Microsoft, Oracle Kick It Up a Notch for SMBs

By Clint Boulton | Posted October 09, 2003

Where do you want to go today? For Microsoft and Oracle, the answer to that question is simple: in the direction of small-to medium-sized enterprises (SMEs).

Better known for its end-user Windows operating system, the Redmond, Wash., company has announced the general availability of its Microsoft Business Network, an expanded deal with Autodesk, and new demand planning modules.

Meanwhile, Oracle is looking to lure its own share of customers away from the likes of IBM with the introduction of a single processor version of its standard database geared for small- and medium-sized businesses (SMBs) and departments of larger enterprises.

And it's all for the SMB's of the world, for now.

Marketing an enterprise application suite for Fortune 1000 companies is a relatively simple sell, even in today's economic environment. With proven return on investment figures, pie charts and a proof of concept, most large corporations can be persuaded to buy a pricey enterprise resource planning, customer relationship management or supply chain management tool.

But getting the smaller companies — the mom-and-pop shops in the community — to pony up tens or hundreds of thousands of dollars on a software suite is more than a small task.

In that area, many of the big-name enterprise software providers have failed. According to Rebecca Wettemann, vice president of research at Nucleus Research, companies like SAP, Oracle and PeopleSoft have been unable to come up with a product that meets the budgets and IT staffs of the smaller companies.

"The larger folks have certainly not been very successful getting into the lower end of the market," she said. "They're very expensive solutions and they are very expensive to deploy. You can scale down a dinosaur only so much."

The Business Network, Microsoft's answer to SCM first announced earlier this year at Convergence 2003, promises to match up companies with their suppliers and customers on the .NET Web services framework.

To compete against companies like SAP and Oracle, both of which say they are targeting the SME sector, Microsoft is said its local flavor is what will differentiates it from competitors. In that respect, the company's 6,000 value-added resellers (VARs) are expected to play a key role.

Microsoft has had a spotty record in recent times with its VARs. Once a rather small community, Microsoft recently opened the doors to allowing many more reseller partners into the mix. To stem the criticism that followed, Microsoft has made modifications to its reward program for technical skill and other criteria.

"Businesses in the small and mid-market segment prefer to work with local partners and experts to meet their IT needs," a Microsoft spokesperson said. "Microsoft works closely with its partners to deliver business applications for these customers. Microsoft provides partners with highly scalable software and tools that make it easy to build solutions that customers are asking for today and that will continue to meet their needs as they evolve."

Microsoft Business Solutions also may have another trump card — the pervasiveness of the Windows OS, which is used by more than 90 percent of the free world. Many smaller companies have dealt with Office products and are familiar with it.

Microsoft's three recent acquisitions — Great Plains, Axapta and Navision, companies that cater to the mid-market sector — could help the software giant's focus on the sectors. Along those lines, the company has released two demand planning modules for companies using the three companies' products.

Finally, Microsoft penned a deal with Autodesk to expand on its existing agreement, to let Autodesk customers use the software to take their engineering projects to the operations teams that manufacture them.

In the end, Nucleus Research's Wettemann said, Microsoft's success in the SME depends solely on its ability to deliver value. For companies, success with Microsoft's Business Solution depends on its partners in the supply chain accepting the software change.

"It's very important to address the adoption issue," Wettemann said. "You can lead a partner to water, but you can't make him drink it unless they understand why the software will be a value to them. Companies should probably take a measured approach to this, pick key partners and make sure they know what's in it for them, and then expand over time."

Oracle answered IBM's DB2 Express database Wednesday with Oracle Standard Edition One, a single processor version of its standard database geared for SMBs and departments of larger enterprises.

Software vendors from many segments have been working to meet the needs of small and midrange businesses, often those with anywhere from 100 to 1,000 employees. Until recently, most major vendors have made relatively high-priced enterprise software for medium to major companies that boast many employees and accordingly many computers.

But Oracle, IBM and other concerns have come to recognize a market segment that doesn't have the financial wherewithal for pricier infrastructure nor the need for it because they operate on such a small scale. IBM already sells DB2 Express, which is priced at $499 for a base server package, with an additional licensing cost of $99 per user. Many industry analysts wondered when Oracle would follow suit.

Now Oracle has. Armed with the 9i code, Oracle Standard Edition One sells for $5,995. It is also available with Named User Plus licensing at $195 per user with a minimum of five users.

"Oracle understands that all customers, regardless of size, want a secure and reliable IT infrastructure on which to build and maintain their businesses," said Jacqueline Woods, Oracle vice president of Global Practices, Global Pricing and Licensing Strategy.

In related news, Oracle unveiled new contingent worker and performance management capabilities for Oracle Human Resources Management System (HRMS). The new contingent worker features help Oracle HRMS customers better understand workforce trends and bolster corporate governance initiatives by tracking and managing contract employees to meet local reporting regulations. Digital record-keeping has been a primary concern among software vendors in the wake of accounting scandals and subsequent government regulations about corporate governance.

The management tools also offer employees the ability to monitor their professional development through online portals.

Adapted from internetnews.com.

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