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Microsoft Dynamics ERP Is Bound for Azure Glory

Microsoft Dynamics ERP Is Bound for Azure Glory

Microsoft is courting small businesses with its decision to take its Dynamics ERP solution to the cloud, but the move will likely create some consternation in its partner community. "I have seen a lot of large ERP vendors move into the cloud and go on to co-opt what used to be their partners' business," said tech analyst Charles King. "This is an ongoing drama."

By Erika Morphy
03/26/12 5:00 AM PT

Microsoft is stepping up its cloud strategy, with the announcement that it will port its Microsoft Dynamics enterprise resource planning software to Windows Azure this year.

The company outlined plans for the transition at Convergence 2012, held last week in Houston.

Dynamics NAV 2013 and Dynamics GP 2013, optimized for small and mid-sized businesses, will be added to Azure in the fourth quarter of 2012. A beta version of NAV 2013 will be available in May.

The company also repeated earlier promises that the next major release of Microsoft Dynamics AX would be as an enterprise cloud service.

Aiming at SMBs

Microsoft has small and medium-sized businesses in mind with this push for the cloud, although demand for such services can be found at all points on the corporate size spectrum, said Microsoft Technical Fellow Mike Ehrenberg, CTO for Microsoft Business Solutions, in a blog post.

"Small and mid-market companies comprise the biggest section of early cloud adopters, and we expect this trend to continue," he said. "These companies have sought cloud services because they allow them to scale back on their in-house IT, which is often not a strategic strength of theirs."

Interoperable and Hybrid

One of the selling points Microsoft is pushing is that its cloud offerings are interoperable with other Microsoft products and services, and that its approach to the cloud is based on an assumption that users are adopting a hybrid strategy.

"Operating with some capabilities on-premises and others delivered from the cloud will be the rule for the long term, and not the exception," Ehrenberg said.

The transition to the cloud won't leave partners out in the cold, he added. "We've architecturally evolved our products based on their feedback; directly enabling deployment on the Azure platform and at the same time, simplifying the experience for current hosting partners."

Ecosystem Beware

Despite the comforting words, Microsoft's partners have reason to be worried, Charles King, principal of Pund-IT, told CRM Buyer.

"I have seen a lot of large ERP vendors move into the cloud and go on to co-opt what used to be their partners' business," he said. "This is an ongoing drama."

However, Microsoft has taken pains to say it is cognizant of its partners concerns, King also pointed out.

A Matter of Time

Its partner ecosystem shouldn't have been surprised by this move, King continued.

"In terms of cloud computing, ERP processes have been the clear winners as far as overall adoption and number of companies and employees shifting to it," he said.

"Having a cloud-based solution for Microsoft ERP makes perfect sense," King concluded, "and I expect the company will do very well with this offering."

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