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With a small but fairly significant reorganization within its business solutions and channel groups, Microsoft Corp. is signaling a recommitment to developing its business applications for small and midsize companies.

The strengthening of the Microsoft Business Solutions group raises the question for many how far that commitment will be extended for large enterprises.

Early this month, the Redmond, Wash., company announced several executive-level shifts that may well impact the applications market. As part of the shuffle, Doug Burgum, senior vice president of Microsoft Business Solutions—the division that deals with Microsoft’s Great Plains, Navision, Axapta and Solomon ERP (enterprise resource planning) suites—will report directly to Microsoft CEO Steve Ballmer.

Burgum, who previously reported to the Office group, will continue in his role as head of the Business Solutions group but, given his direct contact with Ballmer, will have more responsibility for driving the company’s applications strategy and vision.

Great Plains customer David Hurwitz said he has heard that Ballmer has already gotten more involved with Business Solutions and often flies back and forth between Redmond and Fargo, N.D., where Burgum is based. “This doesn’t scare me,” said Hurwitz, chief technology officer of Super Discount CDs & DVDs Inc. “It makes me feel good that the platform is going to stick around.”

Burgum has made no secret about his and Microsoft’s plans for bringing the Business Solutions suites together.

“Our goal is not to set up separate, unrelated organizations,” said Burgum in a speech delivered in Orlando, Fla., this spring. “[Microsoft] has invested $6.8 billion on integrated innovation. … The core idea is for us to have this stuff work really, really well together.”

To better align its applications and partner initiatives, Microsoft’s SMS&P (Small and Midmarket Solutions & Partner) group will take a leap across the company’s organizational chart, moving from the Information Worker, or Office, group to Burgum’s Business Solutions group. Senior Vice President Orlando Ayala will take on a dual role by continuing as head of SMS&P and adding the title of chief operating officer of the Business Solutions group. In his new role as COO, Ayala will oversee sales, services, marketing and operations for both groups.

Ayala was also charged with making sure Microsoft’s 35,000 worldwide partners are working in sync, driving sales and marketing efforts in the SMB (small and midsize business) sector—a necessary task given Microsoft’s increasingly fractured channel relations, coupled with the fact that the company sells its software specifically through alliance partners.

Hurwitz said this move, too, should strengthen Business Solutions by making third-party developers that create add-on software for the Microsoft suites more comfortable.

These moves come at a time when Microsoft is also trying to realign its core applications along the same code base and tailor them to work with the company’s .Net Web services integration platform. Microsoft developers are creating a new code base, dubbed Project Green, to unify Business Solutions’ four application suites. The effort is expected to be completed sometime next year or in 2006.

Click here to read more about Project Green.

On a smaller scale, driving the integrated product effort are new interfaces and integrated CRM (customer relationship management) capabilities that will be available across the company’s core business applications lines. While Great Plains 8.0, announced in March, has a new user interface, it’s not clear when the other suites will have that and the CRM capability.

Cindy Highbarger, controller with Mid-Continent Instruments, which uses Great Plains software, said the recent addition of new CRM package and manufacturing upgrades is an indication of Microsoft’s dead-on focus on the SMB applications market. “The features … are more than enhancements; it’s major changes that they’ve done, which is nice for us,” said Highbarger, in Wichita, Kan.

What Highbarger said she is looking for going forward is tighter integration among the modules in the Great Plains suite—something Microsoft has said it will accomplish with Project Green. Highbarger said she doesn’t mind waiting because her company will have “one new, seamless package.”

However, she said she is dubious of Microsoft’s purported moves into the enterprise space. “We would rather see them stay at the small and midrange because our needs are different than huge companies,” said Highbarger.

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