RealTime IT News

Never Fade Away

Amid mounting concerns about under-performance and customer confusion, Microsoft assured customers that its Microsoft Business Solutions (MBS) would not wither away, but rather would see some enhancements within a year.

The Redmond giant acquired Axapta, Great Plains, Navision and Solomon, the four products that make up the MBS division, along with their sales channels, partners and, to some extent, their staffs. The quartet provides enterprise resource planning (ERP) functions, including financial management, supply chain management, customer relationship management, project management and business analytics, often with considerable overlap.

But sales have lagged. In the company's last earnings call to discuss its third-quarter results, CFO John Connors was surprisingly blunt about the division's disappointing performance -- and he blamed the sales channel.

"We aren't having good U.S. execution, and the majority of it is a function of us having a lot of new people in district positions over the course of the year," Connors told analysts. He added that the company's relations with MBS partners were less effective than a year ago.

"This division is certainly not alone in losing money over at Microsoft, but it has more baggage than some of the other divisions," said Jupiter Research analyst Joe Wilcox. "The company has been struggling to integrate the products into its own product line, and also, the sales channels into Microsoft's broader partner strategy." Jupiter Research and internetnews.com are both owned by Jupitermedia.

Microsoft has promised MBS customers full support through 2012. However, while it continues to push MBS, Redmond also continues to work to make it less relevant. One example is Project Green, the code name for an initiative to create a next-generation ERP offering. Project Green will consolidate business-management functions available in the various MBS offerings on the Microsoft Business Framework platform and tools, which will be built atop the .NET Framework, according to research firm Directions on Microsoft.

Rob Eggemeyer, head of the services organization for MBS reseller ePartners, said he looks forward to Project Green. "It will help us to have to put in only two packages instead of four or five," he said.

His sales team will adapt as Microsoft builds Office into a front end for back-office software, because it's already authorized to sell Office. He sees Microsoft's strategy of ever-increasing interactivity between desktop, server and business software as a good way to keep customers. "They're getting their claws deeper and deeper into the desktop and the back office," he said.

While Project Green is alive and well, according to Directions on Microsoft analyst Chris Alliegro, Microsoft hasn't said much about it. "No doubt, they're concerned about creating a situation where, say, potential Great Plains customers are sitting on the sidelines waiting for the next big thing rather than investing in ERP software today," Alliegro said.

Adding to the confusion about Microsoft's ERP strategy was the news that the company had considered a merger with SAP, the German business software giant. The company said it ended these "due to the complexity of the potential transaction and subsequent integration."

Given the difficulties it's had integrating the MBS acquisitions, digesting SAP might have choked Microsoft. In any case, the news made analysts wonder what other ideas about ERP Redmond might be dreaming up.

Great Plains 8.0 is scheduled to be available this month; Solomon 6.0 is expected in July. Navision 4.0 will ship later this year, and Axapta 4.0 scheduled for some time next year.

This official upgrade schedule is the latest in a series of nudges Redmond has given its balky enterprise software division. In May, the software vendor announced a yearlong initiative to bring its Business Solutions channel partners into the Microsoft Partner Program global framework.

Microsoft brass said the move would eliminate the diverse program terms and discount schedules of the various sales channels Microsoft acquired along with the software.

Then, in June, it reorganized the chain of command, placing division chief Doug Burgum directly under CEO Steve Ballmer, a move observers said was designed to let Ballmer keep a better watch on sales.

At the same time, Orlando Ayala, who was responsible for the sales channel and strategy for small and medium-sized businesses, was made division COO of MBS, reporting to Burgum. That shift helped consolidate the sales channel.

Finally, Microsoft essentially spun out Solomon. It announced that it had outsourced the upkeep of Solomon to Plumbline, a new company comprised of Solomon's founders and 70 percent of recently fired MBS employees.

The jettisoning of the Solomon team from the mother ship could be an indication that Microsoft doesn't see it as core, Alliegro said.

But MBS partners were sanguine about the prospects for the product line. "It's a fact that Microsoft has several different product lines, and their long-term goal is to unify all those different strengths into one code base," said Gary Harpst, co-founder of Solomon Software and chairman of Plumbline. "But that's several years away."

He said Plumbline already is working with Microsoft on the next Solomon release, which would be significant. "We're doing a lot of platform work and making sure it has a long future," he said.

Harpst admitted there was confusion in the marketplace, but said it's normal as next-generation products evolve.

"Any time there's a transition period, like going from DOS to Windows, the current generation of products is more feature-rich than the next generation, because they've been worked on for 10 or 15 years."

He tells customers that if they want functionality and stability, they should buy a current-generation product for the next several years.

"As the functionality of the next generation becomes more real, there will be a tipping point where it makes sense to buy it.

"When I was in the Solomon business, we sold Solomon 3.0 for seven or eight years after Solomon 4.0 was out. This is normal."

That advice may make good sense to customers, but it's not so great for Microsoft.

"MBS needs to drive sales of its existing products now," Alliegro said. "Not create buzz about what's coming in two or three years and risk paralyzing the market today."

The official promise of MBS enhancements could buck up the troops and get potential customers off the dime and into Redmond's arms.