Microsoft has embarked on a truly exciting and radical venture to transform mid-market accounting from its traditional functional bias to a roles based model. The plans were unveiled to European journalists last week in their Vedbaek campus in Copenhagen , the largest development centre outside of the US . In the first of a series of articles on Microsoft's strategy, Gary Simon, FSN's managing editor reports back on what the changes means for business users.
When Microsoft bought into the accounting mid-market a few years ago it could hardly believe the levels of dissatisfaction with traditional financial software. The levels of functionality were acceptably high but the "the user experience" was very poor and they were a poor fit to the way that business is actually carried out. As James Utzschneider, GM Microsoft Dynamics Marketing put it, "No one gets up in the morning looking forward to using their finance package." Most people find their software difficult to use and limited in its ability to support them in their job function. "You need to go to software school for a week just to learn your little part of the application," he added.
Microsoft's early doubts were confirmed by a massive research project in which they methodically followed the activities of several thousand users in an attempt to discover the way in which people really worked and the software tools that they needed to perform their role. They found that the modular design of traditional software confined workers to departmental silos and did not reflect their broader involvement across business processes. In effect present day software supported a limited set of tasks, with workers being left to fill in the gaps through informal communications, paper processes and walking the corridors to answer queries or handover responsibility to the next person in the process. It was as though people were disconnected from the business processes they were expected to operate, gained very little business insight from the thousands of transactions they processed and were denied the opportunity to carry out their role more effectively.
Far from regretting their entry into the business software market, Microsoft relished the challenge of turning received wisdom on its head and recognised the potentially huge prize to be gained if they could succeed in moving to a new roles based paradigm. After all, the marketplace for financial software is extremely fragmented with market share sprinkled thinly over many players and no supplier with more than a 7 percent share. Additionally, Microsoft had already acquired some of the most respected names in the mid-market such as Navision, Axapta and GreatPlains. Along with these acquisitions came 23 years of business applications experience, a network of around 9,250 partners and approximately 275,000 customers worldwide.
Out of the research, Microsoft identified 52 "roles" to which they have given chummy names such as Sara the CFO, Inga in purchasing, Kevin the account manager and Susan in sale ordering and so on. The idea is that, over time, these roles will be embedded within the software (whether you are using, for example, Navision, Axapta or Great Plains ) as the preliminary stage in a broader move towards an adaptable platform in which processes can be configured according to business need.
This thinking is encapsulated within the strategy or roadmap for the Microsoft Dynamics line of business which includes the recently renamed, Dynamics AX, (formerly Axapta), Dynamics NAV (formerly Navision), Dynamics GP (Great Plains), Dynamics SL (Solomon) and the relatively newly developed Customer Relationship Management Software, Microsoft Dynamics CRM.
Wave 1 of the roadmap, which spans proposed activities between 2005 and 2007, is well underway and includes not only the embedding of the roles based concept but also tighter integration with Microsoft's technology stack. This will deliver, amongst other matters, integrated portals, and contextual business intelligence courtesy of the tools within SQL 2005 (see later).
Dynamics Nav, already includes significant Wave 1 enhancements to the user interface. It has a Microsoft Outlook 'look and feel' and menu bars are already organised into process groupings. "We want the software to be immediately recognisable and familiar as well as intuitive to use", says Utzschneider. "If people see a familiar interface in Outlook style, they immediately know what to expect and can feel more confident," he told FSN.
Wave 2, due to be delivered in 2008 and beyond is a far more fundamental and exciting shift. Glimpses of the interface unveiled in Copenhagen incorporate a more visual representation of processes and roles based tasks utilising Microsoft's Vista technology. It is far removed from anything resembling present day software. For example, "April" the accounts payable coordinator can see at a glance the value of overdue invoices and unmatched invoices expressed as icons (paperwork) arranged logically, in process sequence, across the top of the screen, whilst another pane shows in graphical format, the level of supplier trade and settlement discounts available and taken. Contextual BI (Business Intelligence) of this sort allows April to maximise profitability by ensuring that discounts are claimed wherever possible.
An example of the new Vista interface
One of the characteristics associated with the rapid uptake of web deployment for commercial applications is that as the number of connected users has grown they increasingly come from a wider variety of backgrounds. This means that in the future, developers of accounting software have to take into account the fact that users of business systems are much less likely to have an accounting, bookkeeping or clerical background. In other words the interface has to accommodate a wide range of ability and knowledge. Microsoft's planned user interface takes this fully on board. Integration facilities within the interface allow almost web-like development of the interface with graphics, links to URLs and other business applications alongside expected links to Outlook and other Office applications.
Managing the interface in this way is also seen as key to Microsoft's 'verticalisation' of the Dynamics brands i.e. one of the ways in which the partner community will adapt and add to core functionality in order to address the specific industry practices of certain vertical markets. For example, another screen unveiled in Copenhagen showed business software in the context of a car dealership with the sales force not only able to arrange finance, but also to track on screen the whereabouts of demonstration models in real time, replete with GPRS and maps.
Changing the way people work and developing leading edge software is not a trivial task. Whilst the market place has been obsessive about when the Dynamics Nav, Dynamics AX and Dynamics GP will merge into one uniform product, (as if this is the only goal), it sort of misses the point. It is not the end game that is important here but the radical journey that Microsoft has embarked on.
The willingness to discard received wisdom and ask challenging questions about the way we work is refreshing. As Utzschneider says, "The software industry has forced ERP onto businesses saying that it will transform the way that you work. But it has failed to deliver. Client/server software was costly and difficult to configure, user experience is universally poor, training and learning times are too long and the software isn't designed for the way people work."
If Microsoft delivers on just half of its vision then this will almost certainly be welcomed by loyal users of Navision, Axapta and GreatPlains. Utzschneider agrees that the availability of a converged product sometime later this decade is just the icing on the cake. "If people want to move to the converged product that is fine, but if they don't that's also OK," he told FSN.
But all of this comes at a cost which probably only Microsoft could afford. "We were profitable in Microsoft Business Solutions in the last quarter," says Klaus Holse Andersen, VP for EMEA "but we might not be in every quarter because we are making heavy investments," he added. Indeed, Microsoft has deep pockets and is probably the only software house in the world that could take on a global task of these proportions.
In the meantime it is business as usual, and it should be remembered that Navision and Damgaard, were successful and talented innovators in their own right before Microsoft came on the scene. For example, Navision developed powerful proprietary sorting and indexing technology (SIFT) back in the mid 90's and was one of the first to develop an integrated Web Shop in 2000 rather than forcing users to buy a third party tool. Similarly, Damgaard was one of the first to employ object oriented programming techniques to boost the adaptability and efficiency of its software. So other changes are happening to the software and, for example, the latest version of Navision includes substantial improvements to the visibility of production planning and an innovative new function to unwind erroneous accounting entries with full audit trail, but without having to laboriously process lots of journal entries.
Every now and then, somebody has the courage to challenge the ways things have always been done. For several decades we have successfully automated the clerical processing of accounting entries but the benefits, whilst very worthwhile, have been limited. In general, new technology has made the task faster but not that much smarter. However, we are entering the era of the 'wired economy', in which whole enterprises are connected and companies are a part of complex business ecosystems. In these circumstances businesses of all shapes and forms need slicker and adaptable processes that can deliver more business value whilst leaving end users more fulfilled and engaged. There are always people that cannot see the benefit or do not want to change. For those aiming for a better user experience Microsoft is showing the way forward.
Related FSN articles
The global mid-market is growing, but will domestic players lose out to Microsoft and SAP?
Microsoft extends advance on mid-market with industry solutions
