What If Microsoft Expanded BizTalk Server Into A Online Collaboration Service Offering?

The Online Services Business division at Microsoft has been lagging behind the other operational divisions, even though the marketplace for these types of services has been growing steadily by leaps and bounds over the last 10 years. One potential option would be for them to leverage the success and popularity of the BizTalk server product to create a B2B service targeted towards the untapped SMB, Small Medium Business, market segment. The SMB segment is a very large segment that has a potential for extensive growth over the next few years and beyond.The service could initially provide transaction enablement to the SMB market as well as appealing to large enterprises looking to migrate their SMBs to an electronic connectivity solution. Revenue will come from a hybrid subscription/transaction processing model, while additional revenue would initially come from advertising of Microsoft’s own products on the B2B site. The site will eventually morph into a full collaboration service for the SMB market segment.Microsoft was born from its humble beginnings in 1975 when Paul Allen and Bill Gates created a version of the BASIC language for the MITS Altair 8800, the world’s first personal computer. It grew into the one of the most successful software companies in the world by creating innovative software products for personal and business computers. The company went from first year revenues of $16,005 and 3 employees to FY06 revenue of $46.6 billion and about 71,000 employees worldwide. (Microsoft History), (Microsoft Earnings) When we look at Microsoft’s revenues for the last 6 months of 2006 a significant portion of the revenue and operating profits came from the Client, Server and Tools and Business Services Division groups, whereas the Online Services Business showed lacking revenues and actually reflected a loss for the same period. The Online Services Business, which is really Microsoft’s equivalent to the B2B category of e-commerce.The expansion of B2B should be part of Microsoft’s overall growth strategy. One of the major successes in the Business Enablement and B2B offerings for Microsoft is the BizTalk Server, which was first introduced in December of 2000 as graphical tool to help integrate internal business processes utilizing XML. The tool has gone through a number of releases culminating with the launch of BizTalk Server 2006, which has added further B2B integration functions including trading partner management and enhanced tools to bring together complex business processes.The success of the BizTalk Server product line in medium to large enterprises has made it one of the top-selling B2B integration tools on the market with over 6000 business implementations worldwide. The popularity of the BizTalk Server product and the need for B2B external partner integration in the Small to Medium Business (SMB) market has created an opportunity for Microsoft to expand their lagging Online Business Services division. Many of the medium to large enterprises have been able to take advantage of the benefits of EDI and B2B, such as reduction of operating cost by eliminating manual entry errors and reducing cycle times through the integration of the trading partner community.This phenomenon has generally eluded the SMB market segment; the very small businesses may survive by using B2B portals that have been made available by the lager trading partner. But as the size of the company grows they cannot hire and maintain sufficiently trained personnel to utilize these types of solutions, yet they cannot afford to setup a complex EDI or B2B solution either. Thus these companies either pass on certain opportunities or must leverage costly non-standard solutions from the traditional value added networks. In some instances the burden of maintaining the relationship for these types of businesses is passed on to its suppliers that may be required to support these customers through manual entry or a dedicated sales representative at a much higher cost than the other sales channels.These challenges faced by both the SMB companies and those larger enterprises that provide products and services to the SMB can easily addressed through the use of the internet and a robust B2B product suite, such as BizTalk Server 2006. Microsoft, which has been also challenged to make strides in their Online Business Services division, should take the opportunity to reach the SMB customer segment. This can be done through the use of a B2B web site that would allow SMB customers register to exchange data with their business partners electronically without having to hire an in-house staff to manage a complex EDI or B2B system. The potential Microsoft solution would charge a fixed monthly subscription fee for the basic service and a nominal per connected partner fee would be assessed. The more partners that a business connects to the more benefit they will receive. Once the connected partners see the overall benefit of the service to their collaboration and improved productivity, they will join the network and add their own partners.For the larger companies looking for help in getting their SMB business partners connected Microsoft is able to create customized portals, which will include registration and partner enablement. These sites will utilize the same hardware and software infrastructure as the generic offering but it will allow the larger companies to maintain their branding. Initially Microsoft will focus on one vertical industry niche, the retail industry. This niche will provide a wide range of target customers to choose from within the SMB segment. In addition many large suppliers are looking to on-ramp large numbers of SMB customers. While there are many B2B portals available, these solutions typically don’t allow suppliers an adequate level of control over the operational aspect to protect their brand.
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