Microsoft Plays SAAS Catch-Up

Microsoft might be late to the game with a software-as-a-service offering for business applications, but its working to lay the foundation for service-enabled applications with its Dynamics application architecture, according to industry insiders.

The company will announce March 28 at its Microsoft Convergence conference in Dallas a Web services integration layer that will be delivered this year across its range of Dynamics ERP (enterprise resource planning) suites to enable composite application development and integration.

Microsoft Dynamics CRM (Customer Relationship Management) and Dynamics GP are available now with a Web services layer, and Dynamics AX (Axapta) will ship in May with its Web services layer. The remaining Dynamics suites, SL (Solomon) and NAV (Navision), will be available with an integration layer later this year.

The Web services integration layer will allow Microsoft to standardize data models across its four ERP suites. It will also bring much greater integration capabilities to customers and partners developing third-party applications around Dynamics and hooking into Microsoft applications for customers.

The Web services in GP, for example, provide standard schemata for orders, customers, shipping addresses and inventory information, according to Microsoft Certified Gold partner Travis Smith, president of Appolis. They also provide the ability to write that information back into GP using an SOA (service-oriented architecture) model.

Read more here about Microsoft Dynamics.

"What theyre telling us is [that], as they move to the next version, and then the next version, [schemata] will remain intact, so the customer application will not be broken," said Smith in Minneapolis. "Microsoft will provide new information [in the form of new Web services] but provide a layer of isolation between the guts of GP and information that needs to be provided to us," which wasnt the case in the past.

The bottom line, however, is an integration layer across Dynamics that provides the necessary ingredient for Microsofts applications to be delivered as services—something Microsoft is not ready to confirm yet, but analysts say is coming.

"With SAAS, today Microsoft is passing it off largely to partners, but I think they will do more and more of this [with Dynamics]," said Gartner Group analyst Yvonne Genovese. "They have the ability to do some of that in individual applications. They could do some CRM Live initiatives, or some GP Live initiatives. This is one of the end goals—not the end goal," for a Web services integration layer.

Microsoft officials skirted around the question of whether on-demand business applications are part of the companys Dynamics road map.

Click here to read why analysts think on-demand software services will go mainstream in 2006.

"We believe in a hybrid model where customers can have the choice to deploy [on-site], hosted and in a combined manner," said James Utzschneider, general manager for strategy at the Redmond, Wash., company. "Support for Web services protocols enables many of these scenarios."

"For them to do [SAAS] across all the applications would be a pretty big deal," said Genovese, in Stamford, Conn. "What they have to do is pull functionality out that is more likely to be offered as a service. The next step that theyre going to have to go through—part of Wave 2—is where they come to a common business platform, where they can pull common pieces out that can live on their own. That is something they are preparing themselves for."

Forresters Ray Young agrees.

"As Microsoft is integrating with Office 12, if you think about the services their calling from Outlook, plus the SQL Server 2005 reporting functionality, eventually it will get them to a hosted solution, or to be able to host the complete Dynamics product line," said Young, in Cupertino, Calif. "But for the time being, theyre making that functionality more accessible for Web services."

Microsoft is in the midst of Wave 1 now, a two-pronged approach to Dynamics that will eventually enable process orchestration and integration based on roles and the work people do.

Next Page: For integrations sake.