Microsoft felt that they needed to fill a marketing gap and have a cloud-based ERP offering. As a result, they  announced project Madeira, which I’ve code named  ‘Baby NAV’, to release late in 2016. I think this is a fantastic idea and I hope it is a raging success but I would like to offer some cautions to Microsoft.

Microsoft has hinted at Madeira being for companies looking for their first ERP solution, or those upgrading from QuickBooks. If you are buying your first accounting solution you are going to look at the really low-level products like Xero which are products that provide very simplified functionality to the very small business market.  To compete Madeira will need to be equally simple. It will be very difficult to ‘dumb down’ NAV to this level. Warning: Can you make NAV this simple?

QuickBooks is very well established and functionally deep for small business. QuickBooks offers strong native bank integration, AMEX reconciliations, expense claim integrations, automated collections processes, form customization and much more.  QuickBooks customers will demand all the same functionality and much more before they will switch to a new product. Warning: Just being on Azure is not going to be enough.

Microsoft is highlighting the native Office and Outlook integration of Madeira, which is fantastic as I love Outlook. I understand the cross product links, but I fear that many small businesses are not as addicted to Outlook as I am – which would render this feature moot for many small businesses.  Warning: Not everyone uses Office 365 or Outlook.

Microsoft has said they will have a one click upgrade from QuickBooks, or you can choose a predefined chart of accounts. I am very skeptical about this.  If you have finally outgrown QuickBooks it is usually because you hired your first internal accountant. This accountant is insistent you move from pure bookkeeping to actual accounting. Real accountants do not want a ‘canned’ chart of accounts, they want a structured and custom chart with divisional reporting to suit the many different business lines that small businesses develop. Moving your QuickBooks Chart to Madeira would be silly.  Warning: Do not underestimate the love between a passionate accountant and their Chart of Accounts.

Following on from that thought, is there a gap in the market between QuickBooks and full blown NAV, GP or NetSuite? Assuming you hold on to QuickBooks for as long as you can, you have hired an accountant, you are likely ready to take the jump to a fully featured and complex ERP. We have seen SBF, SBA, small business accounting and other products from Microsoft crash and burn in this space. Warning: ‘Mind the Gap, if there is one.’

Sold by Cloud Solution Providers (CSP’s), implemented by whom? I do not believe Microsoft Corporate have understood how complex an ERP is and how much effort goes into a successful implementation. Mid-market ERP’s are complex and only work well if they are implemented by experts, which takes time and costs money. Someone who sells office 365 for a living, is simply unable to successfully implement an ERP.  Now if you are going for the XERO, very small business market, then implementations are not too hard, but my reading says this is not the Madeira market. Warning: Who will do the implementation well?  

Now do not get me wrong. I deeply hope Madeira is a raging success as eOne will benefit greatly through selling integration solutions into this new market space, we have a lot to gain. I am nervous  on Microsoft’s behalf. This is going to be a difficult project with many hurdles. eOne and many other VAR’s and ISV’s will be here to help Microsoft navigate a course  – but they will need to address the above cautions and many more in the short term.