Microsoft Charts Course

“There had been some speculation within the channel as to whether Microsoft was truly committed to the midmarket space, even after the acquisition of Great Plains and other midmarket players,” said Andy Vabulas, CEO of I.B.I.S., a solution provider in Norcross, Ga. “This is a clear statement to the direction of Microsoft and positions both it and its channel strategically to gain substantial market share.”

Microsoft Chairman Bill Gates and Microsoft CEO Steve Ballmer outlined the midmarket offensive last week at the Microsoft Business Summit. The top executives said Microsoft plans to release an integrated midmarket server solution, code-named Centro, and plans to deliver on integration of its newly named Microsoft Dynamics applications with Office 12.

Microsoft also detailed plans to integrate its line of Dynamics applications with the Windows Longhorn server&s workflow and search services in 2007.

Microsoft, Redmond, Wash., also discussed plans to launch a set of midmarket managed services, including hosted CRM, and announced the release of Small Business Accounting 2006.

Gates and Ballmer said Centro is planned to be delivered in 2007 after the Longhorn server ships. Another executive said it may slip to 2008. However, the company will begin delivering soon on its long-promised plans to erase the boundaries that exist between its Office and Windows franchises and its business applications, as part of an effort formerly dubbed Project Green.

The first incarnation will come with the release of Microsoft Dynamics CRM 3.0 in October, Gates said. The integration of Dynamics CRM and Dynamics/AX, formerly Axapta, in 2006, with Microsoft&s forthcoming Office 12 will deliver business-process automation, Microsoft said.

On stage, Microsoft product managers demonstrated working code of the forthcoming CRM application seamlessly pulling live data from an Excel pivot table. From within Word, Microsoft showed how users can access customer information from the CRM system and populate the document&s fields with the CRM data.

Microsoft also plans to implement RSS feeds into CRM so managers can send notifications to their employees using Outlook on their desks or mobile devices.

Office 12, due in late 2006, for example, will consume Windows workflow services and SQL Server 2005&s business intelligence services.

“Late next year with Office 12, it&s something we&re starting to expose to the world,” Gates said.

In addition, the software giant provided a sneak peek of the next generation of Microsoft Dynamics beyond 2006 that will further unify the Solomon, Great Plains and Axapta product lines with Office and institute a new process flow chart model so customers can architect business processes.

For example, Microsoft will implement modular process configuration features and enhanced Visual Studio .Net capabilities beyond 2008 to automate business processes, the company said.

The company focused on its on-premise product plans for the midmarket, including Centro and Dynamics& integration with Office 12 as well as Windows Vista and Longhorn server. But Ballmer also said Microsoft will push a new set of 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 companies over the course of the next 12 months. The best software they can subscribe to instead of implement is ERP and CRM,” Ballmer told more than 700 at the summit. “We will give Salesforce.com a run for its money.”

One Microsoft solution provider said the managed services are fine as long as the vendor doesn&t invade partners& territory. “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, [systems integrator] and the customer,” said Lance Kyle, a managing partner at Acetta, a Microsoft CRM partner in Seattle.

Microsoft also launched at the summit last week Office Small Business Accounting 2006, priced at $149 after a $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 software will be pre-installed on PCs from Dell and Gateway. And system builders will be able to offer customers a $40 rebate on systems bundled with the software to “level the playing field a bit,” said Doug Leland, general manager of worldwide small business for Microsoft&s SMS&P group.

BARBARA DARROW contributed to this story.