Microsoft Takes On SAP, Oracle and with Dynamics

By Renee Boucher Ferguson  |  Posted 2007-03-15

Microsoft Takes On SAP, Oracle and with Dynamics

A couple of key themes emerged from Steve Ballmers March 14 keynote address at Microsofts annual Convergence conference in San Diego: Dynamics, the companys brand of ERP and CRM software, is definitely heading into big business, and its definitely going Live.

In other words, Microsoft is taking on SAP, Oracle and in one fell swoop by building enterprise-worthy—and on-demand—business applications. Oh, and by the way, the transition is going to displace some partners—the group that is essential to Microsoft to get its Dynamics brand of enterprise resource planning and customer relationship management software into small and midmarket customers hands.

At the end of his much-anticipated speech—it was no secret that Ballmer would preview Titan, the multi-tenant version of Dynamics CRM expected to be available later this year—Ballmer opened up the floor for an informal question and answer session. The first two inquiries really set the stage for Microsofts path in the near future: Will the Live Services disintermediate partners? And is Microsoft looking to position itself to work better for large companies, especially those with multiple organizations?

To his credit, Ballmer answered both frankly.

"Will partners potentially be disintermediated [by on-demand software from Microsoft]? The honest answer is yes. But were not sure in what ways exactly," said Ballmer. "Every industry evolution does change the way we interact with partners. Fifteen years ago there used to be a business to integrate TCPIP stacks into Windows. That doesnt exist any more."

Ballmer said he and others at Microsoft have put a lot of time into thinking through the reseller model—how partners can do their own verticalizations and customizations to remain relevant. "We understand the value our partners bring," he said. "If thats different than the partner value add today, thats OK as long as we get more done, partners have more opportunity and ultimately [the] customers get more done. That is the test we have."

The partner conundrum—how do partners remain relevant in an on-demand model where Microsoft hosts and maintains its services for customers directly—also has implications for the companys enterprise market position. Because while Microsoft largely depends on its partner channel to sell and implement Dynamics and its underlying technologies, it is Microsofts own direct sales channel that sells into the enterprise market, where SAP and Oracle live (and also sell through a direct sales force). Should Microsoft plan to focus a lot more energy in that direction with its Dynamics line, it puts even more pressure on an already heavily competitive channel.

Click here to read more about Microsofts plans to invest in five industries through OEM deals, code acquisitions and spending on the partner network.

In answer to the second question asked by a Dynamics user—is Microsoft gearing Dynamics toward the enterprise—Ballmer replied in the affirmative. "Yes," he said. "We support to some degree a simpler set of processes than our big competitors. SAP has 25,000 tables, each of which needs to be customized. We are much simpler. But there is nothing in our design philosophy that should hold us back, give people the capability they want, users can use and you can get implemented at whatever size you are. Doesnt mean we are going to take on the supply chain at GM tomorrow—its more complexity versus scale—and we will continue to build on that."

In interviews with eWEEK, Microsoft executives said that NAV and AX particularly are very much being positioned to support the complex processes found in the enterprise market—but that the actuality of that vision is several releases off for both suites.

Likewise, Microsoft partners believe that on-demand ERP capabilities will start showing up in probably two release cycles—about 18 months at Microsofts current development clip.

Next Page: Where and Microsoft diverge.


The Titan release, demonstrated by Brad Wilson, general manager of Dynamics CRM, is a good example of what the company is trying to accomplish with its Live, or SAAS (software as a service) initiative. Like Salesforce.coms on-demand CRM software, Microsofts will be customizable. It will have calendaring and full sales, marketing and customer service offerings. It will also bring a new resource center—or community—right into the product, with message board, blogs and tips. And like, Titan will be customizable to a companys particular business and enable mashups, or bringing together two separate functionalities like Google Maps and contacts. But heres where and Microsoft diverge: The customizations in Titan automatically trigger customizations in Outlook—an area that is, arguably, Microsofts alone. And is installed on a lot of desktops.

Using an event management company as an example, Wilson explained how Titan is customized.

"You can import a new site map. When its imported it will change the data model, change the screen and reconfigure it as an event management application. It goes from sales, service and marketing to all about events. Very simply you can configure this to look like your system. When you reconfigure CRM, it reconfigures Outlook on the fly to be an events management application," Wilson said to audience applause.

Following Wilsons demo, Ballmer took the stage to detail Microsofts plans with its Live initiative for Dynamics. The plan: to release CRM Live later this year and, over time, other Live products from Dynamics.

The vision is to not only appeal to "hardcore ERP users" but to try to really create the business-ready business, a tag line thats become Microsofts theme. To this end Russ Burtner, who works in Microsofts Center for Information Work, demonstrated the Live Desk—one of only two that exist in the world. The idea is the desktop of the future—not the PC kind, but rather the actual desk people sit at. Its top is a live screen with a piece of glass attached to the top that is, in essence, a monitor. There is no keyboard, no mouse. Everything is touch-screen. Business users are able to interact with different parts of their organization in real time—connect with the factory floor to see whos working there, or what the inventory level is (everything will be tagged with RFID, so inventory management will be automatic). Suppliers can be accessed through services. Documents can be automatically scanned in the system by putting the paper on the surface, like an automatic copier built into the desktop. Using voice capabilities (heres where the March 14 Tellme acquisition comes in) users can speak to the computer to initiate searches on ERP or external data, and then perform analysis.

But the Live Desk is in the future.

For the moment, Microsoft is focusing on expanding its reach with Dynamics, both internally by leveraging the Microsoft stack and externally through initiatives like Live.

"We are committed to driving industry transformation, and we are pushing this transformation from software as service as fast as anybody around," said Ballmer without a hint of irony. "We dont get in and do something and get in it for a year. Sometimes we get it right the first release, sometimes it takes a second. But everything we do, including Dynamics, were just going to keep investing and investing and investing."

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