The SBM Challenge

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What’s the natural home for the Microsoft Great Plains Small Business Manager? It is an important question because most observers expect SBM to be a major product in the small business market.

SBM is a product that Great Plains needs. It is designed to capture customers who have outgrown QuickBooks, but who are not ready for the company’s more robust accounting software lines, Dynamics, Solomon, and eEnterprise. SBM can serve as a feeder system, similar to the way that Best Software has successfully used the Peachtree installed base as a market to mine customers who can be moved to MAS 90. Most resellers who have sold SBM are quite happy with the results.

Still, there are challenges. Microsoft wants a broader channel for SBM, a stripped-down version of Dynamics. SBM seems more suited to the CPA channel, whether as resellers or recommenders. But Great Plains has not made a serious effort at establishing a CPA program over the last few years.

Partner Insights

At times, the company seems to be feeling its way in this market. Early in February, the company put the terms of its SBM reseller program on the Great Plains Web site (including an application). But it hadn’t gotten around to announcing that it has a separate SBM program, at least not with a formal press release by mid-March, although officials had begun talking about it, more or less at the request of the press. It also slashed a third off the price in February, again without an announcement.

The temptation is to read the continuing difficulties involved in integrating a company the size of Great Plains into Microsoft. There are different expectations.

Someone inside the company tells me that this is a "peculiar view," but I can’t shake the belief that the Great Plains arm sees SBM primarily as a financial package while the parent in Redmond, Wash., sees it as a tool to drive SQL Server into the small business market. The fact that GP talks about also authorizing Microsoft resellers, networking and hardware VARs who have sold the Microsoft Small Business Server, leads me to this view. SBS is a suite that also utilizes SQL Server, and when it was introduced with great fanfare, it was viewed as opening up the small business market early in 1998. It’s done well enough to stay around, but it was never the breakaway hit that was envisioned.

Resellers may also see SBM a bit differently than Microsoft corporate. Some see it as a tool for converting sites that are still on the DOS-based Great Plains Accounting line. They are also probably more enamored of SBM as a tool to reach the old DOS market, which Great Plains and Solomon somewhat abandoned in the mid-1990s, when they moved to Dynamics and Solomon IV respectively.

I also believe that Microsoft and the Great Plains unit will have to figure out how to mesh the different profit models they are accustomed to. Microsoft is used to phenomenal profit margins, but the accounting software business doesn’t produce those in the mid-market.

SBM is a product with a 20-percent margin. Moreover, Microsoft GP ratcheted down its top margins on Dynamics last year, which leads to the conclusion it’s trying to squeeze more profit out of the VAR channel.

There are no rules to this game. It’s going to be learn-as-you-go for both the vendors and the channel. It’s going to be a matter of fitting possibly contrasting expectations together.

The Decision Maker’s View

What do buyers want from their accounting software? They want a lot of different things.

In "The Decision Maker’s View," Accounting Technology talks to financial executives who have purchased leading packages, and examines the factors that went into their choices.

Whatever those choices, they have risks. Senior Editor Richard McCausland examines those risks in "The Internet and Liability." Do we even know what all the issues are when it comes to doing business via the Internet?

Meanwhile, another tax software buying season is upon us. For firms who want to see if the grass is greener with another package, Accounting Technology offers its annual "Tax Software Bargains" by Staff Writer Carly Lombardo.

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