REDMOND, Wash., March 1, 2004 — At the helm of Microsoft’s strategy for Independent Software Vendors (ISVs) is Mark Young , general manager for ISVs in the Microsoft Platform Strategy and Partner Group. Since taking on this role prior to Microsoft’s Worldwide Partner Conference last year, Young has been focused on engaging with Microsoft’s broad ISV community and enhancing Microsoft’s model for delivering both technical and business enablement programs to meet the growing needs of ISVs and their customers.
Of the multiple technology enablement programs and platform initiatives available to ISVs, one technology in particular that Young’s group remains focused on is Microsoft .NET — a set of software technologies based on Web services that enable ISVs to reduce costs and drive a higher return on investment in their development resources. The flexibility provided by the Microsoft platform and Web services makes it particularly easy for industry partners to develop solutions that can cross applications, network and business borders to connect information, people, systems, and devices.
In the months leading up to Microsoft Worldwide Partner Conference 2004, ISVs will continue to see increasing investment in partner enablement from Microsoft across its entire platform. To learn more about the growing market opportunities on the horizon for ISVs, PressPass spoke with Young, along with John Hiraoka , senior vice president of Epicor Software Corp., and Guy Miasnik , CEO of AtHoc. Both companies are ISV partners with Microsoft.
PressPass: Can you briefly discuss your past experiences and how they’ve helped you drive changes in Microsoft’s ISV strategy?
Young: In the seven years I’ve worked at Microsoft, I’ve had a variety of positions. Since 2000, I’ve worked on the business development of the .NET initiative, which involved working closely with large enterprises like Citigroup, eBay and Verizon, helping them figure out the best fit for Web services within their IT environments. Consequently, I’ve come to understand the needs in the enterprise space from the ISV perspective. Enterprises are looking for specialized solutions, as opposed to applications, that can tie together disparate data company-wide. They’re also looking for solutions that will make their business processes more efficient, that address needs specific to their company or their industry, that are manageable and secure, and that allow businesses to connect seamlessly with each other.
In my current position, I’m responsible for global platform evangelism and ISV strategy. When I took the job last July, I went on the road and sat down one-on-one with mid-market customers in every vertical industry I could find — special services, manufacturing, retail, healthcare, etcetera — to get a better understanding of what mid-market customers want and need. What I found was that their needs are similar to those in the enterprise. In fact, their need for specialized solutions was even stronger. Based on the customer and ISV feedback, we recognized a variety of opportunities for ISV partners. We’ve worked on applying what we learned to all of our programs and practices, from our development of products and technologies to our evangelism efforts all the way through our go-to-markets, licensing, and sales and marketing efforts.
PressPass: How have changes in the IT landscape affected ISVs and their customers?
Young: It’s challenging for ISVs to be profitable, given the past market conditions and the required investments in developing software for more specialized solutions. IT spending has been down for so long that companies are really getting behind on satisfying the business needs that technology typically helps to solve. Additionally, in reaction to what some view as excessive IT spending in the past, customers are looking for the most strategic, efficient use of their IT budgets.
Hiraoka: What we’ve seen at Epicor is that customers are dealing with issues like the flexibility and agility of applications, and how to implement mobile clients — not to mention the standard improvements in technology. Also, under the Sarbanes-Oxley Act, there are new business compliance requirements which impact publicly traded enterprises and mid-market companies. So companies are looking for the agility and flexibility in their business systems that .NET offers — especially mid-market companies that do not have large IT staffs. As Mark noted, the onus is on ISVs to provide the expertise to address the specific needs of their customers.
Young: It should also be noted that there was increased IT spending in the fourth quarter, and I think the news is even better going forward, especially in the small and mid-markets. But since almost 70 percent of the cost of IT in enterprise is labor, not software, then there’s an upside for vendors and ISVs even if IT spending goes down. There is an opportunity there to take the complexity out of that software, make it easier to deploy and add more value.
PressPass: What about the perception among some ISVs that Microsoft’s acquisition of Navision and Great Plains encroaches on their turf?
Hiraoka: Since the acquisitions, we actually have gotten more attention and better communication from Microsoft. It’s a transparency issue. As ISVs, we have pushed very hard for Microsoft to create a level playing field for all of us, to let us know the roadmap of where they are going. Then we can decide where we want to be competitors and where we want to be partners. That way, we can coexist.
PressPass: How does Microsoft hope to enable business success for its ISV partners in new and existing markets?
Young: We plan to step up not only technology enablement and training of our ISV partners but also go-to-market efforts. And not just focused on a couple of hundred ISVs, but all the ISVs Microsoft works with. Independent Data Corp. estimates more than 80,000 ISVs worldwide, so it’s a big challenge, but one we’re very committed to.
In the next few months, we’ll ramp up this go-to-market or sales and marketing activity, and then at the Worldwide Partner Conference in July we’ll officially roll out some additional programs.
On the program front, we are focused on working with ISVs to accomplish four goals. The first is allowing ISV partners to connect and extend customer offerings. If you’re an ISV selling to a new customer, you really have to be able to connect to what they already have. If you’re selling more to a current customer, you have to find ways to extend what you’ve helped them develop in the past. In both cases, working with existing systems today often means implementing Web services. For Microsoft and its industry partners, that means using tools, servers and smart clients that are based on .NET technologies and enable solutions to cross network and business borders, regardless of the platform or programming language.
The second goal is driving user productivity. Every ISV and every customer has examples of software that they bought, and had great expectations for, that never got used. An example of this is one of my largest enterprise customers which at one point had 112 CRM systems worldwide. It’s a very common problem. To counter this at the platform level, we’re working with ISVs to think about using smart clients, which connect the desktop client to multiple back-end services, and enable workers to quickly access the information they need to make timely business decisions.
The third goal is evolving existing applications, to increase customization and build an application that allows you to sell to small businesses and to enterprises without just repackaging and repricing, but by actually building a product that’s easily customizable by the ISV, the customer, or the business partner. It really has to do with developing a more prescriptive, service-oriented architecture that enables ISVs to build applications that move up and down the market segments and deliver the product that is best aligned with the customer’s needs.
The fourth and last goal is continuing to make applications even more manageable and secure. One example of our current efforts is the Virus Information Alliance, a virus information sharing program which, as announced at last week’s RSA Conference, has doubled in size to include 10 industry-leading anti-virus vendors in addition to Microsoft. In the next year we plan to add evangelism efforts around building secure applications, and will work very closely with our partner ISVs and other industry partners to make progress toward developing applications and platforms that are secure.
PressPass: What is Microsoft doing to enable business success for smaller ISVs?
Young: In addition to creating more market demand for the Microsoft brand, we’re making a number of changes to provide a more predictable, easy-to-use program engagement model for our ISV partners. In January, we launched Channel Builder, which is a program that helps ISVs take advantage of the Microsoft channel by finding other channel partners to resell their applications. And more than 5,500 ISVs are participating in Empower, a two-year program focused at early-stage and smaller ISVs that offers five MSDN (Microsoft Developer Network) licenses for less than US$500, as well as access to servers to do testing and build applications on. It’s a great way for new ISVs to get on board.
Miasnik: From our perspective, the relationship with Microsoft was pivotal in our getting Boeing as a customer. Boeing approached AtHoc and asked us to present our notification product. They liked it, but they had doubts about relying on a small company like us to provide them with a notification system. So we brought in our account manager from Microsoft who joined in our discussions and promoted our use of Microsoft technology. The relationship with Microsoft and the fact that Microsoft was standing behind the technology helped give us the credibility to close the deal.
PressPass: Any other Microsoft programs aimed at helping ISVs succeed?
Young: We’ve started a number of more opportunistic programs to address the demand from ISVs that feel abandoned by their current platform provider or who desire to capitalize on our incumbency and strong position in the Small and Midsize Businesses (SMB) segment. We are working to help ISVs and their customers migrate from UNIX, Linux, and IBM AS/400 platforms to Windows. In the fourth quarter alone, we saw more than 2,500 ISVs signed up to develop on Windows Server 2003 and see that momentum continuing moving forward.
Miasnik: I would add that some of AtHoc’s clients insist on a complete Microsoft solution. We started our product with an Oracle database on the back-end, but some of the clients said they wanted a SQL Server, because we had already given them a Microsoft solution or Microsoft platform on Windows Server. To help AtHoc develop our solution, Microsoft put their resources to work by providing expert architectural guidance and people to help us develop a SQL Server back-end. Providing the entire solution on a single vendor platform helped us achieve better development efficiencies and meet our customer demands.
Hiraoka: At Epicor we believe that companies are moving away from trying to integrate four or five best-of-breed applications in favor of a single-vendor solution that can provide single-point accountability. That way, they can pick up the phone and call one vendor who can figure out how to make it work. It’s even better when that vendor has a very strong relationship with the technology platform, such as we do with Microsoft. The customer is really able to get much better value out of the software applications and the technology platform.
PressPass: How have ISVs responded to the programs and continued investments in Microsoft’s ISV engagement?
Hiraoka: Our relationship with Microsoft has done nothing but improve. Programs like Channel Builder are very important to us. The program means our technologies can be driven out not only through the traditional Microsoft partner channel, but also more importantly through the Microsoft Business Solutions (MBS) channel — a large group of partners that understand the needs of business. That creates additional opportunities to build our business, and it translates to faster time to market, delivery of applications that businesses care about and it drives revenue for both Microsoft and Epicor.
Miasnik: When you’re starting up an ISV, finding your way around a giant like Microsoft can be challenging. One of the things that Microsoft launched is the Emerging Business team, which effectively assigns an account manager to work with younger companies to help facilitate the relationship with Microsoft. Having dedicated resources that help direct us to the right groups and opportunities is very, very valuable to us.
Young: Our partner satisfaction is at an all-time high right now. We’ve been a partner-driven company from the very beginning and we’ve done a lot well. However, we know that we need to continue to improve and do more. We’re confident that the new programs we’re launching will provide tremendous value to our partners and address their needs.