6-Nov-03 - rev 6-Nov-03
Accounting Systems: the Future

I've written several previous articles on this subject (A0), and so far all is going per plan.

• Predictions - right on the money
• What does this mean - to your business?
• Project Green - executing the plan
• Is This a Good Thing or a Bad Thing?
• Do I Have a Choice?
• Additional Reading
• Change Log

Microsoft solemnly promised its business software development partners to never compete against them, and urged them to convert all their customers to Windows. That's exactly what most of them did, and year 2000 gave them the leverage to pry reluctant customers away from faster, more efficient and less expensive DOS and Unix systems.

In 1999 I made these predictions about Microsoft's intentions and what the result would be:

• Microsoft would buy a major accounting software company, probably Great Plains.
  This came to pass in December 2000, Great Plains followed by Navision in Europe.
• Microsoft would bring out a lower cost version of the purchased package to extend its reach into the large small business market, pressuring PeachTree, Intuit and Best.
  This came to pass when Small Business Manager was announced in July 2001, and an even lower cost version of Small Business Manger followed.
• Microsoft would purchase and integrate specialty modules to extend the reach of its products.
  This came to pass May-2002 with the purchase of the QuickSell POS (Point of Sale) product - and more to come.
• I predicted this would be the beginning of the end for just about all independent publishers of Windows based accounting and business management software. Microsoft plans exactly that.

Betrayal of the developers was inevitable - "A Microsoft partner is a victim they haven't gotten to yet" - but what does this mean to your business?
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What This Means to Your Business

• If you currently run any of Microsoft's accounting and management packages: Great Plains, Solomon, Navision or Axapta, you will be running a very different set of packages in the near future. Microsoft's Project Green will consolidate, replace and expand on these packages, integrating them fully with other Microsoft software.

• The Project Green software will require new Windows software, new computers to run it, and extensive retraining. Project Green is designed for the upcoming Longhorn version of Windows which uses a radically different filesystem, a new user interface, and will likely include hardware based security schemes. The accounting software will layer over the Microsoft Business Framework (A2) which is in turn layered over the Microsoft .NET Framework. All new everything.
• If you currently run Windows accounting software by another publisher, chances are you will be running Microsoft's packages instead, in the not so distant future.
• Your Microsoft business software will need to be continually re-licensed or you will lose use of your data. Licenses will be enforced by NGSCB (Next Generation Secure Computing Base (formerly Palladium)). One of Microsoft's most dearly held objectives is to eliminate the traditional perpetual license.

Why would you make these changes? Because accounting software needs support and updating. Microsoft isn't going to continue supporting five completely different packages, four of which it considers obsolete and not in its best interest. And if you're running some other brand of Windows based accounting software? Well, dead companies provide poor support.

Microsoft's revenue goals for its Microsoft Business Solutions group (from $250 million to $10 billion within 10 years A2) leave no doubt they expect to marginalize all competing players - they will no more tolerate competition with their business management software than they do competition with Windows and Microsoft Office.

"How can Microsoft run long established accounting and business management publishers out of business?" The same way they toppled Lotus 123 and WordPerfect. Both had near monopoly market share, and both are now nearly invisible.

Microsoft "helped" Lotus and WordPerfect transition from DOS to Windows where they couldn't compete against Microsoft products already fully integrated with Windows using insider knowledge of the Windows code. Occasional tweaks to Windows DLLs that destabilized competing products caused even more harm - "DOS isn't done 'till Lotus won't run".

Microsoft is working hard to convince ISVs (Independent Software Vendors) to build on the Microsoft Business Framework, and many are signing up (A3). These ISVs will be sitting ducks. Armed with a level of integration no competitor can match, Microsoft will simply substitute its products over the customer's installed and ready MSBF/.NET foundation.

The transition From Windows XP/2000 to Longhorn/.NET will be far and away more complex than DOS to Windows was, and many publishers will fail in trying. Those that succeed will be as weakened as Lotus and WordPerfect were.
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Project Green

Project Green has already absorbed 40% of Microsoft's 1700 Business Solutions programmers, projected to rise to 66% by the end of 2004 (A5). That leaves scant staffing to maintain the older products.

The stated objective of Project Green is to write a completely new set of products developed with Microsoft's .NET programming languages, and to integrate them all tightly with Longhorn (the next major version of Windows) (A1), Microsoft Office 2003, Microsoft CRM (Customer Relations Management), Microsoft SCM (Supply Chain Management) and the full stack of other Microsoft products.

Longhorn itself is a massive return to Microsoft's pre-Internet strategy of locking customers into Windows and everyone else out through incompatibility (A4). They spout "XML" but they mean "Microsoft XML". They're building Internet Explorer deeply into Longhorn and encouraging programmers to use special features so traditional Web browsers can't read Microsoft Web files.

No other programming house will be able to come close to Microsoft's degree of horizontal and vertical integration, and Microsoft will capitalize on that by making the packages interdependent. If you want a particular Microsoft product, you need most of the rest of them to use it, effectively locking you in and competitors out.
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Is this a Good Thing or a Bad Thing?

That depends on how you view your business. Major factors are Cost, Ownership and Security. Here's the score card.

• Path of Least Resistance
  Good: The Microsoft path will take far less thought and planning and fewer decisions on the part of business "decision makers", because Microsoft has already done the planning and made all the decisions for you. They will tell you when to buy what.
  Bad: Having exactly the same system as most of your competitors may not be a competitive advantage.
• Data Formats
  Good: Your data will be in the same format many other companies your size will be using, making information exchange easy.
  Bad: Microsoft will control your business data. While they may not achieve their expressed goal for your data to reside on their .NET servers and you lease access to it, it will still be in proprietary formats readable only with Microsoft's programs you must continuously relicense.
  Bad: Microsoft's expressed goal is elimination of the traditional perpetual license in favor of a lease plan. Failure to renew your lease will render all your software unusable and your business data inaccessible.
  Bad: Theft of data will be easy, because systems that can read it will be everywhere.
  Bad: Much larger business partners are likely to be using entirely different data systems based on Java and standard XML (as distinct from Microsoft XML).
• Integration
  Good: Your accounting system will be completely integrated with all the rest of your business software as part of a complete top to bottom Microsoft information system - Microsoft Office 2003, Microsoft Exchange Server 2003, SQL Server 2003, Microsoft CRM (Customer Relations Management), etc.
  Bad: Tight integration and dependencies means you will have to purchase pretty much the full range of Microsoft products to have any of them.
  Bad: Tight integration will lock out competitors, so competing products will disappear from the market and Microsoft can freely raise prices.
  Bad: The Microsoft server programs your accounting will be integrated with are complex and require powerful (expensive) hardware for adequate performance.
• Installation / Integration Costs
  Good: initial integration costs will be relatively low, take less time than alternatives, and will have a good chance of working, because Microsoft will have done most of the integration work for you.
  Bad: the Microsoft way may not be the most effective way to run your business, but you will have little choice except to change your methods to match the software.
• Operations Costs
  Bad: Continuing operating costs will be very high compared to other systems because of high complexity, continuous updates, security problems, periodic license and support payments to Microsoft and forced upgrades requiring retraining, new software and new computers.
  Bad: The system will be very complex, especially for smaller businesses, because it incorporates a large number of complex Microsoft applications designed for much larger businesses. Microsoft Exchange and Active Directory anyone? Administration costs will be high.
  Bad: Cost and complexity for protection from and cleanup of worms, viruses, trojans, industrial spies and other invaders will continue..
  Bad: Competitors may have much lower operating costs, particularly those that have adopted open source based systems. These systems involve no license payments, can be far simpler, easier to secure, more stable in operation, and will be free from the popular worms and viruses.
• Upgrades
  Good: Software upgrades will be part of your lease agreement. They will be automatically downloaded when ready rather than being separately purchased.
  Bad: Upgrades always disrupt business to some degree and require some retraining. You will now upgrade on Microsoft's schedule, not your own, as is already the case with License 6 subscribers.
• Pre-trained Employees
  Good: Pre-trained employees will be easy to find, because you're using the same software most everyone else is.
  Bad: Employees will have an easy time finding employment elsewhere whenever they feel they can get more money.
• Security
  Good: Security patches and bug fixes will be automatically downloaded and installed on your systems over the Internet.
  Bad: Microsoft bug and security fixes have a reputation for breaking other things. Automatically installed, you may not know what happened.
  Bad: Your system will not be fully functional without a high speed Internet connection allowing your computers access to Microsoft's servers, and Microsoft access to your computers.
  Bad: Microsoft has the right to enter and examine your computer systems and software at any time and make changes, even to disable software - it's already in the Windows XP and Windows 2000 SP2 EULAs (End User License Agreement).
  Bad: It will be impossible to fully secure your systems when you are granting mandatory access
  Bad: "Tight integration" top to bottom and side to side means a security breach at any point gives access to every point in your system. A fast moving malicious worm could bring your business completely to a halt almost instantaneously, requiring days of effort before you can reenter the world of commerce.
  Bad: Longhorn's seamless intermixture of Web and local content will bring a whole new generation of highly dangerous security vulnerabilities. These will take years of patching and upgrades to wring out.
• Business Continuation
  Bad: Microsoft will have the right and the ability to disable your use of their software for any real or imagined breach of license or if they have some objection to your business or the way you do business. This means potential and unpredictable loss of access to your business data.
  Bad If you sell your business, you cannot include any Microsoft software in that sale without Microsoft's permission. This is already a serious problem. Businesses have found they had to buy out the full term of their License 6 contracts to get that permission, and those contracts become invalid upon completeion of sale, so the buyer must relicense. This significantly reduces the value of your business.
  Bad If you can't make your payments to Microsoft for some reason, you are out of business. Your data is "protected" for your "security" and will not be accessible without paid up Microsoft licenses.
• International Trade
  Bad: with so much of the world moving to lower cost Linux / open source based systems, you face both intensified lower cost competition and incompatibility with trade partners. China is already pretty much a lost cause for Microsoft and the rest of Asia will follow. Even Australia is installing a lot of Linux and India too. The European Union is pushing to open source software, particularly Germany. Certainly Africa and much of South America.
• Ease of Migration
  Good: Microsoft will make it as easy as possible to migrate to their accounting and management systems from whatever you use now.
  Bad: once you've bought into the integrated Microsoft business environment, it will be just about impossible to escape. Even if you install a different system, you'll continue to pay Microsoft or lose access to your historical data, all in Microsoft's proprietary formats. It may be more practical to cash out and start a new business.

Do I Have a Choice?

Yes you do, but many business people have already chosen not to have a choice. Many "decision makers" cherish the ability to say "I really had no choice" and are quite comfortable with Microsoft control. Pointing out alternatives just angers them.

Nonetheless, some business people are uncomfortable both with Microsoft control and ever increasing costs. Some are already moving away from Windows or avoiding Windows in the first place. A few examples.

• Ernie Ball Guitar Strings dumped Microsoft for Linux after suffering a painful BSA software compliance audit - to make sure that never happened again. No regrets.
• The City of Garden Grove, California has been migrating gradually to Linux for significant cost benefits.
• The City of Munich rejected Microsoft's lower bid in favor the long term savings of migrating 14,000 PCs to Linux and OpenOffice.
• Burlington Coat Factory chose Linux for stores, warehouses and offices.
• The City of Largo Florida migrated from mixed Windows and Unix to an all Linux thin client system.
• More companies using Linux.

Other companies choose to stay on Windows but reject applications that tie them to Microsoft. Fortunately for these companies there is a good selection of office productivity suites and particularly non-Windows accounting and business management software.

Changing a company's accounting software is traumatic, and I'm the last person who's going to recommend going out and doing that just to do it. On the other hand, if you have to do it anyway, due to growth, demise of a software publisher, or forced upgrades by a publisher, you should take a good look at getting off the Microsoft treadmill.

Here are my recommendations for preserving control of your business without upsetting the apple cart.

1. Select an integrator, consultant or support person who has a good familiarity with Linux / Unix and the software packages available for Linux.
2. Set up a Linux/Samba server for your general file and print services instead of an NT/2000 server. Samba which makes your Linux box look like a Windows 2000 server to your workstations, comes free with most Linux Distributions. This server doesn't have to be a hot machine - many companies start with a PC that's reliable but no longer fast enough for the latest Windows software. You can add a good tape backup system to it. Novell has cast their full weight behind Linux servers making this path even more practical.
3. Start migrating to OpenOffice as your standard office productivity package. It's very compatible with Word and Excel files, close enough to MS Office it will require little or no retraining, and it's free. If you need WordPerfect Office compatibility, the StarOffice version adds that at $79. OpenOffice runs on Windows, Linux, Unix and Macintosh, allowing easy migration.
4. Sample Linux accounting packages and select one that meets your needs. There are many fully mature packages ported from Unix, and some open source accounting packages that let you have your own way of having it. Here are links to a whole bunch of Linux Accounting Software.
5. When you are ready to migrate to new accounting software, set up the user interface that works with it on your Windows PCs. Depending on the software you selected, this may be simple terminal emulation, or a Windows GUI interface. Some packages offer both.
6. Start looking for places you can install Linux workstations instead of Windows workstations. These places are not hard to find in most companies. With a bit of planning you can probably end up with just one Windows machine for certain sticky compatibility issues with some vendors or customers.

The point here is not to just junk everything you have and start over, but to stop being dragged deeper and deeper into an expensive environment you won't be able to escape from.

With just a little effort you can free yourself from high software costs, high administration costs, poor security, worm invasions and outside control. As with Munich, a little extra up front can result in substantial long term savings.

With Linux development effort moving increasingly from server applications to desktop applications this whole process will become easier and easier.
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- Andrew Grygus

• Linux - What is it and how is it used?
• Should Your Business Use Linux? - and can it?
• The Microsoft "Road Ahead" - their plans for your business.
• A0 - Previous AAx articles on the future of accounting:
  DEC-2000 Microsoft Invades New Turf
  AUG-2001 Microsoft Guns for Intuit
  JUL-2003 2003 and Beyond
• A1 - Project Green & Longhorn - CRN - Microsoft 'Project Green' Now Aligned With Longhorn
• A2 - MS Business Framework - The Register Microsoft Business Framework: The 10-year plan"
• A3 - MS Business Framework - Microsoft Watch - Microsoft Business Framework Gets ISV Backing
• A4 - Longhorn - CNet News.com - Plan A for Microsoft
• A5 - Project Green - Information Week - Microsoft Is Keen On Green Oct. 6, 2003