Microsoft Revises Licenses To Support ERP App Hosting

This week, Microsoft hopes to remove some roadblocks to partner-hosted ERP adoption with the introduction of expanded Service Provider Licensing Agreement (SPLA) options for its full business applications lineup.

The plan aims to make it easier for solution providers to "rent" ERP software from Microsoft without paying fully up front and then host it for customers. Under the Software-as-a-Service model pioneered by companies like Salesforce.com and NetSuite, customers pay as they go for business applications hosted by vendors. Users typically pay a per-user, per-month fee of slightly more than $100 depending on the scope of the applications.

That subscription model obviates the old big-bang up-front license sales approach that historically drove business for software giants such as Microsoft, Oracle and SAP.

The trick for Microsoft, Redmond, Wash., will be to devise a way for its partners to play in this SaaS scenario while guaranteeing adequate service levels. Microsoft's latest response to the SaaS movement, to be delivered during the Convergence show in Munich, Germany, fits into its game plan of offering a range of delivery methods for its business applications.

"We fundamentally believe in choice, [in] having on-premise [applications], in having programs like SPLAs, so others can offer our products as a service, and Live offerings directly from us. They are all needed," Satya Nadella, corporate vice president of Microsoft Business Solutions, told CRN.

"We've had CRM available through SPLAs for some time and had fantastic traction with over 20 partners and 50 more in the pipeline," Nadella said.

This news, along with an update of Microsoft's CRM Live plans and forthcoming details about the new Dynamics CRM V.3c, which was updated to take full advantage of Vista and Office 2007, will be announced today at MBS' first Convergence show for Europe, Middle East and Africa this week. Microsoft Chairman Bill Gates will be among the keynoters.

While a handful of partners have offered hosted MBS Dynamics CRM and Great Plains applications for some time, they worked out their licensing options through one-off deals.

NaviSite, for example, was an early adopter and an early Microsoft hosting partner. The difference now is that Microsoft is making the SPLAs broadly available for all four of its ERP lines in a programmatic way.

"Think of this as a software license on demand. Instead of buying all the licenses up front, you now rent. That takes away the big up-front capital expenditure costs," said Mike Mazur, vice president of channel sales and alliances for NaviSite, Andover, Mass.

SaaS ranks will grow further this week as former PeopleSoft CEO Dave Duffield launches Workday, a new provider of on-demand enterprise business services.

Sage Software has offered hosted ERP apps for years, indeed well before the ill-fated Application Service Provider boomlet of the late 1990s.