Microsoft Inches Closer To Delivering Cloud-Based ERP

Nearly one year after announcing plans to offer its Dynamics enterprise resource planning (ERP) applications as cloud-based services, Microsoft finally will reveal specifics and details on those services on Monday at its annual Convergence Conference, being held this year in Houston, Texas.

The crux of the news: Dynamics NAV 2013 and Dynamics GP 2013 will be enabled for Windows Azure, Microsoft's cloud computing platform, and they will be generally available by the end of this year. A beta release of NAV 2013 is expected by May, and a GP beta is expected in late summer. Microsoft qualified that the cloud-based versions of NAV and GP will be "optimized for small and midsize businesses."

Details were sketchier on Dyanmics AX in the cloud. Microsoft reiterated its plan for a cloud option with the next big release, but there were no details in advance of the event of whether that would be an AX 2012 R2 release expected this fall. Dynamics AX 2012 was released as a replacement for AX 2009 last fall, so if cloud support doesn't come with R2, it might have to wait for a next major version of AX some time in 2014.

Meanwhile, the rest of the ERP market is not standing still. Workday and NetSuite, purely cloud-based ERP systems, have been available for years, and both experienced strong growth in 2011. Both also have more than a few large enterprise customers.

[ Want more background on Dynamics? Read Microsoft ERP Release Streamlines Retailing. ]

SAP took a slow, controlled release approach with its Business ByDesign cloud suite, signing on 1,000 customers through the end of last year. But the apps giant has recently hired 500 additional cloud sales reps, promising a much more aggressive approach. Business ByDesign includes ERP as well as CRM, supply chain management and other enterprise application components. SAP is also now offering its previously on-premises-only Business One suite for small businesses in a cloud-based service called Business One OnDemand.

Oracle offers ERP in the cloud through its Oracle Fusion app, and the latest ERP competitor to join the cloud-service fray is Infor, which has partnered with Salesforce.com and introduced Inforce Everywhere. Built on the Force.com development platform, Inforce Everywhere delivers ERP data within Salesforce CRM, and there are plans for similar Inforce Ordering and Inforce Marketing integrated cloud apps.

Microsoft first moved into cloud enterprise app services with Microsoft Dynamics CRM Online. The company announced on Monday that Dynamics CRM and Dynamics CRM Online now have 33,000 customers combined, up from 23,000 reported by Microsoft in early 2011. Microsoft doesn't break out on-premises vs. cloud stats, but it says two out of three new customers are opting for the cloud-based version.

Microsoft isn't pushing the cutting edge with ERP, but it might not be terribly out of step with buyers of this software, who tend to be conservative about financial and competitive information managed in ERP systems. Among a handful of customers canvassed during Sunday night's Convergence opening reception, three weren't at all interested in cloud-based ERP while a fourth said he was "keeping an eye on developments" but had no immediate cloud plans.

It's a tiny sample, but only one of these customers polled was anxious to test the cloud version of Dynamics GP as a possible replacement for an on-premises GP deployment. "Our focus has been on moving into the cloud for more than a year, but the functionality and the economics will have to be right," said Aaron Michalove, director of information systems at Texas Air Systems, a Dallas-based heating and air conditioning equipment distributor.

Texas Air Systems is using Microsoft's Office 365 system for Exchange and Sharepoint services, but its experience with Dynamics CRM Online has Michalove concerned about the economics of cloud-based ERP.

"Dynamics CRM Online is $44 per user, per month and they have a special whereby you can get it for $39, but our cost for the on-premises version works out to about $14, per user, per month," he says. That figure doesn't include the distributor's internal personnel, hardware, and infrastructure costs, Michalove admits, but those cost savings only make up part of the cost difference, so he's looking for more aggressive pricing of GP.

Another concern raised by Michalove and other GP customers is Microsoft's planned move to a Silverlight-based Web interface. A Web client is essential for cloud-based delivery, but Silverlight, which is Microsoft's cross-platform application framework for rich Internet applications, isn't the only option available. Michalove echoed a refrain shared by customers online in recent months, suggesting that Silverlight is as dead as Adobe Flash as a way forward for Web development because it's not supported on Apple iPhone or iPad.

(Microsoft did not respond to requests for clarification on Silverlight support in time for this story. Microsoft recently announced it will introduce iPhone and iPad mobile clients for Dynamics CRM, but that product does not make use of Silverlight.)

Microsoft has allayed some concerns about the use of Silverlight in the pending GP 2013 release by extending support for Dexterity, the programming language used for GP customization and business logic. Nonetheless, Michalove said dependence on Microsoft mobile products might be a deal breaker for the use of GP 2013 Online.

"If the functionality and economics aren't right, we'll have to look at NetSuite," he said.