Microsoft's plan to bring its ERP users slowly but surely to the cloud

Microsoft is moving ahead with plans to host its ERP products on Azure, but isn't rushing users to make the jump.
Written by Mary Jo Foley, Senior Contributing Editor

Last year, Microsoft officials said the company had decided to make all four of its Dynamics ERP products available on its Windows Azure cloud, starting with Dynamics NAV.

As the annual Microsoft Convergence conference approaches, the Softies are readying a few updates about the coming ERP-cloud transition.

First, Dynamics NAV 7 (the codename of the next version of the Dynamics NAV product) will be available hosted on Windows Azure toward the end of calendar 2012. The next Microsoft ERP product to get the Azure treatment will be Dynamics GP. (Microsoft execs aren't providing a target date at this time for the Azure-hosted GP version, though I'd think 2013 would make sense, given the cadence of the Dynamics ERP products).

Microsoft's strategy around moving its ERP products to the cloud isn't to force them down customers' throats, emphasized Mike Ehrenberg, a Microsoft technical fellow and chief technology officer for Microsoft Business Solutions. (Some of Microsoft's ERP partners beg to differ, but that's what the Softies are saying.)

Ehrenberg said that it's even more important for ERP than for CRM to provide users with choices -- on-premises, partner-hosted and Microsoft-hosted ERP options -- because ERP customers can be "even less sure about moving to the cloud." With Dynamics NAV, for example, which is more of a small/mid-market product, customers tend to rely on partners and Microsoft isn't trying to disrupt that relationship, he said.

Microsoft isn't backing away from its cloud emphasis, however. "The cloud reduces costs. It improves the deployment experience. It provides new ways to connect to data -- big data and other kinds of data," Ehrenberg said.

The plan is for Microsoft to follow the same model on the ERP side of the house that it's already pursuing on the CRM side of its Dynamics business. This year, Microsoft will roll out its Dynamics NAV 7 release simultaneously on-premises and in the cloud. After this year, future releases will be cloud-first. As is the case with Dynamics CRM, Microsoft will be making two major updates a year to its ERP platforms once they're available both on-premises and in the cloud.

Microsoft also is planning to enable the coming online versions of its ERP products take advantage of some of the core platform capabilities it offers across its Office 365 and CRM Online offerings, Ehrenberg said. Being able to do single-sign on with a single set of credentials across all of these products is in the cards, he said.

But don't expect the ERP online products to necessarily make use of the other core Online Service Delivery Platform (OSDP) assets that Office 365 and CRM Online do. Because a number of  Microsoft ERP users prefer the partner-hosted/partner-enabled route, Microsoft is treading gingerly so as not to disrupt this balance, Ehrenberg maintained.

For those ERP customers who are already sold on the cloud, Microsoft is moving full speed ahead to enable them to take advantage of its existing cloud assets. Ehrenberg cited a recent incubation that Microsoft completed in the retail space which mashed up machine-learning technologies from Microsoft Research with some of the big-data processing capabilities Microsoft is building out with its Hadoop-centric "Isotope" project. The datasets and apps that are available via the Azure Marketplace also are ready for use by these bleeding-edge ERP cloud customers.

"We know we'll do lots of engineering in the cloud, even though many of our customers are still on-premises for now," Ehrenberg said. "These new capabilities are still informing what we're offering on-premises."

One last point: Microsoft Dynamics CRM is still not Azure-hosted and the Softies have not said when it will be. So even though "slow and steady" are the watchwords for Dynamics ERP, they're one of the Microsoft teams that is the furthest along in moving large, existing apps to Microsoft's Azure cloud.

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