James Utzschneider is general manager of strategy for Microsoft's Small and Midsize Solutions & Partner (SMS&P) Group. Microsoft last week unveiled both its Dynamics platform, which will merge four ERP platforms and had been known as Project Green, and the Microsoft Small Business Accounting 2006 package. The company held its Microsoft Business Summit at its headquarters in Washington, on September 7 to unveil these products along with a system management initiative dubbed Centro. InfoWorld Editor at Large Paul Krill spoke with Utzschneider, a 10-year Microsoft veteran, on the eve of the event about the software giant's small business intentions as well as its take on the growing open source software movement.

How critical is the small and midsize business market to Microsoft?

Well, it represents about half of our commercial revenue today worldwide. It also represents significant upside in terms of growth opportunity for us and, more importantly, growth opportunity for the customers and the companies in the segment that we service.

Do you think the enterprise market is kind of maxed out? That there's not much left to penetrate there as far as new business?

Not at all. But it's important to appreciate the fact that instead of just focusing on enterprise technology and trying to apply it to companies that don't have that big of an IT staff, we've learned that it's important for us to take a segment-specific development approach. And that's one of the things that we're reinforcing at the event tomorrow night: the idea that small, midsize, and enterprise all have different requirements, and ultimately require different products with unique sets of code. On small business, we've done that with the Windows Small Business Server and the Small Business Accounting 2006. And we're reinforcing this type of approach for the mid-market with the work we're doing around Dynamics and Centro.

What's the main thrust of the Small Business Accounting 2006 announcement?

The main thrust of the announcement is a product geared toward meeting the needs of the owner/manager of a small company in terms of business management requirements. [It provides] accounting and integration with (Microsoft) Business Contact Manager for managing how they work with their customers, and to do so in a manner that's integrated with Office. Our research shows that most small businesses in the United States actually run their business on Office, so it makes sense to be able to take accounting and customer management functionality and integrate it in a way that's familiar with the tools they already use.

How difficult will it be to transition the four ERP applications in Project Green into a single code base?

It's a significant undertaking, but based on the feedback we've received from customers, we're doing it in a staged, iterative manner. The last thing companies in this segment want is a big bang. So based on the approach we're using with Project Green, we're taking all of the existing code bases and we're migrating them to common client technology. They'll all have this role-based user experience with deep integration with Office. I mean deep integration with Office, SharePoint [and a] common Web services layer.

I could probably assume what a big bang is, but what specifically is a big bang?

Oh, it's where the [customer] would be asked to throw out all of its existing code and go to something new from scratch. Instead, they want to migrate to the new technology in an iterative, managed manner. So what we're doing is a very gradual migration of the four code bases to a common client technology, and we'll do that with Green Wave 1, now Dynamics Wave 1. The release is over the course of the next year. And then once everyone's using the same user experience, the same reporting, the same integration with SharePoint, in the 2008 timeframe we'll migrate to a common server technology. And our customers tell us this is a sensible, manageable way for them to go from where they are today to where they want to be.

What's the installed base of the four ERP apps -- Navision, Great Plains, Solomon, Axapta?

We just did a study. We have a million installed seats, but I'm not sure how many customers that's divided across. So one of the numbers we'll be talking about is there are a million licensed users.

This next question is shifting gears a bit. I was at a software development show in Santa Clara in 2004 Monday and somebody from Microsoft said that you can't really have a software industry if you have open source, if you're giving stuff away for free. He said a number of things along those lines. What's Microsoft's position on that issue now about how the software industry perpetuates if you have open source software being given away for free?

I'm not really the right guy to answer that question. I don't know who that person was, so you may have to look somewhere else for a comment on that.

Do you have any personal perspective on that?

There aren't many open source business applications out there.

But it seems to be growing now. SugarCRM is one that comes to mind.

And?

I'm sure there are others out there.

We don't see it as a significant presence in the market. In the mid-market especially, businesses are looking for value. They're not in a position to experiment with technology. Business managers in midsize companies are incredibly pragmatic. They want a solution that works from a reliable provider, delivered by a locally skilled partner. We feel we have the right model moving forward.