Microsoft (Again) Woos ISVs For Small-Biz Push

This time, Microsoft pitched its Microsoft Small Business Accounting, due this fall, as an app-dev foundation. SBA will be available with or without Microsoft's Office productivity suite juggernaut.

Microsoft Business Solutions COO Orlando Ayala told ISVs gathered at Microsoft that the company needs them to create specialized vertical applications atop its core offering.

"Customer applications really are vertical and the verticalization really shouldn't come from us," Ayala noted.

Attendees also got a public peak at the recently shipped Software Developers Kit for the accounting product.

Small Business Accounting, aka Magellan, will take on Intuit's QuickBooks, a juggernaut in its own right in small businesses. Unlike QuickBooks, which allows users to adapt their paper trail in the accounting process, SBA will feature real accounting controls, several speakers said.

"Controls are very important, they help you see who touches the data last," said guest speaker Michelle Cable, a CPA and president of Cable Financial, a Seattle-based accounting firm.

Microsoft hopes to convince small businesses -- and solution providers who support them -- that its software stack is most cost-efficient for their needs.

At the low end of the market the company contends with QuickBooks and Peachtree Accounting. Further up, Microsoft's Great Plains lineup vies with other established accounting brands. Its stack also competes, in larger companies, against IBM's Java-centric middleware and applications from SAP, Oracle and others. Virtually all of these vendors are now making nice with ISVs in an attempt to win new marketshare and bolster their current positions.

"I hope you place your bet today with us as a company. We're actually quite obsessed with this opportunity," Ayala said. "I don't think we'll do 600 million customers [right away] but I hope we do 40 million," he said.

But Microsoft has a tough sales job among many ISVs that suspect the company will not leave them much maneuvering room as it moves its own capabilities up the stack.

To reassure them Ayala, along with MBS' Vice President of Business Development Dave O'Hara, and Microsoft General Manager of ISV Strategy Mark Young pledged the company will play fair.

"We can't pick a single ISV and make them the preferred vertical [provider]. When we talk about providing the core horizontal layer, our primary goal is to make sure people can build on us, that we provide whatever information is needed to help people understand what the real opportunities are, what are the underserved verticals and maybe horizontal applications," O'Hara said. "Our goal is transparency."

Rafael Zimbroff, for one, was impressed. Zimbroff is product manager for Z-Firm, a Seattle-based ISV focusing on accounting add-ons. He lauded the quality of SBA's SDK and early code. "This is not a typical Microsoft 1.0 product. What it does, it does perfectly well. There are features that are missing, like a payroll module, but I know very few companies that do their own payrolls anyway."

Z-Firm will continue to develop for QuickBooks, Great Plains, and other offerings, but will also do so now for Small Business Accounting, he said.

While the schpiel for Small Business Accounting was new, most of the overall message goes back a few years to when Microsoft decided it needed to both enter the business applications market and win ISV and solution provider partners with domain expertise.

Small Business Accounting will be available as a standalone SKU or as part of a new Office Edition For Small Business Management. The latter product will include the usual Office applications as well as updated Outlook 2003 with Business Contact Manager. The task and contact management application takes aim at Act and other PIMs, and will sport tight links to the accounting functions as well, Microsoft has said.

This story was updated Wednesday morning with ISV quotes.