Microsoft Dropped Office Accounting: Why the Surprise?

Sometimes seemingly smart people just have bad ideas. Like Germany opening up that second front against the Soviet Union in World War II. Making that Speed Racer movie. Trading away Cliff Lee. And definitely putting The Jay Leno Show on prime time every weeknight. My friend Brian, who runs an employee-benefits firm, is certainly smart. He too, had a bad idea. He's so annoyed about it that he didn't want me to disclose his last name or that of his company in this column. I can't blame him. For more than two years, Brian used Microsoft's Office Accounting software in his business. Just last month, Microsoft (MSFT) announced the discontinuation of the application. Now Brian is stuck. It didn't seem like such a bad idea when Brian bought the program. Introduced in 2006, Office Accounting was Microsoft's challenge to Sage Software's Peachtree and Intuit's (INTU) QuickBooks, then the market leaders in small business accounting software. My firm sells Microsoft and Intuit software, and I have to admit that even we were encouraged by the announcement. Office Accounting, included as part of the Small Business Edition of Office, would integrate with Word, Excel, and Outlook. It was inexpensive. It would be supported by a growing network of "small business specialists," such as my firm. And most exciting of all, it was made by Microsoft. Sounded like a good idea, right? Wrong. Microsoft succeeds slowly—or runsThis fall we've got new talk shows from Wanda Sykes, Jimmy Fallon, George Lopez, and many others, including Jay. Many lack experience with the format and, judging by some of the commercials I've seen, extremely unfunny. In Leno's case, there's also competition from scripted dramas on other channels. The software industry is no different. The market is awash in new technologies from untested companies. Wasting time watching Leno isn't such a big deal. But choosing the wrong software for your business is. So how do business owners know that a technology—or the company that makes it—will still be around five years from now before they invest precious time and money in it? Just don't do what Brian did. Brian thought he was investing in a product. But he should've realized that he was investing in a company—one with a track record of discontinuing products that don't sell and allocating fewer resources to support less-profitable products. Microsoft also seems unable to get a product working well until at least its third iteration. Look at Windows, SQL Server, and Office. Rarely should a small business owner become an early adopter of any technology from any company—especially Microsoft—when it comes to something so critical as accounting. Brian should've waited for a few version releases before making the leap. Like Leno and his producers, Brian should have taken a harder look at the competitive landscape. There were already a bunch of strong accounting software products for small businesses when Microsoft released Office Accounting. What features would make this product stand out? Integration with Outlook, Word, and Excel? Lower price? Easier to use? Already done. Office Accounting had nothing new to offer. A business owner could pick up a copy of QuickBooks or Peachtree with much the same features and priced about the same. And these products had been around much longer. Another important consideration is how much outside support the software enjoys. Small business owners need support—not just from the vendor, but also from its partners and other business owners who use the product. Brian's antennae should've been raised when he asked other business owners, colleagues, and accountants what they thought of Office Accounting and was mainly met with blank stares. No one knew about it. Where were the user conferences? The blogs? The buzz? Office Accounting was just an add-onWhen Brian was researching Office Accounting, he found that Microsoft had a community of "small business specialists" who would help him with this product. If he had dug further he would've found that the community was only recently formed and consisted mostly of Microsoft partners who were not necessarily certified public accountants or indeed had any accounting background. If he had asked more questions, he would've found out that to be a Small Business Specialist, one needed only to have a computer, to have attended elementary school, and be able to walk and chew gum at the same time. I should know. That's pretty much how my firm became a small business specialist. And we're not so good at walking and chewing gum. Many CPA firms have expertise with accounting systems. Unfortunately for Microsoft (and Brian), not this one. While Office Accounting could be purchased on its own, Microsoft was pushing it more as an add-on to its existing Office suite. That's another red flag. The product was one of hundreds that Microsoft sells. At its next-to-nothing price, its potential for becoming a significant profit maker was remote. In other words, Office Accounting was little more than a marketing gimmick to promote sales of Office. So when the gimmick didn't work, Microsoft pulled the plug. If Leno's ratings don't improve, his show may suffer a similar fate. Brian learned that if he's going to buy important software from a technology company, the product should be a core application, not something peddled to promote other products. It's not the end of the world. Competing accounting software vendors are offering tools to migrate Brian's Office Accounting database to their products. Nor should Jay worry. Long after his talk show is cancelled, he'll be a success at doing stand-up and appearing as a guest on Letterman. But next time, Brian will have learned his lesson. He'll know what to consider before purchasing a key technology for his business. I'm afraid the same may not be true for TV. I heard Paula Abdul is considering launching a talk show. Some people never learn.

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