Microsoft buy-up focused on platform only says official

Orlando Ayala

Microsoft's buy-up of mid-market enterprise application providers such as Great Plains and Navision has analysts and customers wondering where it will end.

Is Redmond after the large firms who buy systems from SAP, Oracle and PeopleSoft, or does it just want to sell knock-off versions to the rest of the market?

Orlando Ayala, senior vice-president in charge of Microsoft's small- and mid-market solutions and partner group, said that was the wrong way of looking at it.

"This is not an applications play. This is a platform play. We have been a platform company since day one," said Ayala, who was in New Zealand to open Microsoft's new technology demonstration centre.

He said the functionality of what was in a standard enterprise resource planning (ERP) suite - the general ledger, the human resources tools, the analytics and so on - was becoming commoditised, with or without Microsoft.

What was important to Microsoft was the tools people used to put those applications together, and the operating systems, databases and application servers they used to run them.

He said the latest version of Navision Axapta included a set of APIs (application programming interfaces) dealing with the way life sciences companies such as drug manufacturers needed to deal with regulators, and other industry-specific conditions.

"We added these APIs on the Axapta code base so ISVs [independent software vendors] can build on top of it," Ayala said.

"Microsoft needs to go more vertical, to understand industries better. The way to do that is to create an ISV base in new verticals, while we will continue to create horizontal functionality in the product."

He said Axapta already had the largest range of industry solutions of any product because of the work done over the years by Navision implementers and partners.

Development of the applications platform would come in three waves, which were designed to lower the cost of buying and running the software and making it more flexible and easier to install.

Ayala said a big chunk of Microsoft Business Systems' US$300 million ($419 million) research and development budget was going into integrating the applications with Office and Outlook, the most widely used business desktop software.

"We have an installed base of 300 million on Office, so it is natural to believe people working in Outlook and Office will be excited to use those same tools to extract data from the ERP database.

"The second wave is Yukon, the next version of SQL Server 2005. The scalability will not necessarily come from the ERP package but from how the developers will write to that database."

The third wave would feature the new bells and whistles Microsoft was promising in its new Longhorn operating system, due sometime towards the end of the decade.

"If we do not do this stuff we are dead. SAP will come with a new generation eventually, which will provide for easier installation.

"We take a different approach from SAP in terms of 'how hungry the cat?' They have a very hungry cat ... this stuff is eating all these hours, very expensive hours. That is their business model.

"If they want to come down into the mid-market, they have to move down from this hungry cat," Ayala said.

"That is where we will come at them, from lower cost of ownership, shorter time to implement."