Microsoft Converges Business Solutions Business

"At its Convergence 2005 conference in San Diego last week, Microsoft unveiled its ERP product roadmap, including details of its "Project Green" initiative to gradually unite the five core products sold through its Microsoft Business Solutions (MOBS) division. Project Green will be delivered across two waves, the first of which has already begun. Microsoft also announced a new five-year support policy for all MOBS products, replacing the previous three-year support policy."

Microsoft as a whole set revenue and profit records for the last quarter, but the MOBS segment grew revenues only five percent, to $206 million, and its net loss grew to $23 million -- a loss approaching 10% of sales. This is obviously a disappointment for Microsoft, which trails predictions it would leverage Great Plains, Navision, Solomon, retail POS, and CRM applications into a juggernaut to challenge SAP and Oracle applications -- at least in the mid-market.

Convergence will (eventually) cut costs because fewer support resources will be needed five-plus years from now. More importantly, Microsoft needs to rationalize its sales channel: five products now use five channels to go to market. This is not efficient for Microsoft or for the resellers who are competing at the local level.

Bottom Line: Will not help customers, channel partners, or Microsoft any time soon. But it's the right thing to do in the long run. Potential customers will have to consider a migration somewhere down the road -- but Microsoft is not alone with the prospect of migrations down the road!

Peter S. Kastner