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Microsoft's recently unveiled plans to develop cloud versions of its four ERP application suites promises new opportunities for partners, but resellers will have to give up their reliance on software license sales and evolve into ISVs and service providers with vertical industry expertise.
And if Microsoft's experience with the channel and its CRM Online on-demand application is any indication, not all solution providers are going to successfully make the transition.
Interviews with Microsoft executives and channel partners during and after the company's recent Convergence conference paint a picture of a changing landscape for solution providers who work with the Microsoft Dynamics AX, GP, NAV and SL application suites.
"The ones we're most worried about are the ones that live off the big-bang license fees," said Doug Kennedy, vice president of Microsoft Dynamics partners, in an interview, referring to partners who depend on margins from reselling applications with little in the way of added intellectual property or services. "They're going to lose that up-front, big-bang license with the cloud."
Under Microsoft's cloud computing plans the next major releases of each of the four ERP application suites will be developed to run on the Microsoft Azure cloud platform, beginning with Dynamics NAV in 2012. Given that Microsoft releases a major update of each suite every 24 to 36 months, the cloud version of Dynamics GP would be ready in late 2012 or early 2013, while cloud editions of Dynamics SL and AX would debut in 2013 or 2014.
Microsoft anticipates that customers will adopt cloud-based ERP applications, which manage a business' core financial processes, at a slower rate than they have other on-demand applications such as CRM. "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 at the Convergence conference.
That means solution providers will have time to develop new business models as they contemplate adding on-demand Dynamics ERP software to their product offerings.
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