Channel Development: Microsoft Accounting Channel Implications

Microsoft has a new, super secret accounting package for small businesses. I have been approached by several people inside and outside of Microsoft about this product. Based on these interactions, I see several warning signals for Microsoft on their channel development for this new accounting product.

1. Customer Targeting: The fact that they are somewhat randomly approaching small businesses shows lack of planning in the launch process. Launch research needs to deliver critical product AND channel data to the vendor. Unless the process is well thought out and implemented, the data is compromised.
2. Channel Conflict: I hear that channel development needs to make sure not to conflict with Great Plains product sales. Good luck. This reminds me of US West telling me to launch their DSL product but not cannibalize ISDN. Channel conflict will rage between these products if their customer targeting is not rock solid (see point one.)
3. Product Acceptance: Microsoft seems to underestimate the reluctance to change. It is not the minimal price of the software that keeps me from changing. I do not change my software for core business practices unless my trusted advisors (CPAs in this case) recommend it and unless there is a great migration path. Microsoft knows how to do this-- remember the migration path for Excel from Lotus? Heck, some of my soft key strokes and short cuts from Lotus still work in Excel.
4. Channel Development: Even vertical approaches to the channel will fail. Microsoft recognizes the need to get the accountants on board, but their approach to the launch says they are missing the key inflection points. The trick is not a broad recruitment of accountants, but the recruitment of the right accountants.

Channels are a requirement for this product for three big reasons. First, small businesses are a fractured and divers market that is almost impossible to reach except through intermediaries. Second, every professional small business relies on outside accountants and will not take actions against their recommendations. Third, the motivation to change is not high since existing solutions are already in place.

I know there is a market need for better accounting software and believe that Microsoft, just like with Word and Excel, can produce better software than its competitors. However, without a crystal clear channel strategy and implementation, acceptance of the product will be slow. The shotgun approach to the beta and the channel development endanger the success of the product launch.

Scott Karren, The Channel Pro

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