Application Blitz

The company is working on its own professional services automation (PSA) application, which would be an extension to its Great Plains Project Accounting software. Microsoft plans to debut the PSA application late this year or early in 2003, after it unveils its upcoming CRM application, said Jeff Young, vice president of U.S. sales and services for Microsoft's Business Solutions Group.

In the same time frame, the company also plans to roll out its .Net Business Framework,tools to help developers customize and build vertical functionality atop Microsoft's business applications. It also plans to introduce Business Desk, a .Net application designed to help companies make data from CRM, ERP or manufacturing applications widely available to more people in an organization.

This "specialized UI layer is a thin-client-based portal to the world," Young said. "It's a way to take your [human resources and payroll system outside those departments and let people do time-card reporting [or look up vacation time."

To avoid conflict with enterprise partners such as Siebel Systems and SAP, Microsoft targets these applications,many with roots in Great Plains Software applications,at midmarket companies with $800 million to $1 billion in revenue.

Microsoft's $1.3 billion acquisition of Navision, expected to be final in August, should also bolster its product portfolio. However, in its bid to build .Net applications for the midmarket, Microsoft must tread a fine line between partnering with third-party ISVs and competing with them with its own offerings.

Microsoft's midmarket plans seem to put it in conflict with partner Changepoint, a Toronto-based maker of PSA applications. Microsoft recently licensed Changepoint's application for use by 6,000 of its own consultants. "We're obviously supporting [Changepoint as a platform developer and as a customer," Young said. "But there will be . . . situations with our partners where the customers will look at us and them and have to choose. In other instances, we'll collaborate with them."

Changepoint, which is .Net-enabling its own applications, is philosophical. "Regardless of the markets Microsoft chooses to enter, .Net technology makes sense to Changepoint simply because it will improve our PSA product performance," said Gerry Smith, president and CEO of the company.

But conflict won't be relegated to the midmarket alone. Just as Microsoft built Windows 2000 and SQL Server 2000 into offerings for the enterprise, industry observers say they expect the company to move its business applications upstream as well. At that point, the company would contend with both SAP and Siebel, two of its biggest partners.