R.I.P.: Project Green, 2003-2007

Microsoft's grand unified theory of business processing applications has come to naught. Project Green is either dead or comatose. Whichever, it's another sign that the pieces Microsoft acquired to make up its Dynamics product line simply don't fit well together.

Project Green started making headlines in late summer 2003, a few months before Microsoft made the formal announcement of what was supposed to become a horizontally integrated ERP suite. Project Green would do for ERP applications what bundling did for Office: put together disparate but related applications in a tidy, integrated package and eventually bring them to a single code base.

But Project Green seemed doomed right from its conception, with the horizontal-bundling task running into logistical and management problems. What looked good in concept proved harder to execute, and the channel may have been one of the major reasons.

With the acquisition of products like Great Plains and Navision, Microsoft also picked up existing sales channels that were as disparate as the products. Since then, Microsoft has struggled to integrate the disparate sales channels into existing programs and processes. Even today, Dynamics products are sold differently than every other Microsoft desktop or server application.

A more integrated product family could have put portions of the Dynamics channel at risk. Considering Microsoft's near-dependence on the channel to sell its software, the potential risk of losing customers (or some partners) and the potential disruption of product sales, Project Green potentially created more problems for the company than it solved for its customers.

In September 2005, Microsoft quietly but quiet dramatically repositioned Project Green, with the announcement of Windows Server "Centro." The forthcoming software, due around the time of Windows Server "Longhorn," is specifically designed for midsize businesses. With the Centro announcement, Project Green shifted from horizontal to vertical integration along the desktop-to-server stack.

The same month, Microsoft announced a companywide reorganization that moved products from its Business Solutions group alongside those for Office. Logistically, the eventual creation of the Business division shifted integration in yet another direction, with Office and server software along the vertical stack. Horizontal integration among Dynamics products—the original Project Green concept—took yet another step backwards.

Also in 2005, Microsoft started to perceive competitive pressure from commercial Web services. The Google model of giving away free browser-based products or services disturbed Microsoft executives, but Salesforce.com's successful selling of browser-based services to businesses was akin to nuclear threat. Today, Salesforce.com claims nearly 650,000 subscribers from about 30,000 companies.

Web-based applications like Salesforce.com have got to scare the beejeebies out of many Microsoft executives. Microsoft's stronghold is the desktop, whereas Web platform services like Salesforce.com shift computing relevance away from desktop software. Maintenance is easier, too. Salesforce.com can release ongoing updates to the CRM service, with little or no impact on customers, unlike software they would have to install on their PCs or servers.

Microsoft's Dynamics integration along the vertical stack has three major benefits:

Office and server software can create sales pull for Dynamics products.

Microsoft and its business customers can better serve up server-based solutions, akin to Saleforce.com.

Vertical integration uses entrenched Microsoft products as an anchor to pull computing and informational relevance back to desktop or server software.

Tomorrow, during the Convergence trade show in San Diego, Microsoft CEO Steve Ballmer is scheduled to demonstrate CRM Live—Microsoft's response to Salesforce.com and its first hosted application service. CRM's role is itself evidence of Microsoft's broader problems with the original Project Green conception and troubled integration. The first hosted Dynamics application is based on software developed by Microsoft, rather than one of the acquired products.

Going forward, Microsoft is going to talk lots about software and services—or better stated, software plus services—rather than software as a service. Microsoft benefits by taking control of the nomenclature and by emphasizing what it perceives as the importance of software in delivering services.

The software-plus-services approach is really an articulation of Microsoft's forthcoming services platform, which the company hasn't yet formally disclosed.

As conceived in 2003, Project Green is dead. Whatever can be called its status today—live, dead or comatose—Microsoft's Dynamics integration has shifted from the horizontal to vertical, with Office above and server software below.

Project Green, we barely got to know you.

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