Microsoft to Add "Encore" Functionality to MBS Great Plains 8.0 Part One: Event Summary

Event Summary

On April 27, Microsoft Corporation's (NASDAQ: MSFT) Microsoft Business Solutions (MBS) division announced the acquisition of accounting products from a Winnipeg, Manitoba, Canada-based vendor, Encore Business Solutions, Inc., that could be critical to the success of the customers and partners in the public sector. The acquisition includes Encore's not-for-profit (NFP) accounting products and the intercompany payables management and requisition management modules, some of which have currently been sold by MBS under an original equipment manufacturer (OEM) agreement with Encore. Namely, the only modules that have been OEM-ed so far have been the purchase order enhancements and cash flow management functionality, but these are not a part of the NFP solution.

As a result, MBS Great Plains 8.0, scheduled for release this summer, will also include functionality essential for MBS and its partners to conduct business in the public sector, such as grant management, fund accounting, and encumbrance management. According to both companies, in North America alone there are an estimated 2.3 million public sector entities, which include government, not-for-profit, education, and healthcare organizations. Since Encore and MBS have identical support policies, they insist customer support will be provided for the current and previous versions of all modules. Also, Encore's code has been developed with the same developer toolset as MBS Great Plains, which should make it an attractive opportunity to enhance existing horizontal financial management applications.

The announcement follows closely on MBS's recent provision of details on its strategy to enable independent software vendors (ISV) to build additional industry-specific solutions by focusing on providing an extended platform and applications. MBS believes that enhancing the core horizontal functionality in MBS Great Plains 8.0 by offering an industry-enabling layer for organizations in the public sector is a vital step in taking action on the strategy it recently outlined.

The vendor claims this will let its ISV partners go further with it as they will be building on top of a more robust foundation, while they will have greater opportunities to really focus on their specific areas of expertise and develop applications that address the challenges of organizations in the public sector. Encore's code acquisition might be reflective of MBS's two-fold vision for business applications:

1) develop applications for small and midsized companies with an emphasis on ERP and CRM solutions; and

2) extend the Microsoft platform with business applications at the core horizontal functionality level, providing greater opportunities for ISVs to develop deeper and richer vertical functionality.

This platform focus should offer ISVs multiple opportunities to engage with MBS, since they can

1) connect their products to Microsoft's suite of solutions;

2) leverage their products to extend the core functionality of the Microsoft business application; or

3) embed and sell a complete solution that includes Microsoft's products as well as their own. ISVs can also engage even directly at the platform level if they choose not to use MBS's tools.

This is Part One of a three-part note.

Part Two will discuss the Market Impact.

Part Three will cover Challenges and make User Recommendations.

Convergence 2004 Report

At the end of March, during its annual conference for North American customers, Convergence 2004, Microsoft Corporation's (NASDAQ: MSFT) Microsoft Business Solutions (MBS) division previewed upcoming versions of its enterprise resource planning (ERP) and customer relationship management (CRM) solutions: MBS Axapta, MBS Great Plains, MBS Navision, MBS Solomon, Microsoft CRM, and related services. The main takeaway was that MBS continues to invest in its current offerings to provide customers with the enriched functionality they need to remain competitive in today's evolving marketplace and exploit their existing information technology (IT) investments by streamlining business processes and by more easily accessing the information they need to make educated business decisions.

To that end, mainly incremental releases across the above MBS product assortment during 2004 are aimed at improving features, particularly manufacturing and distribution capabilities, further integrating the MBS portfolio with other Microsoft products, especially Microsoft Office and other desktop and productivity applications, and fostering better cross-integration amongst most MBS products. Logically, there will hardly be any effort in 2004 to consolidate overlapping product functions within the product set, while far-reaching technology and architectural changes within the established ERP product lines are not the short-term priority either.

Long-term plans thus belong to the Project Green, which will supposedly feature all MBS products on a single, global code foundation built on the Microsoft Business Framework and .NET Framework, some time in 2006 or later, when Microsoft is also aiming at coordinating the delivery of its next-generation Longhorn OS platform.

Given the nonetheless immense development undertaking, which began at MBS even before its strategy was espoused in 2002 (see Microsoft Lays Enforced-Concrete Foundation For Its Business Solutions), the incremental approach towards building a more complete enterprise applications portfolio seems logical, if not the only possible option. MBS strives to hereby not only retain the existing install base within the maturing ERP product lines, but also to stimulate the acceptance of recent product additions, some of which are featuring parts of the latest technology mentioned above, and drive sales or upgrades of high-volume products like Office 2003 within MBS's large install base that is nearing the 300,000 mark.

Microsoft Great Plains 8.0

One of the most notable enhancement roadmaps belongs to Microsoft Great Plains 8.0, a cross-industry ERP solution for the mid-market business segment, which will contain over 120 feature enhancements to deliver richer distribution, manufacturing, payroll, and project accounting functionality; a Microsoft Office "look and feel" and seamless integration to it; a deeper focus on the MBS Business Portal (MBP) functionality, which is depicted further on; better access and control of data and expanded reporting capabilities; and improved usability in terms of intuitiveness and navigation and of streamlined productivity enhancements. For example, the Letter Writing Assistant feature, which will work similar to and within Microsoft Word, should enable users to identify and select specific customers for certain mail campaigns and promotions.

Microsoft Great Plains has for some time been offering broad-based out-of-the-box functionality and a wide set of independent software vendor (ISV) solutions, aimed at mid-size enterprises, with an emphasis on some service industries (e.g., accounting and consulting firms), manufacturing, and retail or wholesale (for more info, see How Great is Great Plains' Manufacturing Offering (Did Somebody Say Microsoft)? , and Great Plains' Latest Product Offering—Ready to Stampede the SME Market?). Currently, the product has over 32,000 customers primarily in North America and Latin America, and it has been sold through 1,600 resellers. Like its MBS Solomon and MBS Navision siblings, MBS Great Plains' modules are available in two editions. The upper-end edition, called Great Plains Professional, is aimed at organizations with 1005,000 employees and with $50$250 million in annual revenues. On the other hand, the Great Plains Standard edition is based on the same code base as the "bigger" product, but it features fewer modules and is geared toward businesses with as few as ten or fewer users, to ninety-nine users. General availability for Microsoft Great Plains 8.0 is expected in North America in July 2004.

As mentioned earlier on, the above enhancements are in part related to the release of the Microsoft Business Portal (MBP), a web- and role-based portal application for two of MBS's ERP solutions, MBS Great Plains and MBS Solomon, which will albeit in the long run become the primary user interface (UI) for all MBS's enterprise applications. The idea behind MBP is to extend an organization's ERP solution to provide business intelligence (BI) and processes to all employees, helping companies reduce information support costs, providing greater access to information and enabling users to complete common tasks more easily. The product uses modular components called Web Parts to format and display information tailored to particular individuals and their roles within the enterprise.

Microsoft Business Portal 1.2

To that end, the Human Resource Management (HRM) Self Service Suite for Microsoft Business Portal 1.2, which was released in August 2003, was designed to help employees review their HR and payroll information and complete common tasks, such as filling out and approving timecards, submitting requests for time off, reviewing paycheck and benefit information, and more easily changing their employee profile information. The HRM Self Service Suite consists of five modules: Employee Profile, Employee Pay, Time and Attendance, Recruitment, and Skills and Training, and it works with MBS Great Plains US payroll and HR applications. The KPI module, on its hand, offers executives and other decision makers at-a-glance access to the key business metrics they need to help them reasonably quickly assess the health of an organization and take action when conditions change. Key performance indicators (KPI) can be expressed in graph or chart form and can include green, yellow, and red alert conditions to identify critical areas of concern. The module enables executives to drill down into the underlying data for further analysis, and has been available for both MBS Great Plains and Solomon. Microsoft Business Portal 1.2 also included the ability to deliver reports created with MBS Analytics -- FRx through the portal, so users can more easily access the financial and business reports they need to accurately gauge financial conditions and make better-informed decisions.

MBS Business Portal 2.0, announced early in 2004, brought the product's underlying technology in line with Microsoft's most contemporary portal technology Windows SharePoint Services (WSS), while the earlier releases leveraged the maturing and outgoing Digital Dashboard Resource Kit, which in turn uses Web Parts based on the Active Server Pages (ASP) technology rather than on the newer ASP.NET. Although the MBP 2.0 release had no new functional enhancements, its importance lies in the increased security, performance, and stability that ASP.NET-based web sites inherently bring, and in getting MBS in line with Microsoft's overall corporate portal strategy. Further, moving to WSS has resulted with new enhancements such as sharing and collaborating on documents, creating new pages and parts more easily, adding Microsoft Excel graphs to portal pages, adding sites for projects and meetings, and connecting to external data sources. However, MBS Business Portal 2.5, slated for the second half of 2004, will feature requisition management for equipment and services, project self-service capabilities including time and expense (T&E) management, electronic document delivery, enhancements to HRM self-service, and seamless integration with the Microsoft Office Solution Accelerator for Sarbanes-Oxley.

This concludes Part One of a three-part note.

Part Two will discuss the Market Impact.

Part Three will cover Challenges and make User Recommendations.