Microsoft Midmarket Assault Hinges On Centro, Dynamics, Managed CRM

major midmarket push Dynamics

At its first Business Summit on Wednesday, Microsoft confirmed plans for a set of new managed services including sales force automation, security and application services over the Internet.

"We recognize that need to respond to [Salesforce.com]and will approach that need and a variety of other managed services for smaller and midmarket sized companies over course of next 12 months," Microsoft CEO Steve Ballmer told about 700 partners, customers and analysts gathered for the summit at company headquarters in Redmond, Wash. "We will give Salesforce.com a run for its money.

"The best software they can subscribe to instead of implement is ERP and CRM. We do believe there will be a set of services our midmarket customers, [and our ]small consumers and large enterprise customers, will be interested in running, [including] hosted Exchange, antivirus, anti-spam services acquired from FrontBridge and hosted CRM. We will provide more details to come, " Ballmer said.

Kicking off the event, Microsoft Chairman and Chief Software Architect Bill Gates detailed plans to launch a midmarket server code-named 'Centro" in 2007 and launched Microsoft Small Business Accounting 2006. That small business product is available in the U.S. beginning today. The chairman also discussed plans to integrate Microsoft's newly renamed Dynamics business applications with its forthcoming Office 12 suite in 2006 as well as Longhorn Windows server's new workflow and search capabilities in 2007.

As part of the three-hour briefing, Microsoft's top two executives said the company will soon deliver on its long promised integration plans to erase the boundaries that exist between its Office and Windows franchises and its business applications via a blueprint formerly dubbed "Project Green.

Some of the first incarnations of that integration will come with the release of Microsoft Dynamics CRM 3.0, which Gates said would debut in October, and integration of next wave of Dynamics products including Dynamics/AX in early 2006 with Office 12 in 2006.

Office 12, for example, will be aware of Windows workflow services and SQL Server 2005's business intelligence services so that Dynamics applications that exploit those forthcoming platform services.

On stage, Microsoft product managers demonstrated working code of the forthcoming CRM application pulling live data from an Excel pivot table, sharing it in SharePoint and displaying it for a sales manager over an Outlook screen.

Microsoft also demonstrated a the use of .NET connectivity within Word to access customer information from Microsoft Dynamics CRM, and then populate the Word-based sales proposal with the data while viewing a customer's credit history and sales history and deciding to provide discounts based on that live data.

Microsoft will also implement RSS feeds within CRM so that managers can easily drive alerts and notifications to employees using Outlook on their desk or mobile device.

Additionally, the software giant provided a sneak peek of the next generation of Microsoft Dynamics beyond 2006 that will converge Solomon, Great Plains, Axapta products lines and institute a new process flow chart model so customers can architect specific business processes.

For example, Microsoft will implement modular process configuration features and enhanced Visual Studio .NET capabilities beyond 2008 to automate business processes, according to a Powerpoint slide accompanying Gates' presentation.

"Late next year with Office 12, it's something we're starting to expose to the world," Gates said, handing off an early demo of the model-driven design paradigm to a product manager.

In the described model-driven, workflow-based paradigm, IT managers and partners can create -- and edit in place-- expense reports and purchase order like a process flow chart and use their roles-based user interface within Dynamics in the context of the data they need.

Gates said the business intelligence capabilities in SQL Server 2005 and new Windows workflow services in Longhorn Windows will be pivotal to making the promise a reality.

"Project Green becomes Dynamics, and it speaks to the specific architectural capability that we are uniquely defining into our software and things we don't see in competitive software,' Gates said. "The Dynamics platform will have a richer connection to office than any other applications in the past."

The midmarket server, Centro, will serve the needs of IT generalists and provide a secure infrastructure for midmarket customers, Gates said.

Both Gates and Ballmer said Microsoft will provide many product pricing and licensing options to fit mid-market customers' their needs, including on-premises products and managed services over the 'cloud'.

Until now, except for some older bCentral offerings for small businesses, Microsoft had steered clear of hosting applications itself and had to host its business applications. Apparently that could change now.

One Microsoft solution provider said the managed services are fine as long as the vendor doesn't invade partners' terrirtory.

"It's great, I just wonder how they will keep the price down to a point that it works with all parties - Microsoft, hosting vendor, SI, and the customer," said Lance Kyle, an executive with Acetta, a Microsoft CRM partner based in Seattle.

Microsoft also outlined its carpet-bomb distribution approach for the new Small Business Accounting 2006. The software, available both standalone and bundled with Office, will be available through retailers including CompUSA, Stables, Office Depot, Amazon.com, Office Max, and Best Buy. It can also be pre-installed on select PCs and laptops from Dell and Gateway.

And, system builders who view Dell as Darth Vader, will be able to offer customers a $40 rebate on systems bundled with the software, Microsoft said.

That should "level the playing field a bit," said Doug Leland, general manager of worldwide small business for Microsoft SMS&P group. System builders have long complained that Microsoft gives Dell such low pricing on Office, that they cannot compete.

To take on Intuit's QuickBooks retail presence is key. Perhaps more important, the company has wooed key influencers—accountants—who might or might not sell the product itself.

The company said it has deals with Deluxe Small Business Services for preprinted checks, envelopes and forms, and with Digital Insight and Check Free for online electronic payment and processing. Microsoft had already announced partnerships with ADP on payroll processing and with Chase Merchant Services for credit and debit card processing.

Microsoft Office Small Business Accounting 2006 will cost $149 after $30 rebate at retail. The bundle will list for $569 retail for new users, or $399 as an Office upgrade, both after a $100 rebate. The Suite includes outlook and Business Contact Manager and the latest releases of Word, Excel, PowerPoint, Publisher, and Access.

Intuit remains entrenched even after three major attacks on its turf by Microsfot in the past. And many accountants and partners who signed on with Microsoft this time out said they'll also stick with QuickBooks.

Jason Harrison, president of Harrison Technology Consulting, Nashville, N.C. small business solution provider said while SBA is "still a 1.0 release and has room for improvement, in general it is very competitive head-to-head with QuickBooks," he said.

Barbara Darrow contributed to this report.