There’s no concerted effort by Microsoft Corp. to aggressively pursue the ERP customers of J. D. Edwards. Microsoft Business Solutions vice-president Doug Burgum admitted as much during a lively question and answer session during the company’s Convergence 2005 in San Diego this week.
“We are not in a position to over-aggressively get people to migrate,” Burgum told a gathered group of press and market research analysts. “I respect that switching out an ERP system…is a big, big deal.
“Offering a discount on software is not the right way to go,” he added, explaining that Microsoft is not seeking to entice J.D. Edwards’ (JDE) customers through deep discounting of Business Solutions products. “If Microsoft is the right way for them to go, then that should prompt them to make the move. I think they’ll make their decisions to move when they’re ready.”
Speculation had been that Microsoft might aggressively seek to lure JDE customers, particularly now that Oracle recently purchased PeopleSoft, which had earlier bought JDE.
Burgum admitted he’s had numerous meetings with JDE user groups, including many individuals who expressed concern about the JDE product path for the future.
“Others may be more aggressive in their stance, but I don’t know if that’s going to resonate with JDE customers to make a move,” Burgum said, insisting that you can’t buy a customer base, even when you buy a company – a seemingly direct salvo aimed at Oracle.
Because Microsoft Business Solutions does not employ a direct sales organization, it’s totally up to the company’s reseller base of partners to sway any customer to the Microsoft solutions, Burgum insisted.
“We will rely on partners to present the Microsoft solution to (JDE) customers and if the fit is right, then they’ll make the move. “We have had JDE customers that moved before and after they were acquired by PeopleSoft,” he added. The Microsoft vice-president, however, declined to say how many JDE customers have switched to Microsoft’s solutions.
In other discussions during the hour-long session, Burgum downplayed a claim made that Microsoft Business Solutions would achieve US$10 billion in revenue by 2010. According to Burgum, the $10 billion figure was arbitrarily set as a target in 2001 in response to a question to a Microsoft Business Solutions official at the time, who suggested the market would be US$40 billion by 2010 – and in another discussion said that Microsoft hoped to garner a 25 per cent share.
“We [aspire] to have a specific share in a very big market,” Burgum said. “The aspiration is that [business applications] are a significant market and that we can play a strong part in that.”
The fact is that Microsoft Business Solutions remains in a formative stage and is not yet profitable. The base strategy of Microsoft in the business applications space is to continue investing in the solutions and to grow market share, Burgum said. The company is focusing development in new applications segments – a small business accounting product called Magellan, for example – and is also looking to drive stronger growth in global regions such as China, Japan and Europe.
“We would expect with those investments…our revenue line will grow faster than our expenses, which it has in the last four years,” Burgum said. He explained that revenues are not yet outperforming expenses, but he expects “the lines will cross” in the next few years. The company is satisfied with current revenue growth, which Burgum described as being two to four times faster than growth in the business applications market itself.
Finally, he suggested that application services might be in the offing for Microsoft, but that the company has not “announced” plans for any type of software services – at least for the time being. Burgum said that there are partners who currently deliver such offerings of Microsoft Business Solutions products, although Microsoft officials from Canada suggested there are few, if any, here.
Burgum admitted, however, that his company may look to enter the hosted applications market. “We think at some point in time, there will be better bandwidth to support this, but not today,” he said. “We’re planning for it, but not entering it directly today. Were very bullish on the role of Microsoft services in the future. We feel we have some great assets in delivering online offerings. But what we don’t want to do is build a one-off thing today.”