March 7, 2005 9:30 AM PST

Microsoft outlines business software redesign

A fledgling unit of Microsoft will this week unveil the first fruits of its labor around a multiyear effort to knit together its collection of incompatible business management programs.

The business unit, called Microsoft Business Solutions, represents Microsoft's foray into the so-called enterprise resource planning, or ERP, software market in which Oracle and Germany's SAP are wrestling for global dominance. The programs from each company are designed to automate a broad set of corporate tasks, from fielding customer service calls to organizing assembly lines.

At its annual Convergence conference, which starts Monday in San Diego, Microsoft will be rallying around its ERP customers and partners and talking up the product enhancements it's developing. Microsoft chairman Bill Gates will participate with a keynote speech slated for Wednesday. Also scheduled to appear is Doug Burgum, head of Microsoft Business Solutions and former chief executive of Great Plains, a company Microsoft bought several years ago. His speech is planned for Monday.

Specifically, Microsoft expects to discuss how it's progressing on its plan to redesign four separate ERP product lines it has assembled through a series of acquisitions, an undertaking it has code-named Project Green. Though Project Green won't be complete for another three or four years, Microsoft hopes the finished product will help the company better compete with established ERP rivals with programs that are cheaper and easier to use.

"We went into Green almost in a sense as plumbers, thinking about how to redesign ERP from the bottom up," said James Utzschneider, general manager of strategy for Microsoft's Small and Midmarket Solutions & Partner Group.

The company is gearing up to release its first set of Project Green features this year, starting in the fall with the 8.5 release of its Great Plains applications. Microsoft will follow that with new releases of its Axapta and Navision products that incorporate Project Green developments, such as a new user interface that's consistent across most of the unit's products. The new versions will also share the same Web portal, business reports and interoperability tools, making them easier to navigate and maintain.

Eventually, about 2008, the programs will share the same computer code, making them easier to maintain and develop, Utzschneider said. The company will also incorporate technology that makes the software easier to customize and modify--the Achilles heel of ERP software.

Other plans include expansion into more overseas markets, including Brazil, China and Japan, and a greater effort to target larger companies and divisions of global companies, said Lynne Stockstad, general manager of marketing and strategy for the group. The company is also filling out the unit's management ranks with the recent hiring of former executives from PeopleSoft and rival Best Software, she said.

Microsoft's entry into the business applications market hasn't gone entirely smoothly. It recently delayed releasing the new version of its customer service applications by at least six months after customers that got a sneak peak at the product said it wasn't up to snuff.

During its most recent fiscal quarter, Microsoft reported flat revenue in its Business Solutions division. Stockstad said software sales actually climbed across most major product lines, but the unit's revenue was flat because demand for services fell as Microsoft farmed more of that business out to partners.

Meanwhile, the division continues to lose money, although losses have narrowed. Last year, the company reorganized the division's leadership and elevated the head of the group in the chain of command in an effort to get business on track.

 

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