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Microsoft-hosted ERP coming, Ballmer says at Convergence

Disputing previous reports, Microsoft CEO Steve Ballmer says we should expect a hosted ERP offering in the future.

ORLANDO, FLA. -- Microsoft-hosted enterprise resource planning (ERP) is in the company's plans, CEO Steve Ballmer said during this morning's Convergence 2008 keynote address.

Microsoft will release Dynamics CRM Live, its vendor-hosted customer relationship management (CRM) software, by the end of June. It will be the first of several Microsoft-hosted Dynamics enterprise applications products, Ballmer said.

"You should expect to see more from us in ERP and other areas as we move into the future," he said.

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Ballmer's statements contradicted those of corporate vice president Michael Park, who denied any Microsoft-hosted ERP plans last week. Park told that "the architecture we're making the [hosting] bet on is CRM. With ERP, we've got a good number of partners who are hosting it for us."

Dynamics CRM Live has some Microsoft partners worried about competition with their own hosted CRM services. The prospect of Microsoft-hosted ERP isn't causing the same concern -- at least not yet -- according to Scott Millwood, CEO of Customer Effective, a Microsoft partner in Greenville, S.C.

"There's not as much demand for hosted ERP as there is on the CRM side," he said.

Microsoft execs have said in the past that public numbers of hosted ERP vendors like NetSuite indicate a lot of "churn" as customers come on board, but exit just as quickly.

Microsoft-hosted ERP has been rumored for more than a year now, so Ballmer's comments did not come as a total surprise to Microsoft partners at Convergence.

"Microsoft probably, deep in their think tank, does have a Software as a Service strategy that goes beyond their current hosting strategy," said Jon Buchan, vice president of North American channel development for Blue Fox, a Chattanooga, Tenn.-based Microsoft partner.

Meanwhile, Microsoft today announced Dynamic AX 2009, the latest version of its ERP software that partners can host or deploy on premise. The new release will allow for integration among multiple customer locations. Microsoft partners said that will be a big selling point to help Microsoft compete against the ERP market leaders.

"It's not there, but it's getting there," said Eric Wagner, a partner with Agility Business Solutions, a Microsoft partner in Cleveland. "We'll be able to enhance it, and we'll be able to offer it to multiple customer sets."

Buchan agreed.

"They really made multi-company very strong, and that was probably the one area where we didn't match up well with SAP," he said.

Ballmer this morning also stressed Microsoft's commitment to enterprise applications. He said more people ask him about Microsoft's devotion to that market than any other topic.

"We have a long-term view for every one of these products," he said.

Wagner said Microsoft needs to sell more into the ERP space, and he's confident the company will do so -- eventually.

"They've got the commitment, but they don't have the experience or the people yet," he said. "It doesn't happen overnight."

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