Microsoft OAP: How not to market business software

At this point, if I bumped into Steve Ballmer and the Microsoft Office Accounting product management team on a country road, I’d feel a bit like the yokel who advises, “If that’s where you’re going, you don’t want to be starting from here.”

For a company generally held to be a paragon of ruthless technology marketing expertise, Microsoft’s attempts to expand into small business accounting software have been inept, bordering on catastrophic. When Microsoft Office Accounting Professional launched, belatedly, in the UK in November 2007 I remember quipping to a senior product marketing executive how well the OAP acronym suited the program. It was a cheap shot at the time, but grew into a living nightmare for Microsoft.

As up-to-date and technically sophisticated as Office Accounting Professional was, Microsoft’s product generals were fighting the wrong war. Kashflow founder Duane Jackson confirmed this week that these days any small business looking for accounting software starts on the internet. For all the thousands of copies of the free Office Accounting Express edition that were downloaded, it was almost invisible in our 2008 and 2009 Software Satisfaction Awards surveys while online providers such as Kashflow, Xero, e-conomic, Liberty, Pearl, FreeAgent and Arithmo racked up hundreds of new users between them.

Microsoft made the mistake of assigning its accounting program to the Office product group. Accounting is not a general office productivity task, it is a complicated professional activity that is driven primarily by financial reporting and regulatory parameters. It should be managed by people with accounting expertise and frontline experience with business applications and users. Microsoft Dynamics is such a team and would have benefited greatly from a low end program that would have provided an upgrade path to its more sophisticated accounting and ERP tools.

Microsoft is going through a tough time and everyone recognises that corporate strategies do change. But the termination of the ill fated Office Accounting project, like the PerformancePoint Server BI strategy before it, has only managed to further harm the Microsoft business software brand.

To claim, as Microsoft did, that Excel-based templates could fill the sub-Dynamics gap in its accounting software portfolio displays such a limited understanding of accounting that perhaps it’s best the company does withdraw from this market. True, millions of businesses do run their accounts in Excel, but they are using an inefficient tool for the task that wastes their time and exposes them to a much higher risk of committing material financial errors.

Kashflow’s Duane Jackson speculates that Microsoft might be back in a few years’ time with a software as a service accounting application. I don’t think he needs to worry. Microsoft has so comprehensively bungled Office Accounting that its reputation among advisers is likely to suffer for years. And if you don’t have the accountants on your side, you don’t get businesses using your software. Ask Sage, or all of the SaaS vendors that are courting the profession so assiduously.

More significant for Microsoft is the possible fallout the episode could have on Dynamics. In the ERP world, Dynamics is a billion-dollar player up against the likes of Oracle and SAP, but it receives little attention at Microsoft HQ in Redmond. Having failed to involve Dynamics properly in the development and marketing of Office Accounting, Microsoft has further dented the credibility of its business applications wing by deciding to put the program on ice.

I’m sure I’m not the only observer wondering that if Microsoft can leave hundreds of thousands of Office Accounting users in the lurch, what’s to stop it doing the same to Dynamics customers?

Microsoft Office Accounting - the full story

 

Comments
John Stokdyk's picture

Responses from Microsoft

John Stokdyk | | Permalink

I put some of the questions raised in this blog to Microsoft via official channels and got back the following responses from Justin Huchinson, Director of Consumer and Small Business Product Management for Microsoft:

Q: Can you expand on the business reasons for ceasing development of Office Accounting?
A: We evaluated the product over the past few years and determined that existing free templates in the Office system used with Excel was a better option and for small businesses and the Dynamics products were appropriate for growing or mid-sized organizations.

Q: Has Microsoft considered the damage this move has done to its credibility in the financial software market - and the potential fall-out for prospective customers of MS Dynamics?

A: Although sales and distribution of the product are being discontinued, customers can continue to use Office Accounting following the November 16, 2009 date. Also, customers in the UK will be able to obtain product support through Mamut, a leading European provider of complete, integrated software solutions and internet services for SMEs. They can take advantage of a number services provided by Mamut; a company that offers complete and user-friendly solutions at the best value for money integrating CRM, sales force, logistics, accounting, e-commerce, domains, e-mail, web hosting and security. Further information about Mamut and the company’s products can be found at www.mamut.com.

Q: How would you answer the suggestion that Microsoft Office Accounting arrived at a point where smaller businesses were turning to the web for their accounting software?
A: Microsoft is always evaluating customer need and at the time, felt that Office Accounting could provide an appropriate accounting solution.
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John Stokdyk, Technology editor

Fusion Accounts's picture

Free migration service for Microsoft Office Accounting users

Fusion Accounts | | Permalink

In response to Microsoft’s withdrawal of support for Microsoft Office Accounting, Fusion Accounts will be offering a free migration service for customers wishing to move to Fusion Accounts. 

http://www.fusionaccounts.com

Dynamics

Anonymous | | Permalink

Having worked on an extensive implementation project on Axapata (now Dynamics) I am sure that they are still playing catch up.  It is old technology with window dressing to make it look better than it is.  I would be worried if I was a current user.

daveforbes's picture

over engineered

daveforbes | | Permalink

When we wrote import routines to bring in data to our final accounts package from OAP we were awed at how sophisticated the underlying technology was. Where did the underlying engine for OAP come from ? The problem was, and I think this is a general failing with MS products over the last few years, they failed to hide the complexity to the user.

John Stokdyk's picture

Underlying OAP code

John Stokdyk | | Permalink

Hi Dave, and thanks for the comment.

Digita's Jerry Rihll was pretty close to the development of OAP and this is what he said in our RIP Microsoft OAP obituary: “Significant parts of Word and Excel are written into it, which is why it’s so great - but Microsoft won’t give away the source code, so it won’t have a life outside of Microsoft.” I'm sure you can ask him about the underlying engineering in more detail at the next tax software industry shindig.

Rihll also conratulated Mamut as “significant winners” from the transaction. But if you've already engineered the interfaces between Forbes & OAP as well as Mamut, you should be pretty well placed too - particularly if you can wheel in some kind of service or mechanism to handle iXBRL final accounts output from both systems. But then, I'm still waiting to hear more about your final accounts package!
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John Stokdyk, Technology editor

paul.stobart's picture

My thoughts...    1 thanks

paul.stobart | | Permalink

In this marketplace, the key to success is trusted, durable relationships. This is not a question of SaaS versus desktop. This is about supplying and providing customers with the tools they need to add value to their business; quality products, ongoing support and expert consultancy.

By actually engaging customers to understand their business, we know that what they need from a vendor is the ability to provide local level support, advice and help that is not only considered but relevant to their business. This takes far more than cash; but market understanding, trust and a deep level of insight that will ultimately facilitate a great experience for customers.

Paul Stobart

CEO Sage UK & Ireland

AmitWason's picture

Dynamics and OAP

AmitWason | | Permalink

Seeing that OAP has been pulled and considering your last point about “doing the same to Dynamics customers” an alarm bell did ring momentarily (especially as I had recommended OAP Express to a friend or two!), but then the product propositions between OAP and Dynamics are VERY different and personally I do not think that last statement is a comparable (...err...) comparison.

Firstly, there is a big difference in the number of customers running their business on Dynamics and OAP; Dynamics has 10's of thousands of customers across the globe (I know Dynamics NAV alone has well over 57,000 customers and they passed their 1 million user landmark back in March 06).  Secondly all these customers have paid for the product (unlike OAP Express) and (mostly) keep up to date with their Enhancement plan, hence contributing significantly to Microsoft’s revenue and the investment in the on-going product development.  Dynamics products also have long term roadmaps, each new version has 10 years of support from Microsoft and they are seen as playing a strategic part in Microsoft’s future.  Finally, as you have mentioned OAP and Dynamics fall under different teams within Microsoft; and that puts them under completely different sets of rules, Management and Leadership - I have my doubts that the decisions surrounding OAP have had any ripple in the Dynamics world.

So while I understand my views may be seen as biased (we are a focused Dynamics NAV Partner); I also know that I can choose to resell any product in the market.  However, we firmly believe that Dynamics has a long term strategic commitment from Microsoft and that ‘dropping it’ is not something that they are or would be considering.

So I hope this explains (or at least gives my view) on why Microsoft would not leave it's Dynamics customers in the same sort of lurch.

John Stokdyk's picture

Good reply - thanks!

John Stokdyk | | Permalink

Thanks for adding your more balanced perspective to my rant. I raised the Dynamics link partly because of OAP's potential for to act as a feeder pool, which I felt was something MS had to have if it was really going to challenge Sage, but also from the wider business applications brand.

Dynamics is a big operation but only within Microsoft would a billion dollar business be subject to such neglect. You make some really good points about the strength of the NAV and GP user bases, I still harbour a niggling doubt whether Microsoft corporate's heart really lies in the messy world of business applications. That said, if my worst case scenario did play out, I'm sure there would be several suitors who would be more than happy to take on Dynamics as a growing concern.

Sometimes commentators like me get carried away and labour a point that stretches reality a little. It's very useful to have people with more first hand experience to keep our feet on the ground. (That said, I still think the OAP episode was a horrible miscalcuation that will harm Microsoft's credibility in the business marketplace).

Cheers
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John Stokdyk, Technology editor

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