Microsoft seeks to leverage midmarket ERP

Microsoft can't boast the ERP (enterprise resource planning) application revenue earned by giants SAP and Oracle, nor equal their breadth of technological capabilities, but its tight focus on small and medium-sized businesses gives it an edge, according to observers and company officials..

While Microsoft does not release specific figures for its Dynamics ERP product line, annual revenues have been estimated at between US$1.1 billion and $1.2 billion, according to Ray Wang, a partner with the analyst firm Altimeter Group.

There is plenty of room for that number to grow, as midsized companies look to replace legacy systems or small ones seek out ERP applications as they grow larger in size.

"[The midmarket is] our sweet spot, and where our partners are geared up to sell," according to Phil Battersby, a director in ERP field marketing and management for Microsoft Dynamics EMEA. "We're not interested in the enterprise space. SAP and Oracle have been dominant in that part of the market for a long time."

Dynamics is sold exclusively through partners, who fine-tune and customize the products for specific industries, such as retail, manufacturing and services.

The partner-centric approach is crucial given the vast size of the SMB market and the fact that those customers typically like to deal with a local face, Wang said.

And those partners can help Microsoft reach out to ever more vertical markets -- an approach Battersby said will be important to its competitive success.

The IDG News Service is a Network World affiliate.