microsoft Business Solutions.

One set is aimed at helping service companies better use their employees time and skills. Another set is designed to help retailers track inventory and gather point-of-sale information. Microsoft gained the latter set of applications in May with the acquisition of Sales Management Systems.

The third, as , is customer relationship management (CRM) software intended to help companies track their sales, marketing and service activities.

In the first half of 2003, the company plans to introduce business portal software, an application that arranges on the desktop the software that employees regularly use. Microsoft also plans to release software that will allow companies to exchange data over the Internet with business partners and customers, Reller said.

Microsoft unveiled the plan to more than 2,000 Microsoft consultants, dealers and software partners gathered in Minneapolis for the company's annual Stampede sales partner conference.

Microsoft entered the business application market last year with the acquisition of Great Plains, based in Fargo, N.D. It has since expanded geographically with the acquisition this year of Navision, a Danish applications company with customers across Europe.

The sprawling expansion plans indicate Microsoft is serious about business applications.

"They've just invested $2.4 billion into these companies," said Paul Hamerman, an analyst at technology research company Giga Information Group. "Their intention is to lead and dominate the midmarket for business applications, not just for accounting but by selling anything an enterprise would need to run their business."

By stepping into that market, Microsoft has moved into a realm of information technology long ruled by SAP, Oracle, PeopleSoft, Siebel Systems and JD Edwards. Because Microsoft also has partnerships with those companies it has been careful to define its turf separately from theirs. Microsoft has its eye on the so-called midmarket, which it defines as companies with between $1 million and $1 billion in annual revenue. SAP and the rest of the pack have historically focused on very large, multinational companies.

Through its dual acquisitions, Microsoft has practically become an overnight force in the business applications market with 250,000 customers, 3,800 employees and 4,500 sales partners worldwide, Microsoft's Reller said.

"Fifteen months ago, Microsoft wasn't even in this market," she said.

That sudden entrance is also a potential stumbling point, Hamerman said. Microsoft has yet to explain how it will piece together the many overlapping products and competing sales channels it has amassed through its acquisitions, he said.

Microsoft is beginning to tackle that, however. The company announced at its conference a new pricing structure, corporate brand and customer financing plan, uniting four distinct product lines from Navision and Great Plains under one umbrella called Microsoft Business Solutions.

Microsoft sees its greatest challenge as creating technically advanced products that keep critical data flowing to a company's employees, customers and partners, Reller said.

 

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