That move has long been weighed and even Microsoft ERP partners who sell and implement Dynamics AX, GP, NAV, or SL ERP products recognize the vendor must offer this choice given that competitors–Oracle, NetSuite, et. al–do so already.
What is surprising to many is that instead of doing a ground-up design of cloud-based ERP, Microsoft is forklifting three of its four classic client-server-oriented ERP lines to the cloud. (Sorry, Dynamics SL, you’re SL outta luck.)
Once again, Microsoft appears hamstrung by competing jurisdictions and product/service delivery schedules within its own four walls. For example, none of its current hosted products–Microsoft Dynamics CRM Online, Business Productivity Office Suite etc.–run on Azure, the platform Microsoft wants the universe to develop and run applications on. What’s that thing about eating your own dog food again? of course, those software services were ready before Azure, but Microsoft appears to be recreating the same sort of product interdependencies and bottlenecks in the cloud that hurt it in the on-premises software game. (It is true that Microsoft managed to generate billions of profit despite all those problems, but we’re entering a new era here people!)
Zach Nelson, CEO of ERP rival NetSuite, said Microsoft continues to put lipstick on a chicken. Actually his exact words were: “Hosting a client-server application is a recipe for failure in the cloud. An application must be Web native to deliver the benefits (reduced cost, no version lock, Internet-centricicy, etc.) of the cloud. If this is their approach to cloud-based ERP, I would call it a ‘not at all in’ strategy rather than an ‘all-in’ strategy.”
More objective observers also have a problem with Microsoft ERP’s route to the cloud. Many think it should start over fresh.
“Microsoft should just acquire Acumatica. Honestly, it’s built from the ground up on Azure. They should just say, ‘Hey, we’ll support all the current ERP customers in perpetuity but make a clean break and get someone with the right kind of solution for the future,” said Laurie McCabe, CEO and principal analyst with The SMB Group.
Others were perplexed by the triple-headed NAV-AX-GP cloud plan, which will be officially unveiled at Convergence 2011 in Atlanta next week.
This strategy is “like racing in the America’s Cup while dragging a parachute,” Pica Communications analyst Paul DeGroot wrote via email. “For evertyhing that the competition comes up with, Microsoft gets to triplicate the effort.”
Before the game plan became clearer, DeGroot it would be shocking if Microsoft kept supporting “multiple overlapping ERP lines” in the cloud. Instead, Microsoft should have picked a winner–which most assumed would be AX–and run with it.
Ray Wang, CEO of Constellation Research, said Microsoft partners have to be ready to move regardless of what the vendor itself does.
The prevailing wisdom holds that the cloud model is here, and VARs/integrators just have to deal with it–even though Wang’s own survey last year of Dynamics customers showed that most intend to stay with on-premises ERP.
Right now with Microsoft ERP, its partners have control and it’s a completely indirect model. When the cloud hits, that changes, Wang said. “Microsoft will become less dependent on the partners and that changes the game. Partners will still drive a lot of sales, partners are the reason many people buy Microsoft,” he wrote in email.
The scary thing for partners is that turning customers over to Microsoft (or any vendor) could amount to ceding the customer relationship. Said Wang: “By bringing a client to the cloud, will partners kill themselves?”
For self-preservation, these ERP partners better start building up and polishing their own intellectual property and making it available via the cloud, Wang said.
That way these VARs can market and sell their good stuff to any customer, not just the Microsoft customer, he said.
Let us know what you think about the story; email Barbara Darrow, Senior News Director at firstname.lastname@example.org.
Check out more IT channel news on SearchITChannel.com and follow us on Twitter!]]>
DeGroot formerly an analyst with Directions on Microsoft and now off on his own at PIca Communications, details in SearchITChannel.com how Microsoft is taking more of its volume licensing deals direct, It is certainly not alone in that. Every major software company from Oracle to Symantec is in the same boat. They’re locking down volume licenses directly and most of them are taking all the revenue from renewals and maintenance on licenses direct as well. Two new online services, Microsoft InTune and Office 365, DeGroot writes, replicate much EA functionality and will also be sold/billed directly by Microsoft.
Of course all of this is worrisome to a cadre of Large Account Resellers (LARs.) These were companies like the old Corporate Software, Software Spectrum, Egghead Corporate & Government, Softmart, Software House International etc. which used to handle volume licensing for all the major vendors for big customers.
Many of these LARs have merged and combined with each other or simply went away as more customers started downloading their software direct. Software House International is still fighting the good fight. Direct marketer CDW remains a LAR as does Insight (which bought Software Spectrum which had already merged with Corporate Software or something like that.) Dell is a LAR by virtue of its purchase of ASAP Software. You get the picture.
Since the advent of near-ubiquitous broadband and easy downloads, it was natural that customers get their software delivered that way–straight from the vendor. Of course that imperils the traditional business model of LARs. In the case of MIcrosoft, LARs were a subset of Microsoft partners able to sell volume licenses. When software was delivered in shrink-wrap boxes (or even by disks) there was a model. Not so much anymore.
LARs were able to sell the fact that they could help customers manage multiple volume licenses from multiple vendors. And given the complexity of software licensing, many companies see the attraction in that. A friend of mine has a full time job tracking and monitoring software licensing and pricing for his bank. He attests that 95% of his time is now spent on watching one vendor alone–Oracle. He clearly would welcome trustworthy help keeping vendors honest.
The vendors are always trying to sell him more licenses than he need or are auditing the bank to make sure it’s not using more software than it has the rights for. Monitoring licenses is a full time responsibility, he said. He would also welcome expert advice on when to forego vs. sign on to new Enterprise Agreements. It’s not immediately clear why, with Windows 7 still not fully deployed and now compelling software releases on the horizon for the next two years, why his bank should even sign up for a new EA, other than to stay legal, that is.
So, while some might argue that LARs are outmoded, a LAR that works for the customer’s best interest (vs. pushing as much software as the customer can stand) represents a real value-add.
Let us know what you think about the story; email Barbara Darrow, Senior News Director at email@example.com, or follow us on twitter.
Check out more IT channel news on SearchITChannel.com.]]>