CIO
Blog: The Next Big ERP Innovator: Microsoft

I have complained and ranted and railed about the lack of ERP innovation coming from the Big Two enterprise software players—SAP and Oracle—as well as other traditional on-premise business software vendors. While billions of dollars have flooded into these companies' coffers, how much innovation—real, ground-breaking types of stuff—have we seen from the incumbent megavendors and their overpriced lines of applications?

Not much.

I have also noted with recurring frequency that, besides legitimate threats from SaaS and open-source ERP competitors, SAP and Oracle will have to start taking Microsoft's Dynamics product line much more seriously. Last fall, for instance, I interviewed Microsoft's Chris Caren about its Dynamics strategy and how it was going to topple Oracle and SAP.

At that time, Warren Wilson, a research director at Ovum, noted that despite still being considered a "newcomer," Microsoft was "committing more and more resources to its Dynamics solutions, and its ability to integrate Dynamics with its ubiquitous Windows applications—especially Office—makes Microsoft a threat that neither SAP nor Oracle can afford to take lightly."

Now Microsoft has found another analyst "believer" in Albert Pang, IDC's director of enterprise applications research. In a recent report on Microsoft's Convergence conference (subscription required), Pang writes that Microsoft revealed many new products, including several still in prototype stage, that will be instrumental in restoring growth to the enterprise applications market. Pang gushed even more:

"It was hard not to marvel at the vision outlined by Microsoft executives, who were showing off next-generation touch-screen computing technologies at the main event and how average users ranging from order clerks to warehouse workers would be able to use the so-called Microsoft Surface device to access reams of inventory data by simply manipulating images on a screen, for example to rearrange popular inventory to areas within reach to improve the pick-and-pack process."

Pang was equally impressed with the brand-new Dynamics AX 2009 for manufacturing that included some breakthrough modules. He was also encouraged by the new products' ability to allow Microsoft's resellers to compete with the "high end" offerings of other vendors while ensuring ever-important affordability.

SAP could make a legitimate gripe that its latest Business Suite 7 launch is innovative, but its timing and pricing and onerous requirements dull any shine. As Forrester Research analysts note in a recent overview, "Most SAP customers will remain focused on maintaining and upgrading the core ERP solution, leaving the broader SAP Business Suite 7 offering to consider another day."

Comments

The other option

While I agree Microsoft is gaining ground, particularly in smaller organisations, Microsoft's strategy is true to form, that is, differentiation through unnecessary functionality (e.g. 90% of functions in Office are unused by the average user).

ERP after all is a known concept,most organisations require core functionality, but drive up implementation costs and TCO from "nice to have" requirements. There are some equally viable Open Source solutions which, upon closer look provide a compelling alternative. The integration aspect of the Dynamics story sounds great at face value, but one only has to look at the current state of integration across MS products to see that the truth falls a fair bit away from the marketing. Integrating Open Source applications (and even SAP and Oracle) to touch screens (and other business systems) is no longer rocket science. What companies should look at is an overarching sourcing strategy which takes into account the whole business systems landscape as a portfolio. Microsoft, for some, will be the right choice, SAP/Oracle for others. And for a growing number of organisations, SAAS and Open Source will give them the return they are looking for.

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