On-demand ERP draws mixed reaction

Microsoft still has no plans to roll out on-demand ERP (enterprise resource planning) software, an executive said Tuesday.

While it has tested the waters of on-demand software with its CRM Online application, Microsoft still has no plans to do the same for its Dynamics ERP (enterprise resource planning) product lines, according to a top company executive.

"We don't see people saying, 'Hey, I wish you had hosted ERP, give me that, or I wish you only had hosted CRM,'" said Kirill Tatarinov, corporate vice president of business solutions, during a question-and-answer session Tuesday at the Convergence conference in New Orleans.

The vendor plans to continue with its current model, wherein partners host Dynamics ERP and customize it for customers, according to Tatarinov. "We see that model work quite effectively," he said.

Dynamics customers expressed mixed sentiments about the prospect of Microsoft getting into the SaaS (software-as-a-service) ERP game, where it would compete for midmarket users with the likes of NetSuite.

"If they did, and if it was configurable, we absolutely would do it for a new business unit," said Greg Lush, CIO of The Linc Group, an Irvine, California company that provides facility management and building system services.

Linc Group currently uses Dynamics AX, and wouldn't abandon that on-premises software, he said.

But the on-demand model nonetheless makes perfect sense for his company, according to Lush: "The fact of the matter is, I am in the service business. If I had no servers to worry about, I'd be as happy as a lark."

Lush is not interested in tapping a Microsoft partner for hosted ERP in the meantime, saying he would only be comfortable if the vendor itself was providing the service.

But another Dynamics customer wasn't as gung-ho, saying his company's IT infrastructure is too complicated for the on-demand model.

"We do so many integration points. ... From an application standpoint we're very active on the data side of it, the SQL table side of it. Every day there's a new need. It would just make it too complicated," said Allan Stiles, corporate director of applications and development at CMC Group. The Bowling Green, Ohio, company is made up of several subsidiaries that provide specialized printed products for a number of industries.

At the same time, Microsoft's Dynamics AX 2009 product, which CMC installed last year, has much deeper built-in functionality than past products, Stiles said.

"We got rid of 80 percent of our customizations with AX 2009," as standard features replaced the functions provided by custom code, he said. "You can do more out of the box. The further they go with that, for smaller companies [on-demand ERP] could make sense."

Microsoft's effort to push applications to the cloud -- however far it goes -- has meant good things overall for customers, Lush said.

He pointed to Dynamics CRM 4.0, which has a multitenant architecture, allowing a single server to run multiple instances of the application.

The multitenancy feature is allowing the Linc Group to tweak the CRM application to the liking of the company's various business units, and as a result, "adoption has gone through the roof," he said.

But the cost efficiencies gained by the multitenant model are also key to the profitability of on-demand services like CRM Online, which is based on CRM 4.0.

"I don't think [CRM 4.0] ever would have been multitenant if not for the push to the cloud," Lush said."They're self-motivated to make the products we use more flexible."

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