FAQ: Inside Microsoft's cloud ERP strategy

IDG News Service - Microsoft has announced some key details of how it will introduce Dynamics ERP (enterprise resource planning) software products to the cloud computing model, from initial release dates to the precise role of partners.

Dynamics NAV 2013 and GP 2013, both of which cater to smaller and midsized companies, will be available on Microsoft's Azure cloud service through partners in June, Microsoft announced this week at the Convergence conference in New Orleans. Microsoft also affirmed that the next major version of AX, its enterprise-focused product, will be available on Azure.

Here's a look at some of the biggest questions raised by those announcements.

Partners have long hosted Dynamics software and made their own data center optimizations, so what do they stand to gain, as well as lose, from the Azure deployment option?

"It's all the things you can expect from an enterprise-grade cloud service," namely "stability, protection, security and the ability to scale and grow," said Kirill Tatarinov, president of Microsoft's Business Solutions division, in an interview at Convergence. "Azure is elastic. The fact they can grow without adding servers is huge for them."

In addition, it's all business as usual for partners with respect to Dynamics consulting on Azure. Dynamics ERP is sold through channel partners, many of whom add extensions that fine tune the software for a particular customer's needs. That won't change, and partner-built extensions will also run on Azure.

But will Azure save people money over regular hosting or on-premises installations?

They will, according to Tatarinov. "The cost variables in the cloud change so rapidly between different providers and suppliers, but Azure is and will continue to be cost-competitive," he said. "And ultimately, yes, they will benefit."

That's not to say Microsoft intends Azure as a be-all, end-all cloud platform for Dynamics ERP, said Michael Ehrenberg, a Microsoft technical fellow who oversees development of the Dynamics products, in an interview at Convergence.

"Our target is to be the best provider at volume, at scale," he said. Some hosting partners have specialized offerings, such as for local legal requirements, a higher service-level agreement, or extensive hands-on support; Microsoft won't try to supplant them with Azure, he said. "That's where the partner hosts have a long-term model."

"We have some partners that host today, but there's nothing really special about it," Ehrenberg added. "We expect most of them to transition [to Azure]."

Saving money is nice, but is it the only point of the Azure option?

"Now the customer's dealing with their partner, the software is from Microsoft, and there's some third-party [hosting service] like Rackspace," Ehrenberg said. "This is more, let's give them the comfort of infrastructure run by Microsoft. Now, I'm dealing with my partner and Microsoft." That said, "over time we expect that our costs in the cloud will become super-competitive," he added.