Resellers lament Microsoft's lack of direction

Confusion reigns among VARs as migration of product sets to .Net looms.

Microsoft's business application acquisitions of the past few years have left VARs bemused about its intentions.

The problems started when it acquired Navision/Damgaard last June. Previously it had bought Great Plains, a direct competitor to Navision.

Interestingly, Damgaard was a rival to Navision before the merger. And all three product groups are built on different technologies that pose difficult questions for resellers.

Navision and Great Plains are mature offerings but built on proprietary technologies. Damgaard is .Net ready but not well-known in the UK.

In addition, Damgaard products have typically used Oracle databases for large-scale operations, an issue that raises the hackles of many Redmond developers.

Each is capable of development to provide vertical market solutions and each has become eminently referenceable.

But it is costly to maintain many sets of code, especially when they are incompatible. Simon Edwards, head of Microsoft Business Solutions in the UK, said: "It is only a cost, and with $40bn behind me I am very comfortable."

But Microsoft wants to move its business applications over to .Net and this will require radical surgery on the Navision and Great Plains product suites.

Many have tried in the past, but few have succeeded without causing considerable pain among users. This is the last thing that resellers want because they have to explain new technology to customers.

Microsoft has said it will continue to support existing customers and claimed it has a five-year time line during which it will continue existing product development and create a new generation of .Net applications. But VARs are not convinced.

Alex Pappas, head of technology at Aston Group, said: "It concerns us that it is hard to get anything concrete. We don't expect any beta code for the re-developed products before 2004."

Resellers have already been let down by a delay in the release of Microsoft's customer management product, which was originally slated to be launched in the UK this month.

Andes Loukianos, sales director at reseller Touchstone, said: "People are confused. The strategy is some years off and there is a question about how customers will be migrated to .Net."

Microsoft has big plans for its business solutions division. Today it is worth £17m, but wants to increase this to £310m in eight years.

According to Dean Carroll, Microsoft's business development director, the company cannot do this by organic growth, so is aggressively recruiting more resellers while developing an ISV channel.

Assuming it gets remotely near its target, this will aggravate an already testing migration issue. But resellers see bigger problems.

David Rankin, managing director of Tenon Group, said the proliferation of resellers is bad for business because it means a dilution of resources.

"It takes time to develop expertise in these products and small resellers are unlikely to be in a position to spare time when product is under review and while the market remains difficult," he said.

At the same time, Rankin added, there is a reluctance to devote training by ramping on products that may only have a limited life because it takes about 18 months to recoup the skills investment.

Nick Richards, head of sales at Sytation, is more concerned about channel management.

Referring to the problem of ensuring resellers have the necessary expertise to serve customers adequately, he asked: "Who owns the relationship with the customer and what is the policy for lead allocation?"

At present, Microsoft will only say it is "working on this", but there is the risk that customers could be offered the wrong product or the wrong reseller. This would damage the channel in what is already a tough market.

"There could be a backlash, especially when the market is being presented with products that remain competitive," said Richards.

VARs are responding by creating and developing vertical market solutions of their own and marketing them accordingly.

Microsoft is planning to provide some vertical market solution modules of its own, which are believed to be slated for retail, manufacturing, wholesale distribution and professional services.

But Edwards said vertical markets would be the domain of the reseller and ISV. "They have the expertise; the lead will come from them and we will back them with new technology," he said.

How this will work out in reality remains to be seen. Carroll suggested that in the future, customers will see solutions to business problems cobbled out of many modules and covering a broad spectrum of functionality.

"Users might not even know they are using a piece of equipment by Navision or Great Plains, but they will have the functionality they need," he said.

Microsoft and its channel have a lot to think about.

The vendor must be more precise in its messaging to the channel but must also provide a product delivery road map against which VARs can realistically set their investment plans.