Microsoft apps: the road ahead

Microsoft apps: the road ahead

Summary: Microsoft's approach to the enterprise is radically different from a few years ago. It looks promising. Here's why.

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TOPICS: Microsoft
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Two hours into Convergence 2011 and I was wondering why I'd come. The keynotes, while beautifully crafted and 100% buzzword compliant, were like one of those Chinese take away meals where you feel stuffed from overindulgence but ultimately unsatisfied.

It wasn't helped by the fact Kirill Tatarinov, who leads the Dynamics team, got himself in a horrible pickle trying to convince a room full of hard nosed analysts that multi-tenancy doesn't matter so much and that you can solve many cloud apps scaling issues with hyper virtualization. As I said to one Microsoft exec: "Whatever crack he was on, can I have some please?" It was a bizarre confrontation that left many of us taking sharp intakes of breath at the apparent cluelessness of the man. Why does this matter when Microsoft wants to portray a message of consumption simplicity and a great customer experience?

Those of us who have been around the block a few times have observed how some vendors make a hash of building out cloud apps. It's complicated, difficult and requires many millions of R&D investment dollars. Even then it can all go horribly wrong as SAP found. No-one wants to see that debacle repeated. But as the picture unfolded and we started to meet with the folk who have to make Microsoft apps work, a very different picture emerged.

Microsoft is placing a lot of heavy bets on Dynamics AX, what it considers a second generation ERP capable of scaling on-premise to meet the needs of enterprise customers. That requires a raft of things to fall into place. Here is what I heard them say:

My initial assessment of their focusing on five verticals is correct. They account for something like 76% of the ERP opportunity and Microsoft is convinced it has the application footprint and design to make that a success. The market will decide but for example, the ability to easily visualise the business organisation and change it dynamically through drag and drop is gobsmackingly easy. Not only can you change the org chart easily but all dependencies, reporting structures, account codes and role rules change with the changes you make. No other vendor has this capability. It puts AX directly in competition with UNIT4 Agresso in public sector.

I said yesterday that I believe the master ISV strategy is smart. In conversations today with both Microsoft and partners, it is clear that some partners get what this means. Others are confused. Still others want to stick photos of certain Microsoft execs on the company dartboard. Microsoft is working on how it articulates the partner strategy but there are many moving parts.

Microsoft's Partner Network is being rejigged to take advantage of what they see as a growth opportunity. It has established competency centers and refreshed the partner training and certification model. Partners now have to earn their gold status by proving they know what they are doing across multiple dimensions. This includes the qualitative testing for subject matter expertise for implementation and industry specific knowledge. Microsoft already knows that partners who go through the training and certification mill grow 24% more than those that do not.

Partners will need to invest something around $200,000 in order to take advantage of gold status but in addition, they will no longer be compensated purely upon license and maintenance renewal. Microsoft is baking in a performance element that encourages success and entrepreneurial thinking. Having discussed these plans at length, I am satisfied the company has thought this through carefully. Now comes the execution and while there will always be partners who are less than thrilled, it will be interesting to see how they progress. Microsoft has one of the most sophisticated business apps partner programs I have seen and believes it can get a good 65% of its partners into growth mode.

On the technical front, Microsoft is building out capabilities that will see AX blended with Sharepoint as the building blocks for collaboration. Whatever you think of Sharepoint - and few tech people I speak with are enamored - this removes one more buying point from the socialised agenda.

Cloud apps were never far from my colleagues thoughts and here the picture is a tad fuzzy. It was obvious that Microsoft wants to share what it is doing but is not quite ready. They are cautious about ensuring for example that SQL Azure really can scale. Right now that's not possible if you are thinking about AX in on premise deployments because you only have small, medium and large database offerings. Having had the Tatarinov kerfuffle, they didn't want to talk multi-tenancy. However, I draw comfort from the fact the person leading the technical charge from the apps side of the house is ex-Frictionless prior to its acquisition by SAP. Frictionless developed e-sourcing capability that was initially an on-premise app ported to the cloud. That's working.

Microsoft sees ERP and CRM as platforms. This is not as wild as it sounds and reminds me of what Salesforce.com was thinking about when it built its AppStore and Force.com platform. They have the partners, they have the plan but as always, now comes the execution.

Taking all of this together, Microsoft seems quietly confident. Here is why:

  • With AX, they have taken what was a highly competent acquired but non scalable solution and made it work and scale in mid-market sized deployments. Customers I spoke with are happy to follow Microsoft's development path. they are less certain about Microsoft's ability to port AX to the cloud but we will see. The SQL problem is a big hurdle for a company that wants to own the whole stack.
  • AX now represents a strong competitor in Tier-2 deployments because Microsoft can price an order of magnitude less than competitors and still make a good turn. In one case, it is claiming savings around $100 million. It is thinking of all up implementations running at around $1 million but would like to see that come down.
  • But the most important reason Microsoft is confident is because for the first time since I've been looking at the company from an apps perspective, they've hired the right people into key enterprise roles from vendors like SAP and Oracle. These folk know their stuff, they've lived through problems experienced by others and have a very clear vision of where they want to be and how to get there. This new breed of Microsoft executive doesn't sound like the PR trained drones of the past. They are happy to have the discussions people like myself want without falling into the trap of defending themselves in Microsofty speak. That's genuinely refreshing.

Are there negatives?

  • Microsoft has been trying to crack this space for a long time with its portfolio of offerings. In the past it didn't really understand how to pitch enterprise class apps. In AX 2012 it has the technology to do so in a credible manner ad has a partner program with teeth. Does that save it from past mis-steps? I think so.
  • Talking to some large partners, there is an appetite for what Microsoft is proposing, especially if that means ousting Oracle. Others are less certain, wondering if there is enough pent up market demand to make the investments. Most surveys suggest a return to buying but it is patchy and uneven across geographies.
  • The typical AX customer is far less worried about cloud apps than ensuring it has an ERP backbone that simplifies the landscape and reduces complexity. From my conversations with customers and early AX 2012 adopters, Microsoft is delivering - at least to those lighthouse customers.
  • The lingering question is whether Microsoft has enough brand equity in the enterprise space to be considered credible alongside SAP and Oracle. The short answer is: kind of. I'm much more likely to be agreeable to sending Microsoft an RFP these days than I might have been in the past. But I remain concerned that release cycles are not shortening significantly. If Microsoft is to be a winner then it has to recognise that for all the moves it is making, it is really offering a solution that will be partially perceived as a version 1.5. To counter this, Microsoft is working very closely with early customers to ensure it has a bankable set of references.

Topic: Microsoft

Dennis Howlett

About Dennis Howlett

Dennis Howlett is a 40 year veteran in enterprise IT, working with companies large and small across many industries. He endeavors to inform buyers in a no-nonsense manner and spares no vendor that comes under his microscope.

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8 comments
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  • MS = 0 Credibility

    I'd never bet my enterprise on a Microsoft solution. With Microsoft you're locked into:<br>OS<br> Microsoft Windows<br><br>Database<br> Microsoft SQL<br>Microsoft CRM<br><br>With SAP or other systems you can use:<br>OS<br> UNIX (AIX, HPUX, Linux, etc)<br> Windows<br> Mainframe<br><br>Database<br> Oracle<br> MS SQL<br> MySQL<br><br>I'll go with the more flexible solution so that I can place my business where the best cost advantage is. Not to be locked into the least reliable and most expensive computing platform (Windows)
    itguy08
    • RE: Microsoft apps: the road ahead

      @itguy08 You are right to certain extent. Even with MS products (& enterprise solutions) you can shift your DB from Sql Server to Oracle, if need be. But oof late, I have noticed Oracle has more bugs and performance has become (just) comaprable to Sql Server, as opposed to "Oracle the best". In short, slightly expensive, yes, but quality I see a lot of improvement and I'll still think its a safe bet. However perceptions, experience vary. Few of the decisions are circumspect too.
      krishnansriram
      • RE: Microsoft apps: the road ahead

        @krishnansriram

        Which ones are not tied to MS SQL? I can't think of any other than SSRS/SSAS....

        And then there's the old MS BS line : "You should use MS product XXX instead of "YYY"".

        MS doesn't know interoperability well if at all.
        itguy08
      • RE: Microsoft apps: the road ahead

        @itguy08,<br><br>I think the subject of this article is around ERP. I doubt any of the Dynamics ERP products work with other database, but I could be wrong. I think for the most part you are correct, if you purchase a Microsoft ERP product you'll be using the Microsoft technology stack. Integration with other systems is another subject altogether. With a SOA integration approach, you should be able to build services that other systems can leverage. <br><br>For the most any ERP implementation that your company has is likely going to stay on whatever technology stack that it was implemented on. To be fair I don't think Oracle Financials will run on SQL Server.
        bmonsterman
    • They have more credibility then you, as you're in the negative numbers

      @itguy08
      You're nothing but an MS hater, so of course [i]everything[/i] is allways better then the MS solution in your world.

      Too bad for you real IT people know the difference, as I've seen what happens when you use tyhe other solutions you mention, and it ain't pretty!
      Will Farrell
    • RE: Microsoft apps: the road ahead

      @itguy08 If you put apples against apples and look at the costs of an erp, lets say SAP for example. MS is totally more cost efficient and has performance that easily outperforms many of the other systems. From an IT perspective, we are always looking for a system that is consistent, reproducible and supported. The kind of flexibility you are referring to only creates more issues than it solves, at least in our stack.
      dean.morgan@...
    • RE: Microsoft apps: the road ahead

      @itguy08

      Yep there's integrated sophisticated modern software from MS or there's the duct tape and string approach you seem to favour. Here's hoping I never have to use your business ;-)
      tonymcs@...
  • RE: Microsoft apps: the road ahead

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