Microsoft's 'gettin in the game': Are they a lean, mean tailback with speed, or an oversized lineman who keeps blowing the count?

Read a very good article at CRM Buyer about Microsoft getting into the SMB market with a new initiative. First reaction was "Haven't they been doing this for the last 3 years?" I mean they purchased Great Plains and several other midmarket products, so what happened to all those initiatives? I don't have an answer, but the article goes on to quote Zach Nelson of NetSuite about the difficulties larger firms face when they try to address - or plunder - a smaller market:

• "However, taking products designed for large companies and then retrofitting them to work for smaller businesses is a recipe for failure," Nelson said."It would be like a bus manufacturer changing the color of the bus from yellow to black, and then calling it a car. Those companies that will be successful are designing solutions specifically for the needs of smaller companies, and then delivering the software as a service."
• NetSuite provides companies with a single, integrated, Web-based system. It includes customer relationship management (CRM), order management and fulfillment, inventory management, finance management, Web-site management and employment productivity management.
• Nelson said Microsoft's effort to attract small to mid-sized firms, however, would bring credibility to the idea of an integrated suite. "We are excited by what Microsoft is promoting, because it will create an enormous amount of demand for a product like NetSuite," he said.

I think Nelson is right on here. Software created for large companies will never scale down easily to make it useful to SMBs. I implemented Oracle software for 8 years and they tried over and over to come up with a way to stuff that gorilla into a dog cage and if never worked (and we, the consultants frankly grew tired of holding down the cage). In the same way, a software application created for in-house client server does not become Software as a Service just because you have it hosted by an ASP. As Zoli has mentioned in a great blog entry, the real cost of software is managing it and with an ASP model you still have to manage the application system, as well as the ASP that does the heavy lifting of DBA and System Administration. 

The other issue with larger companies is that they are used to doing huge projects with no budget - well, at least not a budget that anyone takes seriously - for huge companies. Believe me, a NetSuite Implementation is whole different animal. You have to get right to it, there is not time to figure out the best of 50 ways to pay an invoice. You have to respect the business and long, grueling, costly implementations are not 'respecting the business'.

So to Microsoft, I say welcome to a brand new world.  I will gladly go head to head with an integrated application delivered as a service, and you are welcome to bring the proposal that includes two new servers, with operating systems, databases, networking and maintenance software and an IT Department. I'm betting the SMB market likes my proposal better.