• Sidebar: Stampede 2002 Product News

In an effort to streamline a confusing array of product lines, the Microsoft Business Solutions (MBS) division (formerly Microsoft Great Plains) is making some branding changes and publishing a standard price list. Although these changes will reduce customer confusion, they could make it more difficult for resellers to differentiate themselves. Microsoft has also announced a new financing plan which could help resellers make sales in a tough economy and eventually help them transition to a more stable subscription-like revenue model.

The changes were announced at Stampede 2002, an annual conference for MBS resellers held in September. Microsoft also demonstrated several forthcoming products at the conference, but most of these products had been announced previously, and several of them are still in development with features, pricing, and availability not yet finalized. (For an overview of these product announcements, see the sidebar "Stampede 2002 Product News".)

MBS Becomes Umbrella Brand

MBS has consolidated brands to reduce customer confusion and emphasize that its wide array of business management products all come from the same company—Microsoft. Previously, MBS included five major product lines and brands: eEnterprise, Dynamics, and Solomon, acquired when Microsoft bought Great Plains in Apr. 2001; and Attain and Axapta, acquired with Microsoft's purchase of Navision in July 2002. (See "Navision Deal Continues Move into Business Applications" on page 5 of the June 2002 Update.) In addition, MBS offers products that are not part of any of these product lines, such as Small Business Manager, an accounting and business management package for small businesses.

Now, all MBS products will begin with either the Microsoft or MBS brand, followed by a descriptive name, and ending with the product line ("Edition") where appropriate. Applications formerly in the eEnterprise and Dynamics product lines are now simply called "Great Plains Edition" applications. Applications formerly in the Attain product line will now carry the name "Navision Edition" to capitalize on the better-known Navision brand.

So, for example:

• "Microsoft Great Plains eEnterprise Financials" becomes "MBS Financials, Great Plains Edition"
• "Microsoft Great Plains Solomon eCommerce" becomes "MBS eCommerce, Solomon Edition"
• "Microsoft Navision Attain—Manufacturing" becomes "MBS Manufacturing, Navision Edition"
• "Microsoft Navision Axapta Logistics" becomes "MBS Logistics, Axapta Edition."

Standard Pricing and Discounting

To further enforce the unified brand, Microsoft will for the first time publish a standard price list and give consistent volume discounts for all MBS applications.

Generally, MBS applications are sold as packages of "modules." Under the new pricing scheme, individual modules with comparable functionality will have identical pricing regardless of which Edition they are. For example, a general ledger module will cost US$1,000 whether it's the Great Plains or Solomon Edition. (However, each Edition will offer different bundled packages of modules at different prices.)

In addition, MBS customers will now receive standard volume discounts for MBS user licenses and standard price breaks on SQL Server and SQL Server Client Access Licenses (most MBS products require SQL Server). Customers with other Microsoft volume licensing plans will be given additional discounts—5% off for Open customers, and 7% off for customers with Select or Enterprise Agreements.

Finally, in consolidating eEnterprise and Dynamics into Great Plains, MBS has eliminated a big price gap between the two product lines. This gap sometimes caused companies to purchase fewer seats than they needed so they could qualify for the lower-cost Dynamics line (the breaking point was usually about 20 seats).

Changes Impact Resellers

The changes will impact the approximately 4,000 resellers worldwide who make up the exclusive channel for MBS products.

On the plus side, the standard price list will shorten the "haggling" time involved in closing deals, as customers will no longer suspect that other customers are getting better deals on the same or equivalent software.

However, the changes could also make it more difficult for some MBS resellers to differentiate themselves from competitors in their geography. Many resellers specialize in a particular product line—a legacy of the fact that many of these product lines were once offered by independent and competing companies. As these product lines become mere "Editions" with the same price for similar functionality, resellers will have to emphasize other strengths, such as services, expertise in a particular vertical industry, or familiarity with other Microsoft applications.

Although there are still some functional differences between Editions (e.g., Axapta is better suited for large manufacturing organizations than the other Editions), this consolidation will continue. In approximately three years, all the MBS products will be standardized on a single code base, the .NET Business Framework, and the "Edition" names will disappear completely.

Total Solution Financing

To help resellers cope with these changes and a difficult economic climate, MBS has introduced a new financing program backed by MS Capital, Microsoft's new lending arm.

Under the new program, Total Solution Financing, MBS resellers can offer customers financing programs that cover all parts of the sale—not only software but also hardware and services. When each sale is closed, MS Capital will pay the reseller 100% of the sale price, and will assume the risk and responsibility of collecting payments from the customer.

Microsoft believes that the new financing program will help boost sales in a difficult economic climate and give resellers a big cash influx so they can train their sales forces on new products, such as Microsoft Customer Relationship Management (MSCRM), and new technologies, such as .NET. It could also help resellers transition to a more reliable periodic revenue stream, instead of the "feast or famine" cycle that many face today. Without backing from MS Capital, resellers would face a major cash flow problem as they tried to move from upfront payments to subscription-type licensing.

The new lending program places Microsoft at some risk: if many MBS customers default on these loans, the company might have to adjust its revenue expectations. However, Microsoft will be less exposed than other technology companies who have made heavy use of lending programs, such as Cisco, Lucent, and Nortel, because MBS applications constitute only a small percentage of the company's overall sales.

Using Microsoft's Sales Strength

Finally, MBS will work more closely with other parts of Microsoft to reduce duplication of sales and marketing efforts and to take better advantage of Microsoft's resources. Among other changes:

• In cases where a member of the Microsoft sales force recommends an MBS product, the sales person will share a quota for the product with the reseller. Previously, the Microsoft sales team had little incentive to push MBS products.
• Microsoft marketing initiatives will begin to incorporate MBS products. For example, Microsoft sponsors about 800 educational seminars per year for prospective small and mid-size business customers. These seminars previously focused on Office and other Office family products, such as Project and Visio; now they will feature MBS products as well.