Microsoft was smart to shelve "Project Green," its quixotic effort to horizontally integrate its enterprise resource planning suite through brute force recoding of what had been a collection of disparate accounting, financial and customer relationship applications.
Microsoft realized that it would have taken far too long and been far too risky to rewrite what had been the Great Plains, Navision, Axapta and Solomon product lines that it had acquired piecemeal in the early 2000s into a unified code base under the banner of the Dynamics product line.
A project that was supposed to be finished by 2006 had delayed at least until 2008. Then there was the risk that current customers wouldnt recognize or like what would essentially be brand new applications. The project would also put Microsofts channel partners, the people who are essential for helping to distribute and support the applications, in the position of having to rewrite the thousands of add-on and vertical applications they have built over the years.
Now it has decided to follow the example of Oracles Fusion strategy by integrating the existing applications on top of its established server and application development technology stack, including SQL Server, BizTalk Service, SharePoint Portal, Visual Studio and Workflow Foundation.
The position that Microsoft is taking is that integration with Microsofts technology stack and interface connections to the ubiquitous Microsoft applications such as Office and Outlook are more important goals than trying to achieve a single code base.
But Microsoft still faces a lot of uncertainty in trying to make its Dynamics product line a revenue and market powerhouse in the midmarket. This is a market that will come under increasing competitive pressure from Oracle, SAP and others.
At the same time Microsoft is facing increasing competition from SAAS (software as a service) with companies such as Salesforce.com NetSuite, RightNow Technologies and Entellium giving customers quick Web-based access to CRM and other enterprise applications.
Microsoft is responding to this challenge by developing a hybrid product strategy where it will continue to offer its Dynamics applications as on-premise products that customers will install and maintain on its servers while sticking a toe into the SAAS waters.
At the Convergence 2007 conference in San Diego, Microsoft demonstrated Dynamics Live CRM, an on-demand edition of Dynamics CRM that the company can host on its own servers as an on-demand application that competes directly with the likes of Salesforce.com and RightNow Technologies.
It will also allow partners to host the software and resell as an on-demand service, possibly with their own extensions and vertical market applications.
If Live CRM proves even a moderate success Microsoft will likely be encouraged to offer the other Dynamics applications as on-demand services. A truly radical move would be if Microsoft decides that SAAS will become the primary way that it markets its applications. But that would be too much to expect from a company that reaped much of its riches from selling on-premise applications running on desktops on servers.
However, a large-scale move to SAAS may not seem so radical to Microsoft if it finds that this software deployment method continues to expand as it has over the past five years. Certainly many customers will continue to favor on-premise application deployment as a way to protect the security of customer and corporate data.
But for many companies that are looking for ways to cut IT expenses and the heavy maintenance and upgrade fees that are part and parcel of on-premise software, SAAS is going to become increasingly attractive to Microsoft customers, especially small and midsize businesses.
In the next few years we are going to see whether the massive investment Microsoft and Oracle have made in applications and platform integration is going to pay off in terms of revenue, profits and customer satisfaction.
Both companies would say those achievements are already a given. Oracle has seen its profits rise since it completed the multi-billion dollar acquisitions of more than 27 companies over the past three years. Microsoft claims that its CRM program alone has grown 112 percent over the past year.
But it has taken Microsoft more than five years and several business structure reorganizations to conclude that Project Green isnt the way to go. The software market has changed in ways that Microsoft could not have anticipated when it acquired what became the Dynamics products back in the early 2000s.
While Microsoft hasnt stated clearly and unequivocally that Project Green is dead, it has said it is no longer a priority to get to a single code base. Instead, Microsoft is focusing on providing the features and the kind of application integration that will deliver the most value to customers.
If Microsoft has even moderate success in this goal, no one will shed any tears if the last vestiges of Project Green fade away without a whimper.
John Pallatto is a veteran journalist in the field of enterprise software and Internet technology. He can be reached at firstname.lastname@example.org.