Orlando Ayala became a person of importance in the accounting software business last year when he took over as the chief operating officer of Microsoft Business Solutions, which markets the Axapta, Great Plains, Navision and Solomon lines. He also continues in his role as senior vice president of the Small and Midmarket Solutions & Partner Group, the group that runs Microsoft's channel programs, and now operates within MBS. Ayala was asked about his roles in an interview conducted by Accounting Technology editor Bob Scott at Microsoft's Convergence user conference in San Diego in March.

What are the important changes that have been made since you become COO of Microsoft Business Solutions?

OA: One of the steps we needed to take was to bring MBS more into the mainstream. We have 80 general managers, and selling MBS products was not one of their roles. They did not know what MBS was. Now, it is top of mind. This is part of their goals and part of their compensation. The other thing was getting close to the business. Previously, this P&L didn't report directly to [Microsoft chief executive] Steve Ballmer. That was a very important step. I think it's hard to think of MBS as a separate thing anymore.

Some resellers complain that they compete with many other Microsoft resellers. Is there any way of solving this problem?

OA: We need more products that are focused on vertical businesses. Where you look at the 14 verticals, we have some partners in some areas and not enough in others. They must truly specialize. It's not enough to sell retail POS. They must sell POS for liquor stores. We also want our Classic VARs to become more specialized.

How do you plan to accomplish that?OA: We are going to create a channel for resellers to specialize in serving businesses with from one to 25 employees.

Are there any other areas in which accounting VARs need help?OA: We recognize that the cost of sale of MBS products is high. We recognize that the pre-sales cost is higher. We will have to have more resources in order to support partners. We have also begun turning over services to our partners. If you look at the revenue from the December quarter, it's not really flat. It's because one of the things I changed was to move away from making services a profit center for MBS. It's now a partner profit center.

Many resellers reported that the first quarter of 2005 got off to a strong start. What factors have caused the market to improve?

OA: There are several factors that have to do with the industry coming out of a slump. You will see that all midsized employers did not go through the overbuying that the enterprise organizations did. We are blowing away the numbers. We have a more focused strategy.

Doug Burgum has predicted that companies that bought early in the Year 2000 buying cycle would be back in the market as the start of a rebound boom. Are you seeing that?

OA: We are seeing it on the server side, where companies are replacing Windows NT 4.0. I think we are in a very good cycle right now.

There are still companies like SAP that are very well below their all-time highs. We are the only company that hasn't shrunk.

Microsoft plans to re-enter the lower end of the accounting market with Microsoft Office Small Business Accounting. What can you tell us about the principles that have gone into designing SBA?

OA: We did a huge amount of testing, a lot of CPA work. It reflects activities that happen in offices. SBA provides the tools to meet the accountant's needs. It offers simplicity for the customer and power for the accountant.

Microsoft is also trying to improve sales of Small Business Manager, which has been renamed Small Business Financials. Has the change worked?

OA: It's too early to tell. We will know more by July.

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