Seven years after entering the fray, Microsoft finally looks like it has worked out how to insert its ERP applications into its portfolio. Angela Eager reports.
Until recently, Microsoft's business applications division looked like a spare piece of jigsaw, making no more use of Microsoft's infrastructure and productivity applications than those of an independent ISV.
Seven years after the company entered the sector, the Dynamics piece has found a place in the overall picture. Things started to change overtly when Microsoft reorganised its business divisions in autumn 2005 and the Dynamics, Office and server and tools products were brought together under the leadership of Jeff Raikes.
Jeff Raikes, president, Microsoft Business Division
So, why did Microsoft buy into the enterprise applications business? "Back in the year 2000 to 2001, I had returned to this world of office productivity, and it was very clear to me that Microsoft had a unique ability to be able to bring the capabilities of office productivity together with what people do in the structured information [world] of business process applications," says Raikes.
Microsoft's ownership of the desktop gives it a head start in bringing enterprise and desktop applications together. It can then combine that capability with a deep supporting technology stack. The goal is to integrate the business and productivity applications to improve productivity.
The message resonates with information systems manager John Warne of RMD Kwikform, a UK-based provider of formwork and shoring systems to the global construction industry. Currently using version 3 of Dynamics AX, Warne is planning to upgrade to version 4. One of the benefits will be the Outlook-style look and feel, but he also likes AX because it uses standard Windows conventions for operations such as save and copy shortcuts, which reduce the amount of time spent on training users.
Other benefits of tighter integration with productivity applications include the ability to import data from Excel and immediately benefit from the database and business logic. Front-end integration is also important to him as the company uses Microsoft Office and e-mail.
Despite the user benefits, there is a question over whether Microsoft's focus on productivity-to-business application integration is masking a weakness in functionality. Microsoft is focused on usability and appropriate functionality rather than extensive functionality and nowhere is this clearer than in the CRM application.
"We do not focus on being the feature and functionality leader," says Brad Wilson, Microsoft CRM general manager. "Those companies that did that have had limited success. We combine user experience and platform functionality, which is more important than a long feature list."
As the in-house developed application where new developments and directions show up first, CRM is an indicator of what the company thinks and how it will execute.
For Warne, base-level functionality is important, but once that is assured, other criteria come to the fore. "We chose AX... because it used modern technology and had a future as an ERP system. The partner [we used] had a track history in developing systems for the hire industry and wanted to develop a hire system for AX," he says. "It is an agile tool that allows us to be agile as a business."
Cost is also a top agenda item. "Cost is the overriding driver. If it is not cost effective then we will look elsewhere. At the moment the cost equation is in their [Microsoft's] favour," he adds.
Microsoft's strategy bears more than a passing resemblance to Oracle's. Both are grappling with the challenges of managing and converging multiple acquired and inhouse created applications, all built on different code bases, and aligning them with their infrastructure technologies.
Rather than follow Oracle's path and force convergence at the application level, Microsoft is concentrating on convergence at the infrastructure and desktop levels.
Although the ultimate goal is to end up with a common code base across its applications, this will not be achieved by forcing a move to a common application platform. Each application has its own roadmap, but where it is feasible to develop shared capabilities Microsoft will do so, as it has done with SQL Server Reporting Services and is increasingly doing with SharePoint and the new Windows Workflow Foundation (WWF).
Does this mean Microsoft is pushing more application functionality down into the stack, or building more infrastructure into the applications? Not exactly, says Mike Ehrenberg, formerly Dynamics' head architect and now distinguished engineer. "There is a natural flow of granularity in software. Things happen in the application and you can generalise and move to the application framework and then into the infrastructure. It is a constant process. Reporting is an example. Ten years ago people wrote queries in the application for every report, then it became part of the application framework and now it is part of the infrastructure. Things go to the lowest level, where they can be used broadly."
What it does mean is that customers are encouraged to invest in end-to-end Microsoft in order to get the best from their applications, just like SAP and Oracle urge their customers to do. Customers are not averse to the trend. Warne is not unusual when he observes: "There are huge advantages to be gained by staying within the Microsoft stack."
Initially, the company hooked into the stack because of its financial advantages, but "now it is a strategic decision. It allows maximum use of the infrastructure by developing tools that sit within it." Having experienced the pain of multivendor integration, Warne is happy to have the pain reduced.
Front-end work to enable access to Dynamics applications via Office and Outlook has been the most visible evidence that Microsoft is serious about slotting Dynamics into the wider business. Now, results of work done at the back end are coming into view.
Microsoft has worked to modify the Dynamics applications, moving them over to Microsoft infrastructure and delivering tighter integration. The first step with SQL Server, for instance, was to optimise performance of the data store, then make SQL Server richer through the addition of analytics and reporting services. Having done that, it became possible to have the Dynamics applications use SQL Server Reporting rather than each using its own reporting capability.
Dynamics applications are starting to exploit the rest of the Microsoft portfolio, particularly in the SharePoint space. "Between SharePoint's handling of unstructured information, and the way that business applications handle the structured piece, it is a perfect marriage of technology to solve the kinds of problems that our customers are having," explains Wilson. In fact, the same team that develops SharePoint develops the CRM platform.
Much of the work has been driven, according to Ehrenberg, by demand for applications that do more than just handle transactions but help users carry out their everyday tasks. For that they needed data and information from lots of places, which drove the need for composite applications. "SharePoint is the framework that gives people that capability," he says.
SharePoint is the presentation-level centrepiece for users wanting to access business information and processes. It enables the blending of structured and unstructured data, such as business records in ERP software and Word documents containing proposals, or spreadsheets. Raikes describes SharePoint as the platform for how customers interoperate with business information and business process. It is the foundation that brings together Office capabilities with Dynamics capabilities.
According to Ehrenberg, Microsoft is focused on three areas when it comes to SharePoint development: to bring structured and unstructured information together; driving collaboration; and as the platform for composite applications. This last area enables Microsoft to reach the 85% of users who are not using business applications as their everyday tool but would benefit from accessing data and processes occasionally.
Warne says he was using SharePoint in that way a good six months before Microsoft started promoting it, by enabling users to enter timesheet information into AX. In the CRM area, he is also using it to enable sales reps to enter information without entering AX. Users complete a simple form that is saved to SharePoint and then pumped into AX. He is also planning to build SharePoint web pages for key management that will hook into AX data to display KPIs and updated reports. As well as the business benefits, this type of SharePoint usage brings licence cost benefits.
There is a sense that Microsoft is playing catch-up on SharePoint. Although the technical capability has been there, the company has been slow to promote its potential. The change can be tracked back to the Office 2007 launch, which the company says led to an uptake in SharePoint. As customers gain familiarity, Microsoft says it is able to push forward, moving from simple portal to a framework for enabling composite application integration.
Microsoft argues than the next logical development is collaboration, also provided via SharePoint. It also views a unified communications platform as another important platform piece, something it has been able to embed into CRM 4.0 and plans to support in its ERP products.
Another key area of development in terms of Dynamics' strategic position is WWF, which is part of SharePoint. While each Dynamics application had its own workflow engine, they could not be seen as working together, or working well with the rest of the Microsoft stack. WWF is set become to a common workflow solution.
The first application to use it will be Dynamics CRM 4.0, where it will replace the existing workflow engine. It will also be picked up in new versions of Dynamics applications.
It is enormously important in terms of how applications are being developed, says Ehrenberg, because it moves the focus from performing transactions to capturing process workflows. "The WWF will only get more important because there is so much focus on systems helping people do their work. They need a model of what is being done and how they do it, not just the transactions. Workflow is a representation of that."
For all the work done to embed the business applications into the Microsoft stack, and use shared technology such as SharePoint and WWF, there is a jarring disconnect between the (acquired) Dynamics ERP applications and (in-house developed) Dynamics CRM. For all their modifications, the ERP applications are old technology applications, while CRM is new.
ERP and CRM applications can interoperate, but they sit on disparate development platforms and Dynamics applications cannot make use of the CRM development platform. Microsoft partners are encouraged to extend the ERP applications. Similarly, partners hooked into the CRM platform are encouraged to build extensions. However, as Microsoft is explicitly urging them to develop non-CRM applications, there is potential for developments to clash with areas of ERP functionality and create confusion among buyers.
There is clear evidence that Dynamics is being integrated into the broader Microsoft technology portfolio and has become a strategic part of the business. However, the technology deliverables are only just starting to trickle out. Of course, Microsoft has had to put in a lot of background work and that takes time to show up, but even so, it has taken longer than expected. A few changes of direction and time lines cannot have helped and there are still tricky technical and strategic issues to sort out, but Dynamics does now have a place in the overall Microsoft jigsaw.