Investor's Business Daily, March 15th, 2007
Microsoft's Rajat Taneja is concerned about a digital divide that's separating small and large companies in terms of access to and use of the most sophisticated financial and accounting software.
Taneja, who leads Microsoft's MSFT small-business applications and services unit, says small firms are falling behind bigger rivals. The big guys, he says, can integrate their financial activities to a greater degree by using the right software. The big guys can pay more, plus the market is tilted toward big customers, says Taneja.
Taneja's unit is developing financial software for small firms that he says closes the gap. One feature is that its office accounting software can be integrated with eBay EBAY services to let small firms sell online.
He recently spoke with IBD about how he's bridging this divide.
IBD: Why is there this growing digital divide?
Taneja: While small businesses have computers and a fair amount of software to run their business, there's a lot of manual processes, a lot of paperwork involved in their day-to-day work. For the most part, they have "islands of information" that don't talk to each other. They might have customer data in one of these islands and financial data somewhere else.
IBD: How did Microsoft learn this?
Taneja: Before we wrote a single line of code, we spent a lot of time talking to small businesses, looking at their operations and observing what they did. We asked them a lot of questions (about their) processes and problems.
IBD: What was the biggest problem for small firms?
Taneja: To run their business effectively, they needed background on their customers. But they ended up needing to plug the holes in their information with a lot of manual processes.
IBD: How does this compare with larger companies?
Taneja: We concluded that a lot of technological trends and financial processes that bigger companies are taking advantage of are still not benefiting smaller companies (for reasons of cost, software availability and longtime paper-use habits). These small firms also found it harder to add another level of financial processes that would benefit them. This is a digital divide.
IBD: What kinds of financial applications do small firms lack?
Taneja: Examples are selling products across multiple channels, monitoring the credit of their customers, doing advertising or banking online.
IBD: Does Microsoft fear competition from Intuit's INTU TurboTax, Peachtree Software and H&R Block HRB in financial/accounting software?
Taneja: If you look at Peachtree or Intuit's QuickBooks, they are good accounting software. But the approach Microsoft's taken is not just to build user-friendly accounting software, but also to connect with other Web services like eBay in a completely natural way. We're addressing the pain points of software small companies use.
IBD: How does Microsoft's financial software differ from TurboTax and H&R Block software?
Taneja: TurboTax and H&R Block are mostly for the tax piece of what small businesses need to do. We have (financial) interfaces and reports that a CPA can pull from a small company's accounts to prepare a tax return. We don't provide the tax preparation spreadsheet, though we provide all the financial input that goes into the tax preparation software that a CPA uses.
IBD: Does software like Microsoft Office Accounting Express 2007 really help small businesses?
Taneja: Yes. We built this software product from the ground up. It provides a very easy and simple way to run financial and accounting applications. It also opens up and releases that data to other parts of a user's organization that may be using (Microsoft's) Outlook, Word or Excel.
IBD: How does integrating the small-business financial software with online services like eBay help?
Taneja: When we realized that a number of companies were getting involved in selling online (on) eBay, we also realized that there were (smaller) firms that were missing out on this opportunity. The upshot is that the eBay integration connects right into Microsoft Office Accounting Express 2007.
Copyright 2007 Investor's Business Daily, Inc.
