Understanding Microsoft’s cloud application platform

Microsoft’s ambition for its new Dynamics 365 cloud CRM and ERP service is broader than just creating a subscription service from its on-premises business tools.

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When the new Dynamics 365 cloud CRM and ERP service comes out this fall, the obvious comparison is going to be Salesforce (and NetSuite), but Microsoft’s ambition here is broader than just creating a cloud business software subscription service from its on-premise business tools.

It’s really about connecting all your business workflows without the artificial divisions created by point solutions for ‘front office’ and ‘back office’ activities. It’s about bringing together all the tools and sources of information — internal, external, on premise, cloud or anywhere else, social as well as financial — in an attempt to finally make businesses truly digital. And it’s what Microsoft CEO Satya Nadella means when he talks about “what we're doing with Office 365, Dynamics 365, App Source, LinkedIn as all being part of one strategy.”

“Dynamics 365 is about the unification of what have traditionally been monolithic suites of CRM and ERP, because when a company is running a business process, they don’t think in big sweeps of CRM or ERP functionality, they’re just looking to solve a particular business problem,” says Barb Edson, general manager, business applications and industry at Microsoft. “So often, what you want to create is a workflow that cuts across individual business process solutions. But even though there are front office and back office solutions in many companies, those things don’t talk to each other.”

The way Dynamics 365 offers separate apps — “think things like field service, project service, financials or your backend operations, things like customer service,” Edson explains — lets you choose what you need to start with and part of the appeal is that “you can make a smaller decision for a specific business problem,” which has always been an advantage of SaaS.

But you still get integration across what are traditionally different business processes, Edson says. “You can get deep integration across field service and back end operations from a financial perspective, for example making sure when a field service rep rolls a truck and they deplete inventory that the back end systems are automatically updated and the replenish order is sent to kick off the supply chain.”

Edson also touts the strong integration with other Microsoft tools, which you’d expect from a Microsoft cloud service, so a sales rep could work in the CRM tool, or right in Outlook, and still have access to information from Yammer and OneNote. “If you’re working in Outlook, you can generate a quote, and the system is smart enough to reference Dynamics 365 and understand the discounting rates in your sales solution. It can understand what price point your customer has access to based on their volume of purchases.”

Getting that information in your everyday tools is what will make the insights actionable. “CIOs are going through the discovery of IoT and getting insights, but if you can't connect those insights into business processes it's not actionable. Or as Herain Oberoi, director of product management for Microsoft’s advanced analytics tools, puts it, “insights are worth pennies and actions are worth dollars; when you get a prediction, you want to wire it into a workflow and a business process.”

“Project service or field service or customer service is a great entry point because those are often net new areas where the digitization of business is having high impact, and then over time they might do more in, say, the back end financials. You can create agility without creating chaos,” says Edson.

“It used to be companies reinvented their business model every 15 to 20 years; now they’re doing it every 12 to 18 months, and they need the back end agility in their business process solution to do that,”

Business as a platform

The familiar systems of record, like ERP and CRM, are often inefficient; they collect internal data, and they rely on employees keeping things up to date (which means they’re frequently out of date) and knowing the right questions to ask to get business insight. They’re also often separate.

The new systems of record will combine information from a wide range of data sources, from inside and outside the business — social media, enterprise social networks, inventory information, sales records, sales predictions, business analytics, IoT and predictive analytics, marketing data, customer support data, customer satisfaction levels. That's one reason they're more likely to be SaaS rather than on-premise tools, because that way they're more likely to stay up to date as new sources of information come along.

The wealth of data and the business information that comes out of it — which customer accounts to pay attention to, which projects to prioritize, which products might have issues that need fixing — is useful enough that employees will keep using them, which means they stay up to date and relevant. And at the same time, information about how your business works becomes a by-product of getting that work done, not a separate thing you have to do.

Microsoft Graph and the Common Data Model

Microsoft’s approach to digitizing business information isn’t just Dynamics 365 or any other individual products; it’s all of them, connected by the Microsoft Graph and Microsoft’s Common Data Model (CDM) into what it calls the Business Application Platform. Think of it as an abstraction layer for how you run your business that lets you fit in existing systems alongside new sources of insight and gives developers and business users tools so they can extract value.

The CDM isn’t a product, even though Microsoft calls it a “business database for storing and managing business entities.” Those entities are things that are common across businesses, like cost centers, product categories, business units, employees, customers, purchase orders, invoices, and approvals, for everything from tracking a sales lead to hiring a new employee to tracking a customer complaint. There are hundreds of standard entities, but you can create your own — and Microsoft will periodically scan through custom entities and find those that are common enough to add to the CDM. “Business entities – what an employee looks like, what a customer account looks like – look very common across different businesses and different business processes,” says Edson.

CDM entities are at the heart of Dynamics 365 and how it’s able to integrate across business processes. Office 365 understands them as well; for example, an employee entity includes a job title and an email address, which are familiar Office objects that apps and services can query through the Microsoft Graph. Connectors and gateways bring in information from on-premise systems and cloud services, whether that’s Power BI or ZenDesk. Third-party solutions in Microsoft’s AppSource business app store will use the CDM, so they can integrate with Dynamics 365 and Office 365. You’re already using the CDM if you build an app using the Microsoft PowerApps service, or a workflow using Microsoft Flow, where you might connect Twitter, Salesforce and SharePoint to automate the steps of a business process.

For Microsoft, the Common Data Model, the Microsoft Graph that lets you transfer entities between different Microsoft services and the Business Application built on top of all that, looks like a master plan. Current apps and services will connect to it, and new services and workflows will get built on top of it.

And it’s the ideal way to consume all of the useful information in LinkedIn’s professional business graph. Imagine a hiring process that knows what the job you’re trying to fill looks like at businesses like yours, as well as the skills your team already has and what areas you’re weak in, and how the products your team is building are selling right now, plus what the predictions for both sales and customer support look like. That cuts across front office, back office and multiple business processes, and it’s the kind of information most businesses dream of.

This story, "Understanding Microsoft’s cloud application platform " was originally published by CIO.

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