Microsoft sets sights on medium-sized businesses

Microsoft is targeting medium-sized organisations with a range of specially tailored business intelligence and CRM software it claims can boost their revenue and profits.

There are around 1.4 million medium-sized businesses worldwide, according to figures from AMI Partners, and Microsoft chief executive Steve Ballmer said they have been neglected by IT companies.

"In many midsize companies, fewer than five people manage all the IT for the organisation - everything from individual desktops to company-wide databases. They don't have the resources to build custom solutions, nor do they have access to armies of consultants to help them integrate their systems," he said in an executive email to customers.

A key plank of this vision will be server software codenamed Centro, which will be based on the server release of Longhorn and the next version of Exchange. Given that the server version of Longhorn is not due until sometime in 2007, Centro could be two years away.

Microsoft chairman Bill Gates also unveiled the new Dynamics range, at yesterday's Microsoft Business Summit, that will replace Microsoft Business Solutions and is part of the business software project codenamed Green.

Under Dynamics, Microsoft will unify the company's CRM products from the Great Plains and Navision acquisitions as well as build in business intelligence capabilities based on 50 specific job functions in typical medium-sized organisations.

Explaining the new product lines, Ballmer said at the event: "We had too many products that we were trying to sell to too few customers in the mid-market."

Along with the new products, Microsoft released the results of a wide-ranging study into the characteristics and IT capability of some 600 medium-sized businesses. Gates said at the launch it had been one of the most exciting things he had ever read on one of his "bi-annual think weeks".

The research, carried out by Keystone, found a high correlation between IT "capability" - but not IT spend - and profitable business growth.

An IT scorecard measured IT capability from zero to 100 in sales and marketing, finance, operations, employee productivity and collaboration, and IT infrastructure in organisations with between 100 and 500 employees.

It found that 10 points of improved IT capability improves performance by an additional 1.9 per cent of annual revenue growth.

The research said: "Firms that have closely aligned the design of business processes and IT systems find it easier to manage the intrinsic complexity of their businesses. This enables them to grow their revenues and profits faster than competitors."

CNET News.com's Ina Fried contributed to this report