Microsoft unwraps enterprise apps strategy
Chasing the mid-market
Over the past few years, solutions have appeared on the market for automating the business processes that companies use on a day-to-day basis, writes Fran Howarth of Bloor Research.
This charge has been led from two angles - from those companies, formerly known as ERP vendors, that have developed integrated suites on the one hand, and from pure-play vendors, such as Siebel, Ariba and FreeMarkets on the other, that have concentrated on automating a particular set of business processes.
But the majority of these vendors have targeted large organisations as their clients. Some solutions have sprung up aimed at the mid-market and many vendors have developed versions of their applications aimed at tapping smaller companies. However, the majority of vendors are aiming at the higher end of the mid-market, leaving smaller companies relatively under-served. For example, according to Microsoft, fewer than 10% of small companies use customer relationship management applications.
Microsoft aims to change all that. Its Microsoft Business Solutions unit provides enterprise applications aimed generally at the low end of the mid-market - that is, companies with 100 employees or less. Over the next three to four years, the vendor will bring out an integrated suite of enterprise applications that will include supply chain and customer relationship management, as well as professional services automation solutions for small firms.
At the beginning of this year, Microsoft unveiled its customer relationship management software in the US as the first proof point of its long-term vision. Take-up has been so good that it is accelerating international availability of this application to bring out 20 country-specific and nine language versions by the end of this calendar year - much earlier than it had anticipated.
Microsoft's belief is that the mid-market does not just want scaled-down versions of software originally targeted at large organisations, as the needs of the mid-market, especially the low end, are fundamentally different. Many small companies are suppliers to larger firms and must be able to connect to the technology systems that those firms use. Smaller firms also engage heavily in subcontracting parts of their businesses, and those projects need to be handled effectively, including visibility into progress.
With this in mind, Microsoft is developing its applications on its .Net architecture, using web services to connect companies to a range of business processes. Two front ends are available for its products - customers can connect through Microsoft's Outlook product, which is a compelling value proposition for small companies that already rely on Microsoft's desktop applications, or via an Internet browser. All applications will also be tightly integrated with Microsoft's .Net ERP technology - providing a cost-effective way for smaller companies to gain visibility and control of business processes such as financial management.
In terms of the functionality offered by the applications, Microsoft is focusing on automating the processes most commonly used by smaller organisations - rather than providing a huge number of features that its customers will hardly use. For example, its CRM 1.0 release concentrates on automating sales and marketing functions for companies. Functionality includes contact, leads and promotions management and includes a pricing engine for automating tiered pricing and discounts as well as integration with Microsoft Word for back-office invoice management.
Capabilities are provided for automating customer service requirements and the system provides alerts to tell users when a problem has occurred, such as an invoice that has not been paid. Similar levels of functionality will be provided in the supply chain management solutions that the vendor has in development.
But Microsoft is aware that companies in some areas will require specialised functionality suited to their industry. Having invested in the base product, it has made available a development version of its software that independent software vendors can download and use to develop further applications. To date, more than 5,000 vendors have downloaded the development version and there are already some 160 third-party solutions available from Microsoft partners.
These enhanced solutions cover a wide range of business processes, such as automation of the lost sales process, data cleansing capabilities, computer telephony integration and vertical industry add-ons.
Microsoft's expansion in the enterprise applications market makes a lot of sense - the vast majority of firms worldwide already use the vendor's Office desktop applications for such things as word processing and project management, as well as Microsoft Outlook for communicating with business partners.
Microsoft's enterprise applications will integrate deeply into these existing applications and will extend functionality to automate the most commonly used business processes, such as sales, purchasing and financial management. And by leaving development of more advanced functionality to its partners, versions of its products will be made available for the widest range of companies and industries possible without Microsoft having to push up product prices to cover huge investment costs.
Microsoft's new enterprise applications will be the logical choice for many organisations.