Microsoft Expected To Detail Cloud ERP Plans At Convergence Show


CEO Steve Ballmer will use a keynote address at Microsoft's Convergence 2011 conference in Atlanta Monday to outline plans to offer on-demand versions of the company's Dynamics ERP applications, according to a Microsoft source.

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

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

Details of just what Ballmer and Kirill Tatarinov, corporate vice president of Microsoft Business Solutions, will announce in their keynotes Monday remain sketchy. Key questions to be answered include just which Dynamics ERP applications will be developed as on-demand software, the timetable for making them available, and the role channel providers will play in selling those cloud applications.

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Dynamics GP, NAV and SL are more targeted at SMB customers while AX is most popular among mid-size companies. Should Microsoft opt to develop only one ERP application for the cloud, Dynamics GP is a good bet because it competes most directly with on-demand applications from NetSuite and SAP.

Last week NetSuite, never shy when it comes to playing competitive hardball with Microsoft, put out a press release saying it had "rescued" more Dynamics GP owners by switching them over to its cloud ERP applications. NetSuite named Asia Digital Holdings, TYRX and Instrumart as three companies that had made the switch.

Microsoft will likely follow the same channel model for its on-demand ERP applications as it does for Dynamics CRM. Channel partners can resell the on-premise CRM software, host that application for customers, and/or resell the CRM Online application that's hosted by Microsoft.

Microsoft's Dynamics CRM and Dynamics CRM Online are built on the same code base and Microsoft is likely to follow the same model with its on-demand ERP application efforts.

Microsoft developed Dynamics CRM in-house, however, with the plan to eventually offer on-premise and on-demand versions of the application. Dynamics AX, NAV, GP and SL were all acquired and adapting them as multi-tenant software would be a challenge. Hosting them as single-tenant applications would be problematic: SAP's initial release of its Business ByDesign on-demand ERP applications struggled to gain market traction until multi-tenancy was added in a later release.