Microsoft flexes ERP muscles

When CACI International Inc. wanted to create an advanced budgeting and reporting software tool for federal agencies, it didn't want to reinvent the wheel. Instead, the systems integrator sought to build on applications its customers had to minimize user resistance.CACI turned to Microsoft Corp., whose popular office applications are used by about 90 percent of government agencies."We didn't want to start from scratch, but wanted to go with something that users were familiar with; so that the rate of adoption became very easy," said Ravi Dankanikote, a CACI vice president.The result was CACI Enterprise Budget, built on a Microsoft Dynamics enterprise resource planning product. Microsoft's Dynamics line also includes solutions for customer-relationship and supply-chain management.Although CACI launched the Enterprise Budget in June, it has yet to sell the budgeting tool, but the company anticipates demand from civilian agencies and state and local governments. The company expects to compete with CGI-AMS Inc., Oracle Corp. and SAP America Inc., Dankanikote said."We intend to go hand-in-hand with Microsoft into the deals and win [them] as a partnership," he said.Increasing numbers of companies are teaming with Microsoft to sell its CRM and ERP products to the government, albeit after some customization.In the five years since Microsoft first introduced its CRM and ERP solutions and set its sights on the public sector, it has gained traction in finding partners to sell these enterprise management products to contractors, who sell them aspart of their IT work for government agencies.The strategy is part of the company's campaign to expand its sales channel and create an image as an enterprise software company rather than solely a desktop software developer. It also helps the company push deeper into public sector markets."Our business applications for Dynamics fit seamlessly into the platform products that our customers are using today, so they're easy to manage, easy to administer, have a very low cost of ownership and are less complex," said Jack Hersey, managing director for worldwide public sector, Microsoft's business division.Despite its new enterprise software and branding efforts, Microsoft must be aware of certain business processes that the public sector requires, said Wayne Bobby, vice president of finance and administration solutions, Oracle's public sector group.In the federal government, agencies must comply with regulations set by the General Services Administration's Financial Systems Integration Office for financial systems requirements, testing and product certification, he said.At the state level, procurement regulations and funding complexities, and budgetary and reporting scenarios vary from state to state, Bobby said.Microsoft has more than 7,800 public sector customers worldwide that buy its business solutions, including Dynamics. Of that number, 2,200 are in the U.S. public sector, which includes federal, state and local governments and educational institutions, Microsoft officials said.Federal government customers include the U.S. Special Operations Command and the Chickasaw Nation. State and local customers include New Orleans, Albemarle County, Va., and the Johnson County, Kan., Park and Recreation District. Educational customers include Fairfax County, Va., public schools and the University of Wisconsin.With the recently released Microsoft Dynamics CRM Version 3.0, contractors easily can set up a 1,000-seat installation for a government agency; with previous versions, it was difficult to do a clean deployment of more than 50 seats, said Rajev Bricksin, Dynlink LLC's vice president of business development.Microsoft's public sector business "is growing rather rapidly right now just because the new product ? is scalable to larger organizations," he said.Dynlink, a woman-owned small business in Arlington, Va., teamed with Eagle Eye Inc. to customize for the federal government and government contractors an application based on Microsoft's CRM version 3.0. The application shows government agencies how much money they have left on their contracts before the fiscal year ends. It also shows contractors when contracts are coming up for bid.Dynlink demonstrated the application for the Navy, which had about 10 contract vehicles and was uncertain of the amounts left on them and which employees were assigned to them, Bricksin said.For government agencies that already use Microsoft products, setting up the CRM system would be easier, quicker and less expensive than installing solutions by other providers, he said. Siebel Systems Inc.'s product, for instance, takes more work to install and has many different screens, said Bricksin, who previously soldMicrosoft has more than 9,000 partners worldwide, specializing in various markets. The company has about 100 partners that sell to both the federal and state and local governments, Microsoft's Hersey said.Microsoft sells to the government only through its vendor partners, which range from small and mid-size businesses to larger companies such as BearingPoint Inc. and Accenture Ltd., which have partnerships with other global software and systems providers. Mid-tier contractors such as CACI and Tier Technologies Inc. of Reston, Va., and small businesses, including Invoke Systems Inc. of Baltimore, also partner with the software giant.By contrast, companies like SAP and Oracle use multiple sales channels in selling to the federal government, either directly to the agencies or through systems integrators."This gives the government customer more choice and more flexibility in picking the solution that is best for them," said Rand Blazer, president of SAP Public Services in Washington. He also noted that Microsoft and SAP collaborate in the public sector with their recently announced solution called Duet. The application creates a seamless bridge between SAP software, which automates accounting and supply-chain management functions, and Microsoft's office applications, he said. The first Duet buyer was the Pennsylvania Turnpike Commission, he said.Software and IT services provider Tier Technologies recently decided to ditch its the ERP solution it had used for the last 20 years and adopt Microsoft Dynamics, Hersey said. Tier Technologies wants to move the more than 100 top U.S. municipalities that run on its financial platform to Microsoft Dynamics, he said.Invoke Systems uses Microsoft Dynamics CRM 3.0 for a solution that lets federal agencies communicate with constituents and citizens. The company provides correspondent management solutions to the U.S. Senate and House of Representatives via Microsoft's CRM application, Hersey said.In the public sector, Microsoft faces competition from a bevy of companies including CGI-AMS, Oracle and SAP at the top end, mid-tier companies Eden Systems Inc. and Munis Inc., and small companies such as Intuit Inc. and Sage Software Inc. Because companies like SAP and Oracle usually do large enterprisewide deployments, Microsoft is targeting small to mid-size enterprises in the government space, Hersey said.Microsoft isn't backing away from larger implementations, however. For example, it used Columbus, Ohio, the 15th largest city in the United States, according to the 2000 census, as an enterprise testing ground for its Dynamics solutions, Hersey said. Project roll-out is planned for the fall, he added.Challenges remain, however. "The technical complexities in bringing Microsoft's application enterprisewide are very steep," said Oracle's Bobby.Nevertheless, Microsoft is well-positioned in the public sector marketand has a good strategy for selling its CRM and ERP applications to government, said Alan Webber, senior analyst at technology market firm ForresterInc."They know what their strengths are" he said. "And they're very attuned to what the other products are out there. Sometimes they try to stretch a little bit too much, but they're doing a good job."Staff Writer Roseanne Gerin can be reached at rgerin@postnewsweektech.com.