REDMOND, Wash., April 6, 2004 — Microsoft Business Solutions today provided additional detail around its platform and independent software vendor (ISV) strategy — with the vision of delivering a higher level of integrated innovation through an “industry-enabling layer” that can enhance and expand opportunities for its business partners,. The strategy offers ISVs who are building vertical applications the chance to focus their development efforts, and brings a new level of opportunity to develop applications based on their industry expertise.
To gain insight into Microsoft Business Solutions’ vision of the business applications market segment, the significance of ISVs to Microsoft, and the growing value of the Microsoft platform, PressPass spoke with Dave O’Hara , vice president, business development, Microsoft Business Solutions.
PressPass: The manner in which Microsoft Business Solutions works with the ISV community is driven by Microsoft Business Solutions’ overall strategy in the business applications market. What is that strategy?
Dave O’Hara: Microsoft’s strategy in the business applications market segment includes two key components. First, a deep commitment to developing and delivering leading-edge business applications — specifically in the areas of financial management, supply chain management (SCM), customer relationship management (CRM) and analytics. Second, and of equal importance, is our commitment at the platform level. We consider our solutions an extension of the Microsoft platform, focused on business applications.
This platform commitment is our heritage — Microsoft is now and has always been a platform company. Both Great Plains and Navision, acquired by Microsoft in, respectively, 2001 and 2002, and the foundation of Microsoft Business Solutions, had a similar view, focusing on building an ISV community around their business applications platforms. There were strong synergies among those organizations, and we’re building on those synergies as we go forward as one to work with our ISV partners to create solutions that add value for businesses worldwide.
PressPass: What is core horizontal functionality?
O’Hara: Microsoft Business Solutions thinks of horizontal functionality as the plumbing beneath a business application, essential functionality that is needed across all industries. An example is a general-ledger application — every business today needs a way to manage what monies are coming in and going out of their company if they want to stay in business. Microsoft Business Solutions wants to deliver this core, essential functionality in our applications to small, mid-market, and corporate businesses worldwide.
If you think of our platform vision, this core functionality then becomes a toolset for ISV partners. For them, it’s important to differentiate their solutions and help them create a compelling solution that provides their customers additional value. It’s challenging to accomplish that when an ISV is also challenged with building the core elements, like a general ledger, for example. So we offer ISVs these basic elements as a starting point to build upon to deliver a rich, specific solution for their customer bases.
PressPass: Have you not added on to this core horizontal layer with an industry focus?
O’Hara: Yes. We offer an industry-enabling layer to provide additional support to ISVs as they seek out opportunities in vertical industries. The industry-enabling layer includes additional features needed to serve an industry. For example, project accounting is needed widely in professional services. We consider functionality to be part of the industry-enabling layer if more than half of the businesses in an industry require common features. Our intention is not to provide deep vertical functionality — we want to create opportunities for partners in this area. We have a partner-led strategy for vertical markets, enabling ISVs to focus on their domain expertise, specific industry applications or deeper vertical functionality, providing the value-add solutions that customers expect.
PressPass: You speak of core horizontal functionality and this industry-enabling layer, but doesn’t Microsoft Business Solutions offer specific verticalized industry solutions?
O’Hara: The majority of our applications focus on the broad-based functionality needed by the majority of businesses today. These include financial management, CRM (customer relationship management), SCM (supply chain management) and analytics solutions. The industry-enabling layer extends our horizontal offerings to provide a deeper level of core functionality across specific industries: right now, our focus is on manufacturing, wholesale distribution, retail and professional services. As an example, for wholesale distribution, Microsoft Business Solutions offers functionality that’s relevant for companies dealing with hard goods distribution for both industrial products and consumer packaged goods. These broad industries can be segmented into numerous deep verticals — these are all areas of strong opportunity for our ISV partners.
PressPass: What does all this mean for ISVs?
O’Hara: It means our ISV partners can go further with us. They can deliver more of what customers expect, because they are building on a more robust foundation. Our partners have greater opportunity to focus on their specific areas of expertise, by developing applications that address the challenges of organizations in specific industries. Take manufacturing, for example: all manufacturing businesses need to manage their financials and material flow. Microsoft Business Solutions delivers that capability with horizontal and industry-enabling functionality. But, for example, what manufacturers of medical devices really need in order to positively impact the experience of their customers are applications that automate regulatory compliance — not baseline manufacturing functionality. By providing the baseline functionality, Microsoft Business Solutions empowers ISVs to focus on developing the kinds of applications that address customers’ deepest industry challenges. Ultimately, offering our ISVs industry-enabling functionality allows them to better serve their customers.
PressPass: Microsoft has articulated its commitment to delivering what it calls integrated innovation. Why is that important to ISVs?
O’Hara: In this instance, integrated innovation means working very closely with our community of industry partners to provide a platform that they can use and extend to make their own compelling and customized solutions. It’s another value-add we offer ISVs. The integrated innovation Microsoft and ISVs can make possible is a direct result of Microsoft’s technology stack. Microsoft’s overall technology stack is a true differentiator for our ISV community because it sets them apart from other ISVs. The technology stack is built on a foundational layer of servers that store data, client, and productivity solutions such as Microsoft Windows XP and Microsoft Office 2003, and ERP and CRM applications designed specifically for small and mid-market segment businesses. That’s a powerful combination. By providing a superior technology stack — from development tools, an industry-standard platform, business and productivity applications, and services — Microsoft and its network of ISVs can build long-term relationships with customers.
PressPass: Can you explain the programs you offer for ISVs looking to build on Microsoft Business Solutions platform?
O’Hara: As of July 1, all Microsoft Business Solutions ISVs will be part of the overall Microsoft Partner Program efforts. This provides a more streamlined value proposition, including better options in terms of marketing support, distribution and networking opportunities. We are also working on a more formal embed program — which is still being finalized. As a part of this program, ISVs who make a financial investment with Microsoft will be able to embed Microsoft Business Solutions functionality into their own line of products. An example of how this works today is Incadea GmbH, a global ISV headquartered in Germany. Incadea was acquired by The Reynolds and Reynolds Company in October 2003. Incadea develops automotive retail software that is now used by more than 5,500 auto-dealership personnel in more than 300 dealerships across 23 countries. Incadea AG needed the basic ERP elements but didn’t want to invest in developing its own. Instead, they build their software, called the incadea engine, on Microsoft Business Solutions — Navison. The Incadea solution is considered a unique, industry-first solution for automotive retailing. Based on Microsoft Windows and Microsoft Navision ERP software, it is supported by Microsoft and a multi-continent network of partners who customize it with OEM-specific layers. A key benefit is that the platform can be rapidly localized and deployed on a large scale across multiple countries and languages.
PressPass: Will availability of the embed program be exclusive to Microsoft Business Solutions ISVs?
O’Hara: No. The embed program will be open to any and all Microsoft ISVs who are willing to go through the process of training and certification. Microsoft Business Solutions currently works with approximately 900 ISVs that are trained and certified.
PressPass: Besides this embed model, what types of engagement opportunities are available to ISVs by working with Microsoft Business Solutions?
O’Hara: We are committed to offering ISVs the broadest market opportunity, the best product development model, and maximum customer reach. ISVs have multiple opportunities to engage with Microsoft Business Solutions, focused around three key models: connect, extend and embed. With the connect model, ISVs can develop and provide integration links for solutions that share data with Microsoft business applications. An example of this would be mailing and shipping applications which share data with Microsoft Business Solutions ERP or CRM products. With the extend model, ISVs can extend the core functionality provided by Microsoft to support more sophisticated business processes and more complex industry solutions. An example would be solutions for apparel manufacturers which partners build as extensions to our core horizontal products. Finally, as outlined above, ISVs can embed and sell a complete solution that includes Microsoft’s and the ISV’s products in a single package. Again, to use the Incadea example, Reynolds and Reynolds, a global ISV headquartered in Dayton, Ohio, wanted to expand its U.S. market for integrated automotive retail solutions, including change-management and profit-improvement tools. Reynolds purchased Incadea AG based on the solid inroads in the European market made by Incadea’s use of Microsoft Navision in its product. Reynolds is now confident that its combination of technology, solutions, automotive retailing experience, and global capabilities will be hard for its competitors to match.
PressPass: Does Microsoft Business Solutions assist ISVs in taking their applications to market?
O’Hara: Definitely, in a variety of ways. This is really the primary purpose of the introduction of the new Partner Programs. They represent the sales and marketing engagement opportunities ISVs have with Microsoft, and Microsoft Business Solutions is a key part of that. For example, we have co-marketing programs in place today. Another way Microsoft Business Solutions assists with market efforts is by bringing a strong brand association to the relationship. Microsoft is a highly recognized, valued brand, and basing applications on Microsoft technology gives ISVs a competitive edge they wouldn’t have if they partnered with a less recognized organization.