Microsoft's "Alternative" ERP and CRM Status: Not for Much Longer

It's quite strange to think of Microsoft as an "alternative" in any of the computing and IT markets in which it operates—well, except in the digital music category. (Even there, its Zune product is more of an "are they still making that?" than a viable alternative).

Nevertheless, that's exactly the current status of Microsoft's Dynamics line of ERP and CRM applications—an alternative to the business software apps offered by SAP, Oracle and other enterprise vendors, who have long maintained a stranglehold on large, locked-in corporate customers.

But as I've noted in the past, the SAP and Oracle "two-horse" race is fast becoming a free-for-all scrum: As SAP and Oracle try to milk their large customer bases, they are also pursuing the SMB and on-demand spaces. Conversely, Microsoft and smaller vendors, as well as SaaS and open-source players, want more than merely the SMB prey and continue to target the enterprise customer base with their vastly improved and highly scalable product sets.

It's no surprise, then, that Microsoft has used its near-universal presence in businesses big and small to sell its line of ERP and CRM applications, touting the "ease of use and integration" between Office and SharePoint to its Dynamics ERP and CRM application sets.

And lately it's having more success.

"As organizations plan for upgrades and vendor selection in their long-term apps strategies, Forrester believes that Microsoft Dynamics will continue to serve as an alternative for those seeking on-premise solutions," writes Ray Wang, a VP and principal analyst at Forrester Research, in a new report on Microsoft (subscription required).

Despite challenges facing all vendors right now—deep cuts in customers' IT budgets, legacy integration headaches and future roadmap quandaries—Wang says he's bullish on Microsoft's future in the enterprise apps space.

"Microsoft's commitment to continued investment and customer-friendly software licensing and pricing programs," he writes, "provide customers with choice, flexibility and predictability in an enterprise apps market undergoing significant market transformation." (IDC's Albert Pang also shares Wang's enthusiasm.)

In particular, Wang contends that Microsoft offers favorable licensing practices and vendor stability when both are in short supply right now. In fact, Wang writes that while other vendors are cutting their R&D, Microsoft will be "more likely to honor its commitments to deliver on its road map as promised." In addition, more "consumption" of Microsoft's .Net components will allow Microsoft to "take advantage of its technology stack to deliver future innovations in search, data management, content management and other productivity tools."

As to the all-important customer "value" question (as in, "What the heck am I getting for all these millions I'm spending?!"), Wang writes of Microsoft's expanding range of customer-financing options, including its 0 percent financing offer (which recently ended), licensing simplification programs and other innovative options.

Still, Microsoft's mission won't be easy. Microsoft, like other business software vendors, still faces serious market challenges, Wang notes. These include: moving its customers, many of whom are one to three version releases behind in adoption, forward on the new releases; improving uptake of Microsoft's support and maintenance; and figuring out a long-term strategy for software-as-a-service (SaaS), since customers "will expect a continuum of multiple deployment options that span on-premise, hosted, multi-instance and multitenant SaaS," Wang writes.

Microsoft may be the outsider now, but SAP, Oracle and others would be foolish to ignore or downplay Microsoft's alternative presence much longer. Certainly, customers won't.

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