Special Report: Microsoft talks business apps strategy

The recent Convergence conference in Florida, saw Microsoft Business Solutions take centre stage. Microsoft corporate vice president Kirill Tatarinov speaks about the company's wider business applications strategy - including partner networks, software modernisation and Software as a Service.

By Stuart Lauchlan, news and analysis editor

Microsoft Business Solutions was at the very heart of the recent Convergence conference in Orlando, Florida, where Microsoft corporate vice president (CVP) Kirill Tatarinov took time out to expand on the company's wider business applications strategy.

“Dynamics is a very vibrant business for Microsoft,” says Kirill Tatarinov, CVP Microsoft Business Solutions. “Last fiscal year, we surpassed the $1 billion mark, which is very exciting [and] put Dynamics into the elite class of $1-billion businesses within Microsoft. This is also a business that continues to be growing at approximately 20% over the course of the last six quarters, and it's certainly very exciting growth in a market that is effectively growing in single digits. Last quarter, we reported 26% growth in customer billings, that yet again continues on the path of strong performance and strong delivery on our results.”

"Microsoft has been a major player, a major driver in the overall push for software modernisation."

Kirill Tatarinov, CVP Microsoft Business Solutions

A major differentiator that Microsoft is keen to play up against the competition is its massive partner network. “We have nearly 10,000 partners who work with us in retailing our software, servicing our software, and delivering additional capabilities to our software,” says Tatarinov. “There are 1,700 ISVs that are listed in the solutions finder portal that basically make Dynamics' offering richer, makes Dynamics' offering targeted to unique industry verticals, and makes Dynamics fine-tuned to the needs of specific micro verticals.

“The youngest product that we have in our portfolio, Dynamics CRM, the product that we introduced to the market only five years ago is now celebrating its fourth release. Dynamics CRM 4.0... is the product that can be run both on-premise by our customers, can be hosted by our partners, and also will be hosted by Microsoft as Dynamics CRM Live. And this product is enjoying very significant growth. We have over 14,000 customers and over 600,000 users worldwide who are using Dynamics CRM for their sales management, marketing management, and service management in very broad environments from the smallest organisations to the largest organisations.”

Software modernisation

The other term that is bandied around a lot by Microsoft is 'software modernisation', coined by Gartner Group and refering to the leap forward made by organisations to modernise their entire portfolio of technology investment.

“Microsoft has been a major player, a major driver in the overall push for software modernisation,” argues Tatarinov. “It's about delivering software that is familiar to the end users, software that people can use without having to go through massive retraining and massive learning, software that is very familiar to the Outlook user.

"We know that many sales people and many business people effectively live in Outlook day-in, day-out, so we're providing software that effectively looks and feels and plays just like Outlook, this is very important. Also, we're delivering software that is tailored to specific roles in an organisation, and that's a very, very important undertaking, and a very important differentiation that Microsoft delivers here.

“Three years ago, we introduced the role-tailored experience concept. It's effectively the result of a massive research that we conducted in Microsoft to analyse what people in business actually do, what are the tasks they perform daily, and what are the business processes that they participate? And that allows us to identify the needs of those individual personas in the business. It then allowed us to build our software in such a way that it's become effectively pre-packaged, pre-configured for the needs of those individual roles. So the credit processing person gets everything the person needs in front of them, at a glance, in one screen and they don't have to leave the screen as they do their daily job while the accounts payable and receivable clerk has everything they need in front of them, including transaction history, audit logs, and so on and so forth.”

A matter of cost

Of course, cost still plays a significant part in technology investment decisions, particularly reduced total cost of ownership – or as Tatarinov puts it: “Making sure that through that pre-configuration that our customers get from Microsoft where business applications is at the top of the stack and all of our infrastructure technology is in the stack itself, comes pre-packaged and pre-integrated."

Business productivity is another hot topic. “Effectively, when you talk to ERP or CRM customers, it's all about features,” says Tatarinov. “Business applications are all about features, what kind of features do you give me, how rich is your application? We've very much focused on that, delivering both industry enablement in our solutions, and also empowering ISVs to continue to do more on top of our platform. The most important aspect here is to provide end-to-end scenarios which connect those features together.”

Consolidation in the business intelligence (BI) market has focused attention on this area of functionality and how it sits alongside and as part of the wider applications infrastructure. “Confident decision making is about business intelligence and business analytics,” notes Tatarinov.

“This is one area which clearly allows businesses to gain competitive edge from the business application. They have vast amounts of data and they need something that would enable them to consume this data and make them productive by consuming this data in a uniquely delivered fashion. We're delivering business intelligence within the context of the business application. So people don't have to leave the familiar experience. People don't have to launch yet another tool. People don't have to make massive investments in other technology and other platforms. It's all within the context of what they do. We deliver simple business analytics within the context of ERP and we'll be delivering it also in the CRM application.”

Finally there's the hottest of hot topics – software as a service (SaaS). “This is probably one of the most frequent questions that we're being asked by our customers and partners alike: What are you guys doing in that area? What is your strategy? What are you planning to deliver?” admits Tatarinov. “Our core value proposition to our partners and customers is software plus service. When you apply that to business applications, there is one very important difference that I think the industry as a whole is just starting to realise today: it is about the business process, about the unique process. It is about customer unique configuration and customer unique environment, and it's also about capability and end-to-end scenarios.

“It's not as much about how they get the capabilities, it is about what type of capabilities they get, and that's exactly what we aim to deliver. We're delivering strong value within our Dynamics portfolio, and we're giving our customers unprecedented choice of how they get it - whether they get it deployed in their own environment or whether they get it hosted by third partners. What we're seeing in mid-sized organisation, [the partner channel] is by far the preferred place for them to get the benefit of software as a service and unique configuration and customisation.”

Can it scale?

While multiple choice is important, so too is consistency of approach, which raises the question of how different the user experience will be when customers move from an on-premise to a cloud offering. “Some customers would expect literally the same user experience; some customers would expect a different experience, I would say more lightweight,” says Tatarinov. “It really depends on the actual scenario of usage. In most cases, what we're delivering is rich desktop experience, full desktop experience. Basically, give them complete experience of the rich desktop whether it's connected or disconnected."

The recent advent of CRM 4.0 takes Microsoft directly into the SaaS game, albeit only in the US to date, but Tatarinov sees no problematic competitive concerns between the vendor and its partner channel. “I actually had a chance to meet with one of our partners who has been hosting CRM for three years now, and they've been hosting CRM 3.0 in single-tenant mode, and they've been doing it quite successfully,” he says.

“They have over 50 customers worldwide that are effectively running CRM from their data centres. They're now rapidly embracing multi-tenant versions; they're deploying CRM 4.0 in their data centres and have started offering it to a broader range of customers to get significantly better scale. They differentiate by adding additional modules, by adding customisations, by adding extra capabilities. They give customers the choice. If they want to go to CRM Live, they will help them set up, they will direct them to our data centre they will collect ongoing subscription fees, and they'll have the setup fee - or they just do it themselves from their data centre.”

But can CRM Live scale? Is it really a product that can compete with the enteprise players? “CRM 4.0 is designed for customers of all sizes,” insists Tatarinov. “It gives the necessary simplicity and ease of use and ease of installation and low TCO so the smallest organisations can use it whether it's on-premises or in the cloud, and it has all the power and all the scalability that the largest organisation would need. We had simulated environments of 24,000 users on a single instance of Dynamics CRM 4.0 with a sub-second response time. This is as enterprise as it can get.

“Speaking as one of the largest enterprises out there, Microsoft, we obviously have been a Siebel user for quite some time. We've also been a Clarify user in our support organisation. We've started the migration. To date, we have approximately 5,000 users who've already migrated to Dynamics CRM, and we'll continue that push. In approximately two years' time, we will be Siebel and Clarify free. And the entire Microsoft will be run on Dynamics CRM."

Related stories

• Special Report: Is Microsoft serious about business apps?
• Special Report: Microsoft opens up?
• Microsoft demonstrates Dynamics CRM 4.0
• Special Report: Microsoft sparks SaaS price war with Salesforce.com
• Special Report: Microsoft's Ray Ozzie on software plus services
• It's not easy being Green for muppets or Microsoft

  Find out more about Stuart Lauchlan