Microsoft faces strong local competition in software solutions for small firms

Central and Eastern Europe is the region with the fastest growth rate in the world for Microsoft Business Solutions (MBS), however, Romania has still to make it into the top five countries.
MBS turnover in Central and Eastern Europe is expected to rise by 22-25% during this fiscal year (ending on June 30, 2008), with Romania forecast to generate between 3.8% and 4% of revenues, Jean-Christophe Berthier, a marketing lead for Central and Eastern Europe at MBS, told ZF.
“We basically have 5 countries (Russia, Poland, Czech Republic, Hungary, and Greece) who are doing 75% of the business. The next level: countries below 5%, but Romania is on top of them, that’s why it has a huge potential,” added Berthier.
Regional growth primarily comes from the segment of transactions, and not software solutions.
The business unit of Microsoft (the world’s biggest software producer), posted revenues worth more than 1bn dollars from its Dynamics business products line for this fiscal year (which ended on June 30, 2007), up 21% year-on-year, stated Jeff Raikes, MBS president.
“Depending on the region, we are outgrowing the market by a factor of 2 or 3 on the ERP and CRM segments. But, in some countries, on the transaction business, we sometimes have triple-digit growth,” added Berthier.
The company’s official specified Microsoft’s main priority in Romania was to recruit several partners, particularly on the segments Microsoft does not have a strong presence on.
The segment of small enterprises is still not widely covered by Microsoft products. “We have many strong domestic competitors on this segment. Microsoft recently launched a product that targets this market (Dynamics Entrepreneur 2008), but is still unavailable in Central and Eastern Europe,” Berthier added.
Berthier believes domestic alternatives to Microsoft solutions hold an important position on the market and competition on the ERP and CRM segments in the CEE region remains very tight.
“It’s difficult to compete with domestic firms only in terms of the final sale price. Microsoft products are more expensive because they can provide a certain stability, which many domestic companies cannot offer,” stated Berthier, and added Microsoft partners would have to play an important role here, and provide improved maintenance services, regular updates and a long-term development plan for users.
“On the short term, paying less may seem more of an advantage, but if the software provider disappears in 3 years, a user will have to start from scratch”.

Microsoft Business Solutions

Central and Eastern Europe is the region with the fastest growth rate in the world, however Romania has still to make it into the top five countries
Turnover in CEE is expected to rise by 22-25% during this fiscal year (ending on June 30, 2008), with Romania forecast to generate between 3.8% and 4% of revenues
Its main priority in Romania is to recruit several partners, particularly on the segments Microsoft does not have a strong presence on