Microsoft To Add Links To Payroll Services In Next Version Of Office - InformationWeek

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Software // Enterprise Applications

Microsoft To Add Links To Payroll Services In Next Version Of Office

The integration of ADP's payroll offering could be the first of many such partnerships for Microsoft.

Microsoft on Friday said it's partnering with Automatic Data Processing Inc.'s Small Business Services to offer integrated payroll services as part of the new Office release scheduled to make its U.S. debut in late 2005. Rollouts in other countries are being discussed.

The new suite is geared toward small businesses with 50 or fewer employees. The accounting package will have a link to ADP Small Business Services, which is part of the employer services division of ADP that provides outsourced payroll and human-resources services. The software package offers signature-ready tax forms, integrated checks and other online forms, and support for direct deposit.

Is the integration of this payroll offering the first of many such partnerships to come for Microsoft? "Absolutely," says Bruce Richardson, senior VP of research at AMR Research. Future upgrades might include links to Citibank, Discover, or American Express. "This would give companies seamless links for accounting entrees between your accounting books, as the owner of a small business, and the charges from your card," he says. "This could be the small-business accounting system for the Century 21 real-estate branch because it looks and feels very similar to Outlook and Office, and provides rudimentary accounting principles that are easy to use."

The announcement also marks the first time two of Microsoft's seven business units jointly developed software. The package is a result of collaborative efforts between the Microsoft Business Solutions and the Microsoft Office teams. The new edition of Microsoft Office for small businesses also includes upgrades for Microsoft Office Outlook 2003 with Business Contact Manager.

For the last 18 months, Microsoft has been on a path to build applications for small businesses. With feedback from small customers, the software company is finally beginning to pull together a cohesive offerings suite for smaller businesses that is showing up in monetary gains. "Sales for Office are up 20% in the small-business segment," says Steven Guggenheimer, the company's VP of worldwide small business for the small midmarket solutions and partners group. "Economic impact studies indicate about 98% of the world's business are small businesses."

The small-business market is enormous. Citing a Microsoft report, AMR's Richardson says there are 12.7 million companies with between 11 and 49 employees, and 27.2 million with one to 10 employees.

Approximately 80% of the Microsoft's revenue comes from small, midmarket, and large companies as of July, the most recent statistics. Of that, half comes from large companies and a quarter comes from each of the other two segments.

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