Microsoft Unveils Plans To Adapt Its ERP Applications For Cloud Computing

Microsoft will develop cloud-computing versions of its Microsoft Dynamics ERP applications and the company is promising to bring its partner ecosystem along as those applications are rolled out over the next several years.

Microsoft unveiled the roadmap for its cloud ERP applications before some 9,000 attendees at its Convergence 2011 conference in Atlanta Monday. But executives acknowledged that a lot of details remain to be worked out given the different development approaches the individual Dynamics AX, GP, NAV and SL products will require.

"For now we thought that it was appropriate for use to articulate the vision and the roadmap, the directional statement," said Kirill Tatarinov, corporate vice president for Microsoft Business Solutions, in a press conference following his keynote speech.

Currently Microsoft provides a Software-as-a-Service version of its CRM application, Dynamics CRM Online, along with the on-premise release. Dynamics CRM Online has been available in the U.S. for three years and just went global in February.

But until now Microsoft has offered only on-premise versions of its Dynamics ERP applications. Microsoft channel partners have had the right to host those applications themselves for their customers under a service provider license agreement (SPLA).

The next major releases of Dynamics AX, GP, NAV and SL will be developed to run on Windows Azure, Microsoft's cloud development platform that's been available for a year, Tatarinov said, beginning with the next version of Dynamics NAV that's due in 2012. The applications will support multi-tenancy, he said.

"Make no mistake, when it comes to the cloud, Microsoft's all in," said CEO Steve Ballmer, using his keynote to highlight the range of cloud computing products Microsoft now offers or is developing, including Windows Azure, Dynamics CRM Online and Office 365.

"Every one of our products will be engineered to deliver the full benefits of the cloud. Every one of the whole Dynamics set, for example," he said. "As I see it the cloud is probably the most important technological generation going forward for the next 10 years."

At some point Microsoft will also adapt Dynamics CRM Online, which preceded Windows Azure, to run on that platform, according to Tatarinov.

Next: The Role Of The Channel In Microsoft's Cloud Plans

Tatarinov said that there is a 50-50 split between customers choosing the on-premise version of Dynamics CRM and Dynamics CRM Online. But he said his conversations with customers indicate that interest in on-demand ERP applications has lagged and that fewer businesses are ready to move mission-critical data and workflows to the cloud.

Customers, nevertheless, wanted to hear that Microsoft has long-range plans to offer cloud-based ERP applications, the executive said, with seemless integration between on-premise and on-demand applications such as Microsoft now provides with Dynamics CRM.

Tatarinov also said that "it is hugely important for us to bring the entire [Dynamics ERP] partner ecosystem to the cloud" as it develops its on-demand ERP software. That includes providing guides and methodologies for moving code and customizations developed by solution providers to the cloud.

Tatarinov acknowledged that "the economics of the cloud are very different" for channel partners, given that on-premise application licenses are purchased while on-demand cloud applications are generally sold on a subscription basis. Last week Microsoft published the Microsoft Dynamics Cloud Partner Profitability Guide to help partners understand and work with the new business models cloud computing presents.

David Goad, managing director of eSavvy Pty Ltd., a Microsoft partner that specializes in Dynamics CRM deployments, praised the guide. "It offers clear guidance on how to benefit from this shift and serves as a great starting point for all partners looking to build a strong, cloud-based service," he said in a statement.

When Microsoft debuted Dynamics CRM Online, it was largely sold by new channel partners while existing resellers mostly stuck with the on-premise application, Tatarinov said. But over time more partners have been carrying both versions of the application.

Microsoft also said that a public beta of Dynamics AX 2012, the next release of that ERP suite for mid-market customers, is now generally available and that the final release of that edition will ship in August.

Dynamics AX 2012 offers a library of built-in business processes, what Microsoft called "unified natural models," that businesses can use to modify their organizations and processes. The application also provides new role-tailored experiences and enhanced business intelligence capabilities. "This new version of [Dynamics] AX is a game-changer," Ballmer said in his keynote.

Microsoft also said that Dynamics SL 2011 and Dynamics CRM 2011 are now generally available and Dynamics GP 2010 R2 will be generally available May 1.