Microsoft this week outlined a clear plan to deliver its Dynamics enterprise resource planning (ERP) software as cloud-delivered services. Microsoft has some credibility here, drawing on its experience delivering Dynamics CRM Online. But is it moving fast enough with its cloud strategy, and will the company really change its Microsoft-biased ways?
These were questions many Dynamics customers had in mind before attending this week's Microsoft Business Solutions Convergence Conference in Houston, Texas. They were reassured, for the most part, as Microsoft laid out a sensible and fairly aggressive roadmap for its various ERP software products (GP, NAV, and AX) and its Dynamics CRM application. Microsoft also vowed it would have "multi-platform, multi-device" mobile support. This must mean Apple iOS and Android OS tablets and smartphones, but top Microsoft executives including COO Kevin Turner and Microsoft Business Solutions president Kirill Tatarinov couldn't bring themselves to name names.
Microsoft's cloud strategy is important because it represents the long-term future for these apps, even if demand for online ERP is only just beginning. So after all the announcements, speeches and presentations, how does Microsoft's cloud strategy stack up? Here's my take on 6 pros and 3 cons of turning to Microsoft as a cloud-based enterprise apps provider.
Pro - Dynamics apps look like and tightly integrate with Office and SharePoint. This is Microsoft's old saw, but it's still a sharp one where customers are concerned. "We had to look at the way our people work, and what we like about Dynamics is the familiar user interface," says Bill Schlageter, CIO at Dentsply, a $2.5 billion global dental supplies manufacturer and distributor. "We knew that the adoption curve would be a lot quicker than for some of the competitor interfaces." Dentsply is using Dynamics CRM Online, and Schlageter says the firm will move from Dynamics AX on premises to the online service as soon as it's available.
[ Want more on Microsoft's Dynamics announcements? Read Microsoft Inches Closer To Delivering Cloud-Based ERP. ]
Pro - Microsoft's cloud apps are the same as the on-premises apps. Many of Microsoft's competitors offer just cloud apps (Salesforce.com, NetSuite, Workday), or they have separate products for on-premises and public-cloud delivery (SAP). Microsoft strategy is to offer one app that can be run on-premises, on private clouds, or on Microsoft's Azure public cloud -- a strategy that Oracle also espouses with its Fusion software and Oracle cloud.
Microsoft already takes this approach with Dynamics CRM, and it's promising to do the same with NAV, GP and AX. That's reassuring when you're making a 10- to 20-year commitment to run your company on a particular ERP system, since you know you can go cloud without changing your applications or supported business processes. Or, if you don't like the cloud performance or pricing, you can take it back in-house.
Pro - Microsoft supports hybrid deployment scenarios. Moving to the cloud shouldn't be an either-or proposition. Microsoft lets you use different options depending on the employee role or the workload; it is promising to let companies split workloads running on the same ERP application among on-premises (think finance), private-cloud (think remote factory) and public-cloud (think supply chain) deployments. Microsoft claims to make it easy, too, by letting you manage assets and capabilities across all three environments using Systems Center and manage users across all three environments with single-sign-on and federated identity access control with Active Directory.
Microsoft also offers Office 365 Exchange, SharePoint, Lync, and Office apps services, SQL Azure database services, and other online services through its Windows Azure cloud platform, and it all can be wrapped into one admin, deployment, and subscription plan.
Pro - Microsoft vows it will support rival platforms and mobile products. Microsoft COO Kevin Turner sent this message loud and clear during the opening keynote at Convergence. He still clung to the "we'll work first and best on Microsoft products" message, "but we'll also work on the other guys' platforms," he said.
There's evidence this is no empty promise. In February, Microsoft announced it will release a battery of new mobile options for Dynamics CRM, including support for Android devices and Apple iPhone and iPad.
"It was refreshing to hear Microsoft acknowledge that there are other vendors and other technologies and that they're going to collaborate and cooperate with others," says Sharon Boyle, associate director, global supply chain, at World Vision. The global charity is a Dynamics AX user and also uses Skype, which Microsoft bought last year, for low-cost communications.
Pro - Microsoft has picked up the pace on app development. Tatarinov, Microsoft Business Solutions president, made a very public point of saying that his group is delivering on its promise to pick up the pace of development. True, though a gap remains between the pace of change for on-premises versus cloud apps. The ERP apps that are still only on-premises (AX and SL) get annual upgrades and major new versions every three years. Dynamics CRM switched to spring and fall updates once the online version became available, and NAV and GP will presumably go onto the same schedule once available as services on Azure later this year.
Some customers actually complain that they're already dealing with too many updates, even in the cloud. Cloud-delivered app changes aren't always as "seamless and invisible" to customers as vendors claim. Changes in interfaces and functionality can alter the way people work with an app. That's why Microsoft says it gives customers control over when to move to the latest versions of cloud-based services, with up to one year to do so.
Pro - Microsoft is a blue chip. Dynamics apps are where they are today because they're under Microsoft's wing. The company's deep pockets and supporting infrastructure offerings--Windows Server, Microsoft SQL Server, .Net, etc.--count for a lot with customers.
"We chose Dynamics in large part because we didn't want to be tied to a company that would evaporate five years from now," says Malcolm McAuley, a systems manager at Big Brothers and Big Sisters of Canada. Big Brothers and Big Sisters is using Dynamics CRM Online, and it has 800 users across 123 affiliated agency offices.
Microsoft's clout also fuels the depth and breadth of its partner network, which gives customers plenty of support options. Microsoft is making sure those relationships move into the cloud by letting partners handle all sales and support for the cloud-based Dynamics NAV and Dynamics GP services set to go live by the end of this year. Microsoft will handle a slice of global accounts once AX hits the cloud, but it says AX partners will have a big role here, too.
And now for the three very notable cons.
Con - That "first and best on Microsoft" caveat raises doubts. Will iPad, iPhone, and Android devices be second-class citizens? The post-PC era has put huge pressure on Microsoft to catch up in the tablet and smartphone markets, so it's a concern that Microsoft will reserve the best experience for products with miniscule market share. Or perhaps Microsoft will make its own mobile apps available well ahead of those of rivals. One bad, early sign: Dynamics GP 2013 Online will rely on a Microsoft Silverlight-based Web client that won't work on iPhones or iPads.
Microsoft Technical Fellow Michael Ehrenberg says Dynamics NAV 2013 will debut with Web-based multi-platform capabilities and that long-term, HTML5 will be the cross-platform answer for all its apps. Customers will be watching and waiting.
Con - Microsoft's long-term roadmap isn't terribly visible. Microsoft lets its general intentions be known, but the details go only about six to eight months out. It announced that the next (R2) upgrade of AX will arrive by the end of this year. We're told the next major release will go cloud, but we don't know when that will be. If past release cycles hold it would be 2014, which is an eternity in the cloud era. We asked about Dynamics SL ERP cloud plans, and Tatarinov would not definitively say whether SL will move into the cloud.
Most vendors like to give themselves wiggle room by not committing to plans too far in advance, but the lack of specifics on Web client plans, mobile support, and AX and SL progress into the cloud leave room for doubt.
Con - Microsoft is not the innovator. Microsoft continues to live up to its reputation of being a follower rather than a leader on key innovations. It will be among the last ERP vendors to move into the public cloud and to deliver the kinds of mobile experiences that customers expect. Dynamics CRM was late in adding social elements last year, and it will not gain sentiment-analysis and social-network monitoring capabilities to support customer service and brand reputation management until late this year.
In true Microsoft fashion the company is getting there, eventually, with an affordable option and the functionality proven to matter most. But it rarely leads the trends. So there you have it. As the numbers suggest -- six pros, three cons -- I'm mostly impressed with what Dynamics has to offer and its strategy for moving into the cloud. I talked to many customers who view Microsoft as way out ahead of where they need it to be with cloud options. These are the customers who are not yet convinced that cloud is the future and who aren't running or expecting to run their businesses from tablets and smartphones. In the balance between being visionary and serving current market expectations, Microsoft is, as always, sticking to the middle of the road.