CRN Interview: Microsoft Business Solutions Doug Burgum

EDITOR'S NOTE: Doug Burgum, president of Microsoft Business Solutions and a Microsoft senior vice president, spoke recently with Industry Editor Barbara Darrow to talk about the company's new CRM push and its attempt to position itself as a friend to ISVs. Burgum is leading Microsoft's charge into midmarket business applications.

CRN: So the big question here is will Microsoft Business Solutions compete with its own ISVs as it enters new application areas? You say you're raising the platform so ISVs can use more of your technology and concentrate on higher-value development.

Burgum: We see this as making the market bigger for everybody, and one of the ways we achieve that is, if you drew a picture of what ISVs do in terms of development today, a lot are developing core functionality and a lot of times the edge they work on--the platform edge vs. the customer edge--the platform edge, is a tough edge.

When we were stand-alone Great Plains and we had toolsets [that helped insulate 300 ISVs from changes on the platform edge . . . when we went from 16- to 32-bit, when we went from btrieve to SQL [database, we had hundreds of ISVs that just got a free ride. Wow. Now we're in the SQL market, and we didn't have to do anything because we were writing to this layer.

The vision behind the Microsoft Business Framework is to create a really robust set of tools and capabilities on top of the .Net framework. You've got another layer of abstraction there that allows for easy modeling. Depending on how we package some of these elements, [they can become ubiquitous in other applications. . . . What I was referring to as components or objects we sell to ISVs even all the way up to a full general ledger. . . . If you want to use a [general ledger in accounts receivable, great, here it is. Then you can focus on your vertical whether it's health care or construction.

CRN: Is this a two-year window kind of thing?

Burgum: The framework will start to be available in components this year. The Microsoft Business Framework and that will become more available over time. . . . We're talking about the Longhorn time frame, which is kind of three-year out for the next-gen stuff. . . . There's a fixed amount of capacity among 10,000 ISVs, and if we push that toward the customer edge by relieving some of the problems on the platform edge, we're sort of raising the bar.

CRN: It depends on how you price it and make it available.

Burgum: Yes, it will be broadly available and low priced. . . . We want to price it so from an economic standpoint it's attractive for an ISV to say that's an easy decision for me.

CRN: I remember a similar statement years ago from [former Microsoft group vice president Mike Maples regarding Office, promising to make it a broad, horizontal platform for other developers to verticalize and customize. That never happened. Why is this different?

Burgum: I certainly remember that. But this is different. I think [with desktop applications, there's an affinity there for standardization that sort of lead to that consolidation, and I don't think that consolidation is going to happen here. Microsoft has been in the database business for a long time, and there are a lot of healthy competitors. You've got [IBM's DB2 and Oracle. You've got a lot of strong competitors. I think the [business-apps business will be a lot like that. There are a lot of ISVs building atop SQL, but it's kind of difficult to grab SQL and grab C# and go build an app. We'd like to make it really easy to build applications on the Windows platform and build applications that also interconnect. Part of the strategy relates to the initial question about the more vertical things we're pushing into because we want to have some proof applications for .Net. In some, we'll push up further in the stack, but it's not like we'll do all these [apps, but some of them we'll do so we understand the issues associated [with development at that level--as opposed to [saying "oh we sell tools." We can figure it out. We want to live the Microsoft experience and Great Plains experience. . . . Microsoft historically is the platform piece, and Great Plains and Navision is the ISV. We want to make sure we don't lose that ISV heritage of really understanding what it takes to build great apps.

CRN: The other hot button is how far up your apps will go in the enterprise. You say you're basically setting the upper limits at a certain point and are not attacking the big enterprise where Siebel sits with Microsoft CRM?

Burgum: Look at ACT, now owned by SalesLogix. Where does ACT reside? There's a lot of copies of ACT in the enterprise, so I would never say we are never going to do departmental if someone wants to buy it, if some reseller wants to put it in a corporation. What I said is the upper limit will be where our partners want to take it. To me, the upper limit should be ascribed to "we're not going to build a direct sales force in terms of how we sell." When I think about the functionality, people tend to think CRM is this one thing, but it's so different. We have a chance with all our work with Siebel to understand the differences. It would take us years, because it will be multiple releases before we even have the functionality of Siebel MidMarket. Tom [Siebel, chairman and CEO of Siebel Systems is not standing still, he's spending more CRM R and D than anyone else. He's going to keep moving that functionality ahead. I just think the gap remains or widens as opposed to everyone just assuming there's this collision course like gravity. I don't know. . . . People have Siebel and SAP. How do I displace those systems? They're in there and they're customized, they're deeply customized. I know what the spending is inside Microsoft..

CRN: You're an SAP house?

Burgum: At Microsoft. Not within our division [laughs. We do both Navision and Great Plains in our division, we use two systems. And Great Plains was a Siebel customer, and now we're going to integrate Microsoft CRM and Siebel CRM. We've integrated Great Plains with SAP, too. We've done some integrations and other companies may choose to do that at division level.

CRN: SQL Server started out as a departmental thing and starting at SQL 7 made a big enterprise push. Folks expect that to happen with Microsoft CRM.

Burgum: There's a direct sales force for that. . . . They're trying to sell into enterprises. That's where databases get purchased. In smaller businesses, databases get pulled with an application. I always try to come back to the economics and the DNA. Microsoft's DNA, the way it beat IBM, is with millions of people coming up [from the low-end volume. I need to reach hundreds of millions of businesses, not the tens of thousands we reach now.

When Steve [Ballmer, CEO of Microsoft and Bill [Gates, chairman of Microsoft, sit down with us, they say in 10 years you've got to be thinking broad. Steve's been explicitly saying this though he doesn't have to tell me, because I already knew this. I don't want to be the seventh person in line sitting outside the CIO's office. . . . I'm the next direct sales guy taking a turn to go in. That's not a broad customer connection. That's not how you win. That's trying to out-relationship everyone else with the CIO. There's this assumption in everything we do that we're going to go midmarket and up.

The real story, now that we've done Navision and got the CRM thing, the next thing is what are we going to do to move down. That's the story nobody's writing. In the United States, you can say 'Oh, this is a collision course with Intuit.' Well, yes and no. Microsoft's a global company, and Intuit's not outside the United States. Sage is strong in four countries, France, Germany, the United Kingdom and the United States. Sage is not global. Intuit's 90 percent U.S. [sales. And there's the rest of the world who can be served, and in some cases, it's all local competition, it's broad-based and those local competitors are facing the same challenges every ISV is facing how to get to next-gen, how to get customers to next-gen. . . . If you want to go back to an analogy, one of the things in Microsoft that happened is Windows took off in part when Excel and Word started utilizing features in the platform that made them better products. Innovation occurred that they spiraled up together.

One point that keeps getting missed: We had already picked .Net as a platform as ISV Great Plains before [Microsoft acquired Great Plains. Part of the reason was we wanted to focus on [the SMB [market, and there's some point above that where the CIO wants heterogeneous, be-in-control, play enterprise vendors against each other, and the whole myth of Java write-one-run-anywhere. That's the high end. Below that, customers want to work together. That means probably homogeneous, it means "I don't want two operating systems and two databases, and I don't want a different database for my inventory system and that. I want it all to work together." There's sort of a natural gravity towards the high-volume, low-priced platform which happens to be Windows on Intel. So Great Plains said, we want to be proof point for .Net. The proof point for Windows was Office, the proof point for .Net will be business applications.

More of Burgum's interview will appear in next week's issue of CRN.