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Microsoft in the Middle (Market)

Company renews emphasis on solutions for midsize companies.

As a group, midsize companies used to be like Rodney Dangerfield: They got no respect.

Neither giant empires with instant name recognition nor feisty little start-ups founded by colorful entrepreneurs, midsize companies were, until recently, the Aunt Ednas and Uncle Harolds of the business world. They plodded along reliably but unremarkably year after year, rarely attracting attention, waiting for the day when they'd hit the jackpot and move up to the big time.

Then suddenly, Aunt Edna and Uncle Harold became the hottest ticket in town. They didn't hit the jackpot—as it turns out, they are the jackpot. Everybody wants to do business with them. And Microsoft is no exception.

In September, at its first-ever Microsoft Business Summit for midsize organizations, Microsoft announced a redoubled emphasis on serving companies in that category, which it defines as those having between 50 and 1,000 employees (or between 25 and 500 PCs). The 1.4 million midsize companies worldwide are "the least well-served customer[s] across this spectrum of people involved in IT," Microsoft CEO Steve Ballmer told more than 500 partners and customers at the event.

Midsize companies, which represent 31 percent of the U.S. economy, share some traits with both their larger and smaller brethren. Like small businesses, they shy away from excessive complexity; like large corporations, they want to collaborate with partners and suppliers worldwide, deliver customized "just-in-time" service and comply with a growing number of regulations. However, Ballmer said, midsize organizations "often struggle to find the resources to tackle these challenges."

Microsoft's goal is, of course, providing some of those resources to those companies, which, according to research by New York-based AMI-Partners, have a projected annual growth rate of 5 percent. To that end, the company announced a menu of products and services designed to work the way people in midsize businesses work: by functional roles. Among them:

1. Microsoft Dynamics is the new name for several Microsoft Business Solutions products targeting midsize businesses. The products, to be renamed as new versions appear over the next year, include:

  • Microsoft Great Plains, which becomes Microsoft Dynamics GP
  • Microsoft CRM, which becomes Microsoft Dynamics CRM
  • Microsoft Axapta, which becomes Microsoft Dynamics AX
  • Microsoft Navision, which becomes Microsoft Dynamics NAV
  • Microsoft Solomon, which becomes Microsoft Dynamics SL

Microsoft expects to release new versions of Dynamics GP and Dynamics CRM by year's end; new versions of the other three products are planned for 2006. All contain applications designed for individual employees in jobs ranging from CEO and CFO to salesperson to customer service rep to front-desk receptionist. Microsoft developed more than 50 such roles after sending 80 developers and program managers to interview and observe employees at about 750 midsize companies worldwide. "We followed them around the office and tracked business processes as they moved from person to person," Ballmer said.

"We even took pictures of their desks to understand the environment they work in and the way they use their computers." The bottom line, based on that research: Current business software doesn't fully serve midsize companies because it's designed around tasks rather than the capabilities individual employees need to do their jobs.

"People were clear to us that they want software built for their companies around their roles," Microsoft Chairman Bill Gates told summit attendees. As a result, Microsoft has focused on designing "role-based" functionality into its products and services. Meanwhile, the company emphasized that its business solutions will continue to be fully integrated with the familiar Microsoft Office applications such as Outlook, Excel and Word.

2. Microsoft Windows Server "Centro." This code-named infrastructure is designed to help ease the pain felt in a key role found in many midsize companies: the overworked IT generalist. Microsoft says Centro will pull the "Longhorn" Windows Server, Microsoft Exchange, security technologies and management applications into a single integrated solution that's easier for an overwhelmed IT professional in a fast-growing company to install and maintain.

Centro will benefit Microsoft partners as well because they'll be able to offer customers one solution rather than five or six, says Steve VanRoekel, who heads Microsoft's midsize business solutions strategy. "Centro is something that they can wrap their arms around and say, ‘Here is what Microsoft recommends, designed specifically for you, and it's going to bring you great business and IT benefits,'" he says. "It's an easier sales model."

Centro—derived from a Latin word meaning "center," as in the core of a network—will become available after the Longhorn server's release, currently scheduled for sometime in 2007.

About the Author

Anne Stuart, the former executive editor of Redmond Channel Partner, is a business technology freelance writer based in Boston, Mass.

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