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Partners ponder Microsoft's hosted ERP plans

Microsoft Dynamics CRM 4.0 will get the headlines at Convergence 2008, but a hosted ERP offering could also be in the works.

Microsoft Dynamics CRM 4.0 and Dynamics CRM Live will be at the forefront of next month's Convergence 2008 event. But it's what Microsoft may not talk about that could make even bigger news.

Microsoft partners have told that Microsoft has been pondering a vendor-hosted enterprise resource planning (ERP) offering, similar to Dynamics CRM Live, for quite some time.

One partner said Microsoft had been talking privately with him about vendor-hosted ERP but stopped a few months ago. The Microsoft Business Solutions (MBS) group is extremely worried about low-end accounting and what it sees as a growing threat from Quicken Online, this partner said. But another partner said Microsoft, as of late last year, had not decided which of its four ERP code bases to use as the foundation for a hosted ERP foray.

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This partner feels that MBS has scaled back its ambitions considerably since announcing plans for a "Project Green" converged ERP code base four years ago and subsequently backing away from the plan.

Another partner, Jeff Pyden, said he has heard rumblings about Microsoft-hosted ERP, but the company has so far remained tight-lipped.

"I can't get anybody to admit anything," said Pyden, founding and managing director of Omnivue Business Solutions in Alpharetta, Ga.

Dynamics CRM Live marks the first time Microsoft has hosted its customer relationship management (CRM) software for customers. Partners can sell that offering, host Dynamics CRM 4.0 themselves or deploy the software on premise for customers. Going to the same model with ERP is Microsoft's logical next step, Pyden said. Some partners already host Microsoft's various ERP packages for customers, but thus far the vendor has not done the honors itself, which would be following in the footsteps of companies like NetSuite Inc.

Some Microsoft hosting partners are worried about competition from Dynamics CRM Live, but Pyden said he doesn't expect Microsoft to threaten its ERP hosting partners any time soon.

"They're going to go for the midmarket, which is different [from what] a lot of partners typically focus on," he said. "I don't think anyone would host with them right out of the gate. Most of our clients won't."

Some Microsoft partners now feel that the company has taken its pedal off the metal in terms of hosted ERP and other MBS efforts because of renewed focus on Google and competition for online advertising revenue. Microsoft's $44.6 billion takeover bid for Yahoo is the biggest signal yet of that shift in strategy.

"What they're trying to do is grow their recurring revenue line," Pyden said. "They could give away these apps for free if you want to put up with having advertisers."

Most of Omnivue's clients, however, would rather pay for advertising-free applications, Pyden added.

Convergence 2008 will take place March 11-14 in Orlando, Fla. The focus for Microsoft Dynamics partners used to be on ERP over CRM, but that has changed as "those lines have blurred tremendously," according to Donna Armstrong, sales director at Collins Computing in Mission Viejo, Calif. Now partners are more interested in the big picture, which includes ERP, Dynamics CRM 4.0 and other products and technologies, she said.

"SharePoint is an integral part of today's business solution, as well as business intelligence and anything around analytics," she added.

For most partners, the best part of Convergence is meeting with their own clients, third-party companies offering partnership opportunities and other Microsoft Dynamics customers who can offer new perspectives.

"It's a good way to get with our clients and see what their strategic vision is for the year," said Pyden, who has attended Convergence about a half dozen times.

Ravi Agarwal, CEO of groupSPARK in Burlington, Mass., will be making his first trip to Convergence this year. GroupSPARK is the first Microsoft hosting partner to launch hosted Dynamics CRM 4.0 and will be looking for resellers to rebrand the service and get it out into the market, Agarwal said.

"It will be a great place to market the new service and sign up partners," he said. "This is predominantly about marketing."

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