Microsoft expands its cloud ERP roadmap

Dynamics AX will be available in the cloud this year. Next up are Dynamics NAV and Dynamics GP, executives promised at the annual Convergence show.

HOUSTON -- Microsoft outlined its vision for the future of ERP today, and it includes multiple applications delivered in multiple flavors of the cloud with a little consumerization thrown in.

Microsoft Dynamics NAV 2013 and Dynamics GP 2013 will be released to Windows Azure in the Microsoft elastic cloud next year, said Kirill Tatarinov, president of the Microsoft Business Solutions division, at the annual Convergence conference Monday.

At last year’s event, Microsoft promised that all its ERP products -- AX, NAV and GP -- will be offered on-demand in the cloud. The first, Dynamics AX, will be released later this year.

Dynamics NAV and GP will be hosted in Microsoft’s data centers, but partners will continue to manage the relationship, Tatarinov said.

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“As we told you last year, partners remain a very important part of our ecosystem,” he said. “What we’re announcing with GP and NAV 2013 on Azure would allow them to do what they were already doing.”

Ultimately, the ERP products will follow the same model as Dynamics CRM, which can be purchased as an on-premises application, hosted by partners or Microsoft, Tatarinov said.

In fact, Microsoft’s experience with its CRM product is informing how it transitions ERP to the cloud, a process that has not been without its bumps for other vendors in the marketplace. SAP pulled Business ByDesign, its cloud ERP application, from the market when it ran into issues with multi-tenancy and problems selling the product effectively. Oracle, which purchased ERP companies PeopleSoft and JD Edwards and boasts its homegrown E-Business Suite, is just now releasing a combined Fusion Applications that runs either on-premises or on-demand. Customers are facing potential issues in managing the complexity of the combined Fusion Applications in-house.

Both Oracle and SAP launched on-demand CRM products before moving on to on-demand ERP like Microsoft is doing, but Microsoft executives vowed today that their experience will help them manage.

“[With CRM] we have successfully transitioned from being an on-premises packaged product to an on-premises packaged product also running in the Microsoft data center to becoming a complete online service,” Tatarinov said. “Every bit of learning we have there, every bit of learning from Office 365, we’re applying that to our ERP processes. Three releases in 18 months? You can see the change there from a group that used to put out a release every three years.”

Indeed, upgrades present a significant departure from the traditional approach of on-premises software upgrades. Currently, Microsoft issues upgrades to its CRM application two times a year. It previewed the upcoming version, scheduled for release in the second quarter, last month. It will include mobile support for multiple devices and browsers. ERP upgrades will also require an adjustment.

“The partner will play a role in that,” Tatarinov said. “In NAV in particular all of those deployments will include an ISV solution. It is a partner-led solution. We will have rules of engagement.”

Microsoft will not follow the lead of Salesforce.com, which issues three upgrades a year to all of its customers on its own schedule.

“Our practices for forced upgrade, for lack of a better word, has been and will always be user- and people-centric versus draconian, like executed by some of our competitors,” Tatarinov said. “For example, in CRM Online we give customers a year to move to latest version and we allow them to schedule when they move.”

Additionally, Microsoft already had its own experience trying to combine its myriad ERP products into one, the way Oracle is doing now, when it attempted and ultimately killed off Project Green.

“Oracle basically did Project Green with Fusion,” said Joshua Greenbaum, principal at Enterprise Applications Consulting in Berkeley, Calif. “Microsoft had already done Project Green and learned its lesson.”

Perhaps informed by the experiences of its competitors, Microsoft is taking a more measured approach to cloud ERP.

“What I think Microsoft has done differently is chart a course that is doable and frankly matches the aspirations of its customers,” Greenbaum said. “The deployment of choice is the one the customer wants.”

Indeed, cloud-based ERP was not necessarily what everyone in the audience was there for.

“Kirill wasn’t as compelling as we had hoped for,” said Bill Mayor, chief information officer of Butterfield & Vallis, a Bermuda-based food wholesaler and distributor with $100 million in annual revenue. The company is in the middle of migrating from a highly customized legacy ERP system from Tecsys to Dynamics GP. “I was hoping to see a little more on Windows 8 and how it’s going to be integrated across their different solutions. Otherwise I feel he touched on everything we expected.”

While Mayor has read reports stating that the next major upgrade to the desktop operating system will ship in the fourth quarter, he was disappointed that Microsoft did not provide a firm ship date.

Mayor added that Microsoft’s cloud timeline for Dynamics is of less interest to Butterfield & Vallis because the broadband networks that serve Bermuda are not reliable enough to risk putting enterprise data in the cloud.

A more positive reaction came from one woman who consults for a California renewable energy company that uses Dynamics AX.

“I thought it was a very good, broad-based speech,” said the first-time attendee, who declined to give her name. “It’s good to know that there will be a lot more products that are adapted to the cloud. To me it seems to be a better choice for lots of companies that don’t have resources. It’s flexible and is good for companies that are growing.” 

Microsoft also hopes to bring its experience with consumer technologies to its business applications. Its Metro UI offering will allow Microsoft products to run across smartphones, tablets, PCs and even televisions.

“Windows is going to come in many shapes, many sizes, and the ability to get that OS without compromises is something we’re very, very excited about,” said Kevin Turner, Microsoft’s chief operating officer.

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