MBS ramps up regional operations

Although Microsoft Business Solutions (MBS), Microsoft's ERP and CRM division has managed to secure a large customer base in the past two years, it has yet to become dominant in the highly competitive ERP space. To tackle this, MBS is restructuring its operations and gearing up to launch a barrage of enterprise apps.

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By  Maddy Reddy Published  November 30, 2004

|~|left_Joedevassy_rightSohaka.jpg|~|(L to R) Joe Devassy, SMS&P manager at Microsoft South Gulf with Soha Kamal, regional product group manager at MBS Middle East & Africa.|~|Microsoft Business Solutions (MBS), the enterprise resource planning (ERP) division of Microsoft, is ramping up its activities in the Middle East. Starting with the recent launch of Great Plains 8.0, the software giant is introducing a slew of new products, besides restructuring its operations in an attempt to secure a larger slice of the mid-market ERP pie.

“We are investing heavily and growing fast in the region. The Middle East & North Africa has a growth of over 80% and we contribute nearly 10% to the global revenues of MBS,” says Soha Kamal, regional product group manager at MBS Middle East & Africa. “We are committed to delivering solutions that meet the needs of our customers in the Middle East, now and in the future,” she adds.

By targeting small-to-medium sized businesses (SMBs), which in Microsoft’s regional taxonomy are companies with 25 to 250 PCs, the payoffs are certain, as SMBs account for an IT spend of more than US$218 million annually. Although MBS has managed to secure a large customer base over the past two years, it continues to bleed (see table below), as it tries hard to make a dent in the highly competitive ERP space. The vendor, however, says otherwise. “MBS is a new division and the operating losses are due to acquisition-related costs, increases in sales and marketing expenses, and R&D expenses. In the region, however, we are doing very well,” says Kamal.

In order to avoid being written off as a subsidised division of Microsoft, MBS has publicly declared a sales target of US$10 billion by 2010, from its current global sales of US$667 million. There has also been a restructuring process. For instance, in July 2004 Microsoft combined its SMB sales force with MBS to form a small and mid-market solutions & partners (SMS&P) organisation.

However, Microsoft is now planning to include the SMS&P organisation in its Information Worker division, which is responsible for the MS Office 2003 system. “We have fully integrated into the Microsoft infrastructure locally. Now it’s no longer a few people handling the MBS, but the entire Microsoft handling it. MBS is now integrated with all the divisions of Microsoft and employees are working closely with MBS,” says Kamal.

This could be a tough move for other ERP vendors to match, considering that Microsoft has more than 1000 certified partners, besides its own army of dedicated sales staff. Joe Devassy, SMS&P manager at Microsoft South Gulf, says it is a move in the right direction.

“MBS and Microsoft are one company. When our sales people are going and selling MS Office and Windows, they are also selling the ERP solutions and the CRM. It is one sales force, and we are retraining our sales in certain areas to create a single interface for all our customers. All sales people in Microsoft have the same objectives as MBS,” he adds.

Furthermore, the vendor claims to have increased its regional marketing spend for MBS by 20%. The move may help MBS increase its revenues, but the challenges will remain. Two years ago, the Redmond-based software giant unveiled plans for Project Green, which would create revamped business applications aligned with Longhorn, the next major release of Windows. Despite Longhorn’s continued delay, MBS has no plans of giving up.

“We have the resources of Microsoft. We are able to do what a lot of vendors cannot do — have huge R&D budgets [over US$6.8 billion in 2004] for all four MBS products, including CRM. All of them are getting funds and we have a separate spend on Project Green,” says MBS’s senior director for product marketing & partners, Jon Pratt.

To keep the momentum going until the launch of Longhorn, MBS already has a relentless 2005 roadmap. Great Plains 9.0 and Business Portal 3.0 will be launched in the fourth quarter of 2005. Similarly, the launch of new versions of Solomon 6.0, Navision 4.0, Axapta 4.0, Microsoft CRM and retail management system (RMS) version 1.2 are in the pipeline.

The company has already launched Arabised solutions, which include Info Path 2003 and MBS CRM 1.2. Just in terms of sheer volume and frequency, this could be difficult for the traditional ERP vendors to match.

With the Middle East’s ERP market estimated to be worth US$141 million this year, research firm IDC is predicting double-digit growth in the coming years. MBS shares this optimism. “There is lot of market opportunity. We can capitalise on this as the market is fragmented and there is no market leader,” says Kamal. ||**||

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