It seems the people at Microsoft Business Solutions have finally realized how much of a hill they have to climb before their applications can compete effectively in the on-demand marketplace. This week's announcement of plans for the rebranded Dynamics product suite at least means they're on the right track at last, but the timescale for getting there is way too slow and lags behind virtually everyone else of significance in the market (except Intuit and Sage of course, but that's a story for another day).
The transition onto an even competitive footing is a tall order for any conventional software company because the first step is to completely rearchitect the software along shared-services principles . Once that major overhaul has been completed, the vendor ends up with a fully virtualized, service-oriented product that customers can still install on-premises if they want to, but which also has an architecture that's well suited for delivering applications on demand.
Look at Microsoft's competitors in the enterprise business suites market and you'll see that they're already well down this road, although with different degrees of awareness of why exactly they're doing it. Siebel, to its credit, seems to be the most switched on, with a commitment to end up with a product that customers can deploy on-demand, on-premise, or as pick-and-mix service components. SAP hasn't yet fully appreciated the significance of the on-demand option, but it understands the need to offer the other two options, and is pressing ahead with service-enabling its suites. Oracle gets the importance of a service-oriented architecture but still doesn't quite understand why customers would want to dilute the purity of the Oracle suite by mixing in components from other vendors (save those it recently bought). Among the following pack, Lawson, SSA and Onyx are all well ahead with moving to service-oriented architectures.
Microsoft could have been ahead of them all had it followed through its Project Green initiative early enough. Instead it allowed it to languish for so long that rebranding it Dynamics seems almost ironic. The details announced so far show no signs of any innovative talent being deployed, unless copying best practice from SAP counts as innovation. The new applications will have a roles-based user interface and better support for customizing business processes, and it will all be fronted by Office — a direct rip-off of SAP's Mendocino project (which in turn simply emulates a practice already adopted by many on-demand application vendors).
All this is promised for delivery sometime in 2008 or so (compared to 2006 for Mendocino, for example). No wonder Steve Ballmer was evasive and vague about the details yesterday when he acknowledged that Microsoft is working on offering hosted applications, which of course can't get into gear until the underlying application architecture is up to speed. Perhaps Microsoft is counting on its business customer base consisting largely of late majority adopters and technology laggards, in which case being so late to market won't necessarily lose it any customers. But it's leaving its on demand rivals a huge amount of wiggle room to establish their market positions in the meantime.