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Microsoft partners anxious about the new MBS (Microsoft Business Solutions) chief got their chance to meet him at the vendor’s Worldwide Partner Conference July 10 to 12 in Denver.

Kirill Tatarinov, the new Corporate Vice President, Windows Enterprise Management Division and head of the MBS division, said the message he has heard from partners is that they need stability and continuity.

Tatarinov, who joined Microsoft five years ago, assumed his new post July 2. He spent a good part of his time at the conference in Denver meeting with MBS partners, many of whom had expected MBS long-timer Tami Reller to get the post.

Tatarinov, who helped lead Microsoft’s DSI (Dynamic Systems Initiative) did his best to reassure what can be an insular group that he has their best interest at heart.

To read about how Microsoft will invest $20M this year in its Dynamics partner network., click here.

Reller, who co-led the search for the new MBS chief when Satya Nadella abruptly left the post for another Microsoft job in March, will stay on for a “number of months” to ease the transition, she and Tatarinov said in the interview.

In Tatarinov’s view, his DSI work, which aims to make applications and systems more easily and more automatically manageable, can inform MBS products and strategies.

“There are a huge amount of synergies. The work we did with DSI primarily addressed enterprise customers but spreads beyond that (to other types of customers) and is also oriented around a partner ecosystem,” he said. “The message there was to build manageable systems, to get the whole ecosystem to work together. For us to help businesses run themselves well, we have to implement business processes. The ecosystem is very, very similar coming from one job to another.”

“After meeting with partners for two days non-stop, (it’s clear that) the ecosystem in business solutions is much broader and the partner is the strategy…working with them to enable this ecosystem in business solutions is the number one attribute in this job.”

The fact that MBS will be headed by someone who has been outside the group is probably a good thing, said one long-time partner, who spent time with Tatarinov. “This shows that MBS is part and parcel of Microsoft and there is no more ‘Fargonaut’ vs. Redmond stuff going on,” he said.

MBS grew out of Microsoft’s 2001 purchase of Great Plains Software, based in Fargo, N.D., and has been most closely associated with former Great Plains CEO Doug Burgum and his crew. Burgum left Microsoft officially as of July 1, but was on hand at the WPC, squiring Tatarinov to meetings, interviews and parties.

While Microsoft execs have signaled that MBS’ CRM (customer relationship management) and ERP (enterprise resource planning) wares will increasingly be pitched to enterprise accounts as well as to SMBs, Tatarinov downplayed that angle.

“Customers of all sizes want our software but I wouldn’t say there’s a bigger emphasis on enterprise sales…From a strategic point of view our emphasis remains strongly in the mid-market,” he said.

The enterprise and SMB angles are big ones for Microsoft. While it partners and collaborates with enterprise software giants SAP AG and—to a lesser extent—Oracle to ensure interoperability between key customer software, MBS also competes with their ERP and CRM offerings. That competition is growing stronger as Oracle and SAP each step up its own mid-market pushes.

Other huge issues beckon MBS going forward. For example, it is still up in the air whether the company’s “Live” push will extend into ERP. While the upcoming “Titan” CRM release is the poster child for the company’s “software plus services” plan—in that it will be available in on-premises, partner-hosted and Microsoft-hosted flavors—no decision has been made yet on whether ERP will follow suit.

Reller and Tatarinov said that, should ERP also go “live,” partners will not be disenfranchised. ERP partners are spooked at that prospect, given that ERP margins on license sales and implementations tend to be fatter than those on CRM, and much fatter than those on non-MBS Microsoft products. The prospect of inexpensive Microsoft-hosted ERP sparks fear of further price and margin erosion.

“There is such a huge amount of opportunity for partners across Live activities, across the board in both CRM, in future work in ERP and in Office and Windows Live. As we evolve our strategy, partners will continue to play a very strong role,” Reller said.

Should Microsoft host the technology in its data centers, there will be room for partner customization work and the resulting margins, she said.

Microsoft CEO Steve Ballmer and chief software architect Ray Ozzie—whose absence at WPC was noted by partners—have said that the company will make applications available to customers in whatever way they demand them. The advent of and its hosted CRM, forced the company to look into new delivery modes, partners said.

And, some partners at the show, including Spinnaker Networks’ Founder and President Mitchell Cannady, said the fact that Microsoft has a clear roadmap for CRM Live delivery gives his company something to sell customers who are leaning towards

Cannady added that these smaller customers might otherwise be lost to his company, which is based in Irvine, Calif., and which specializes in Microsoft and Sage Software CRM.

One bright spot, even for partners spooked by Microsoft-hosted CRM Live, is that they will get margins on customers they bring in and additional margins if those customers move to partner-hosted or on-premises CRM over time. For the first year of CRM Live availability in 2008, partners will get a 15 percent margin on partners they bring into CRM Live. After that, the margin will fall to 10 percent, Microsoft said at the show.

Reller acknowledged that the company will have to look at implementing some sort of dashboard that will let a given solution provider track his or her customers, whether they’re using on-premises, partner-hosted or Microsoft-hosted CRM.

Partners have “requested a full dashboard and that’s fair feedback. Partners need to understand their full business model and see the full customer set across delivery models,” she noted.

She also reiterated that the planned applications “marketplace” for CRM Live, will rollout in phases, sometime after CRM Live goes live early next year.