Enterprise System Spectator blog: ERP and enterprise system vendor evaluation, selection, and implementation.

The Enterprise System Spectator

Tuesday, March 27, 2012

Microsoft Dynamics ERP on Azure: What Are the Benefits?

Last week I attended Microsoft’s annual Convergence conference, for users and partners of its Dynamics line of enterprise applications. The back-to-back briefings were a great opportunity to get an update on where Microsoft is going with enterprise applications.

But the big news from my perspective is that by the end of 2012, two of Microsoft's ERP products, GP and NAV, will be available on Microsoft's Azure cloud.

Click on the video interview at the right for my initial thoughts, which I am expanding upon in this post.

Azure Complements Existing Hosted Offerings

Microsoft customers have always been able to deploy NAV (formerly, Navision) and GP (formerly, Great Plains) on-premises. In addition, some customers have chosen in the past to have Microsoft partners host their systems in partner data centers. MyGPCloud is one of the largest such partners, hosting GP for thousands of small business customers. Likewise, Tribridge offers similar hosting services for all Dynamics ERP products.

Now, Microsoft is offering customers the option to deploy their GP or NAV systems on Microsoft's Azure cloud, which runs in Microsoft data centers. This offering will not replace partner hosting but simply will be another deployment option for customers.

Through back channels, I've heard some partners express uncertainty about this new development. Is Microsoft attempting to go direct with customers? How will the partners make money? During the session, Microsoft executives made clear that, under Azure deployment, partners will still maintain the customer relationship and deliver the services for implementation and ongoing support. The only difference is that with the Azure deployment option partners will be relieved from the need to maintain data center infrastructure.

What Are the Benefits?

Over the past two years, I've been one of those encouraging the Dynamics team to go faster in moving to Azure, as cloud ERP is already available from competitors. But now that Microsoft is on the verge of actually doing it, I wanted to know, what are the benefits? Specifically, if customers can already have these systems hosted by a Microsoft partner--and if Microsoft will still work through partners in selling and supporting systems deployed on Azure--what are the added benefits of Azure?

I asked this question a year ago at Convergence and, frankly, the answers were not that clear. After asking this same question in several briefings this year, and adding my own analysis, I think the benefits picture is now emerging.
  • Azure deployment is cheaper than hosting. Azure is a true elastic cloud platform, with data center economies of scale that traditional hosting cannot come close to matching. This should allow Microsoft to price these services at a lower cost than what partners can offer.
  • Azure deployment scales beyond partner hosting. As a true cloud platform, Azure deployments can scale instantly beyond what partner hosting can offer. Hosted ERP relies upon dedicated resources, which must be planned and expanded manually to meet changing customer requirements. With Azure, customers will never exhaust the resources available.
  • Azure supports worldwide deployments better than partner hosting does. Microsoft runs Azure data centers worldwide and can move customer systems and data between them as needed. Hosting partners do not have this capability, unless they are utilizing a true cloud IaaS, such as Amazon's EC2. The move to Azure is therefore a better choice for organizations that are running separate instances in different parts of the world.
  • Azure deployment provides easier version upgrades. With partner hosting, upgrades and maintenance are handled more or less as they are with on-premises software: each customer is treated separately (though I suspect some partners are more organized about this than others). With Azure deployment, Microsoft will have a more disciplined approach to application management: rolling out new versions, upgrades, and patches to its customers, similar to what it does today with Microsoft CRM (even though, as I point out in the interview, CRM is not yet an Azure service).
  • Azure deployment is provided directly by Microsoft. Most new prospects will have a higher level of comfort with cloud services provided directly by Microsoft and backed by the Microsoft brand and service level guarantees. Hosting is often delivered by service providers who are relatively unknown. The direct Microsoft relationship is also simpler and easier to explain. The software comes from Microsoft and the cloud services are delivered directly by Microsoft.
It is also important to point out at least one advantage of Azure deployment over partner hosting that Microsoft is not claiming--that is, that Azure deployment provides the ability to inter-operate with other Azure services, such as Office 365 or other future Azure data services (some of which I was briefed on). Microsoft has made a big deal about its vision of the so-called "hybrid cloud," meaning that customers will be able to move selected "workloads" to Azure while keeping other workloads on-premises or in partner-hosted data centers. Therefore, if I want to inter-operate Microsoft's Office 365 with my NAV system, it should not make any difference if my NAV instance is on-premises, in a partner data center, or on the Azure cloud.

Optimizing Azure as a Cloud Platform

I am struck by the fact that I've had to piece together this value proposition for Azure ERP myself, lobbing softball questions to Microsoft executives, parsing their answers, and adding my own analysis. If Microsoft itself is not prepared to articulate the value proposition of Azure ERP, how can it expect that its customers or its partners will perceive it?

Therefore, I do not envision customers and prospects staging a mad rush to Azure. As I said in the interview linked above, what if Dynamics throws an party and no one shows up?

Nevertheless, from a strategic perspective, I do believe that moving to Azure is the right thing for Dynamics. Mike Ehrenberg, one of only a handful of Microsoft Technical Fellows, told us an interesting story. He said that when they first spoke with CEO Steve Ballmer about moving Dynamics ERP to the cloud they told him that they could do it in one of two ways:
  1. The quick way: hosting it in Microsoft data centers in a highly virtualized environment, as they had done with Microsoft CRM, or
  2. The strategic way: working with the Azure team to optimize the Azure capabilities needed to support true scalable enterprise business applications, such as SQL Azure, until it could support Dynamics ERP.
Mike reported that Ballmer thought for about two seconds before choosing the second option. He likened it to Microsoft Windows and Microsoft Office, years ago. It took the requirements of Office as a set of user applications to make Windows "become better" as a PC platform. Likewise, it would take Dynamics as a set of enterprise applications to make Azure become better as a cloud platform.
The problem, of course, is that it's taking much longer to develop Azure as a enterprise-class platform. In the meantime, competitors such as NetSuite, Workday, SAP, Plex, and others have already become established as cloud ERP providers and have gained market share in this emerging market. Nevertheless, Microsoft entering this market later this year is a welcome development that will mean an increasing number of choices for buyers.
Postscript: watch for Part 1 of my market overview of cloud ERP over the next few weeks.

Labels: , , ,


by Frank Scavo, 3/27/2012 07:52:00 AM | permalink | e-mail this!

Subscribe!

 Reader Comments:

No surprise Frank, all along Azure's product marketing has sucked, despite robust technical vision.

Via @SQLServerMike SQL Azure allows up to 50 SQL server databases to cooperate together, by relaxing the cap theorem, yet still guaranteeing consistency.

My take, Azure may be ready to challenge Oracle's / IBM's database dominance in a more scalable federated way. Allowing a global realtime ERP without batching across timezones (imagine real-time MRP). This 50 SQL server capability is only available in SQL Azure not in on-premise SQL server.
http://cliveboulton.com/post/16551888996/sqlazure-littlebigpaas-with-michael-rys
 
Good stuff, Clive. I recommend everyone check out Clive's post in the previous link.
 
Post a Comment
 

Links to this post:


 

Powered by Blogger

(c) 2002-2014, Frank Scavo.

Independent analysis of issues and trends in enterprise applications software and the strengths, weaknesses, advantages, and disadvantages of the vendors that provide them.

About the Enterprise System Spectator.

Frank Scavo Send tips, rumors, gossip, and feedback to Frank Scavo at .

I'm interested in hearing about best practices, lessons learned, horror stories, and case studies of success or failure.

Selecting a new enterprise system can be a difficult decision. My consulting firm, Strativa, offers assistance that is independent and unbiased. For information on how we can help your organization make and carry out these decisions, write to me.

For reprint or distribution rights for content published on the Spectator, please contact me.


Go to latest postings

Custom Search

Join over 1,700 subscribers on the Spectator email list!
Max. 1-2 times/month.
Easy one-click to unsubscribe anytime.

Follow me on Twitter
My RSS feed

AddThis Feed Button


Computer Economics
ERP Support Staffing Ratios
Outsourcing Statistics
IT Spending and Staffing Benchmarks
IT Staffing Ratios
IT Management Best Practices
Worldwide Technology Trends
IT Salary Report
IT Help Desk/Service Desk Management

Get these headlines on your site, free!


Awards

2013 Best ERP Writer - Winner

Alltop. We're kind of a big deal.
 
Constant Contact 2010 All Star Technobabble Top 100 Analyst Blogs


Blog Roll and Favorite Sites
Strativa: ERP software vendor evaluation, selection, and implementation consultants, California
StreetWolf: Digital creative studio specializing in web, mobile and social applications
Vinnie Mirchandani: The Deal Architect
Oliver Marks' Enterprise 2.0 Blog
Si Chen's Open Source Strategies
diginomica
CISO Handbook


Spectator Archives
May 2002
June 2002
July 2002
August 2002
September 2002
October 2002
November 2002
December 2002
January 2003
February 2003
March 2003
April 2003
May 2003
June 2003
July 2003
August 2003
September 2003
October 2003
November 2003
December 2003
January 2004
February 2004
March 2004
April 2004
May 2004
June 2004
July 2004
August 2004
September 2004
October 2004
November 2004
December 2004
January 2005
February 2005
March 2005
April 2005
May 2005
June 2005
July 2005
August 2005
September 2005
October 2005
November 2005
December 2005
January 2006
February 2006
March 2006
April 2006
May 2006
June 2006
July 2006
August 2006
September 2006
October 2006
November 2006
December 2006
January 2007
February 2007
March 2007
April 2007
May 2007
June 2007
July 2007
August 2007
September 2007
October 2007
November 2007
December 2007
January 2008
February 2008
March 2008
April 2008
May 2008
June 2008
July 2008
August 2008
September 2008
October 2008
November 2008
December 2008
January 2009
February 2009
March 2009
April 2009
May 2009
June 2009
July 2009
August 2009
September 2009
October 2009
November 2009
December 2009
January 2010
February 2010
March 2010
April 2010
June 2010
July 2010
August 2010
September 2010
October 2010
November 2010
December 2010
January 2011
February 2011
March 2011
April 2011
May 2011
July 2011
August 2011
September 2011
October 2011
November 2011
December 2011
January 2012
February 2012
March 2012
April 2012
May 2012
June 2012
July 2012
September 2012
October 2012
December 2012
January 2013
February 2013
March 2013
May 2013
June 2013
July 2013
September 2013
October 2013
December 2013
January 2014
February 2014
March 2014
Latest postings