Microsoft Business Solutions (MBS) is the second smallest, by sales, of seven operating units at the $37 billion company. But Microsoft will spend $10 billion over the next five years in the hope that the division can grow by more than a factor of ten, to $10 billion, in less than ten years. There are plenty of opportunities for the unit, but Microsoft might be hoping for too much.
The market that Microsoft is targeting is small and mid-sized businesses with up to 1,000 employees. Consider that SAP, the largest and most successful business applications company by far, has about 30,000 customers. Microsoft says it has over 350,000 small business customers now, and there are millions more in the universe that Microsoft is targeting. businesses.
Microsoft already has 8,000 partners, some of which resell its products and others that develop complimentary applications. “Microsoft builds channels better than anyone,” says Jim Shepherd, an analyst at AMR Research. “And the only way to succeed at the bottom end of the market is with volume.”
Paul Hamerman of Forrester Research agrees that Microsoft’s indirect sales channels give it an advantage but cautions against its $10 billion target. “They need to get to one billion first,” he says.
To be sure, Microsoft’s plans are not without big challenges. For starters, Microsoft sells four overlapping sets of business applications, and some say there is no clear distinction between them.