May 2006 | Commentary | Supply Chain Technology

Microsoft's New SCM Dynamic

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While many already use Microsoft software to manage transportation and logistics, the company is now making a splash with specialized supply chain solutions.

Microsoft is beefing up its business application offerings for small- to mid-size businesses (SMBs) with the release of several enhanced products, including the Microsoft Dynamics suite, designed to empower customer relationship management (CRM), the supply chain, and other collaborative business functions. And the global marketing crew in Redmond, Wash., plans to spend $500 million this year to tell us all about it.

While the company's gargantuan success with basic business functions has landed a Windows-equipped PC in nearly every U.S. worker's cubicle, its more specialized business solutions have sometimes fallen short of industry expectations, primarily because Microsoft was more engaged in the consumer and general business applications market.

The supply chain space, in particular, has felt the acute lack of integrated, inexpensive, seamless software solutions from Microsoft and other big name software vendors. Many logisticians—especially at SMBs—have spent the last 20 years butting their heads into IT walls trying to find programs and systems that operate seamlessly both across the enterprise and externally, so carriers, logistics partners, and customers can work together for the benefit of all in the value chain.

And small businesses can't afford to expose their business just to get, say, a warehouse management system to integrate with a cantankerous ERP system.

A Radical Idea?

Is sophisticated supply chain software for SMBs a radical idea? It shouldn't be, says Sharon Ward, Microsoft's director, manufacturing industry.

"Supply chain managers need technology tools that work with existing solutions, and provide visibility to all customers—passing inventory, processes, and strategy information back and forth easily—no matter what size the enterprise," she says.

This is what Microsoft aims to do with Microsoft Dynamics, says Ward, who recently visited Inbound Logistics along with Jigish Avalani, Microsoft's managing director, industry solutions.

The Dynamics suite—formerly known as the more prosaic Microsoft Business Solutions—is an umbrella brand for its various CRM, supply chain, and financial management solutions. The suite's products integrate functionality and drive collaborative business decision-making.

Admittedly, some supply chain professionals may not immediately accept Microsoft as a first resource for solving complex logistics problems.

"Logistics managers will ask, 'Why Microsoft?' We don't have that recognition as a supply chain and distribution partner," Avalani acknowledges. "We are taking a two-pronged approach to answer that question—investing heavily in our field, and bringing in industry experts to guide us in meeting user demands."

Touting Dynamics' easy implementation and scalability is another way Microsoft will attract more supply chain users. Although its $500-million pitch is largely geared toward SMB customers, large companies may also be drawn to Dynamics as a connectivity tool.

Supply chain managers in Fortune 500 companies know all too well how long it takes for big, end-to-end systems to filter down to individual pain points; those that can't wait for a six-month mega-ERP implementation will be looking for a solution to close the gap.

Familiarity Breeds Content

And lest we forget, this is Microsoft. Many companies still use basic Excel spreadsheets to manage logistics functions, and most of us can operate Microsoft's desktop tools with our eyes closed. This familiarity can help supply chain managers assuage fears when presenting new technology requests to tight-fisted finance execs.

IL readers know that the supply chain drives modern business; technology companies are starting to realize it as well. As the supply chain market heats up, and as technology providers run out of large companies to sell to, the SMB market in particular has become a prime focus for Microsoft and the other big guns—IBM, Oracle, SAP, and Siebel.

This healthy competition brings good news for logistics professionals—more solution choices and greater flexibility in how those solutions are delivered. Most importantly, Microsoft's entry can only mean the price for solutions will drop.

Microsoft's flexibility and renewed emphasis on integrating business functions and driving supply chain collaboration will likely win a warm welcome from the supply chain community. Whether it's a $500-million welcome, however, remains to be seen.

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