“I am amazed sometimes about how light the thinking is around Cloud,” says Brad Wilson, Microsoft's general manager for Dynamics CRM. “It's a bit like global warming. You have the zealots on one side and the deniers on the other; you hardly ever get in the middle and try to get a joint understanding.
"It's all about 'are you for this' or 'are you denying that it's happening?' That's not helpful, " he adds. "As Microsoft, we are investing hundreds of billions of dollars to Cloud-enable everything we do, but we still think there's a balanced way of looking at this.
“People still misunderstand what the benefits of SaaS are. Some people say 'Cloud is simple, on premise is complicated'. But SaaS is a how, not a what. You can find SaaS products that might have a poor user interface, but which offer other great things or vice versa. Cloud products being newer tend to embrace newer concepts such as componentisation, SOA and so on.
“It's about what you want to do and how you want to do it. Do you run on premises or in the Cloud? You need to ask what's your core competency? Is it running applications? People still get mixed up. Ten years ago, people who wanted to invest in CRM would go out and buy a bright and shiny object. But really what capabilities you need to make a difference to you should dictate your decision making criteria, not how you intend to deliver the applications.”
But the Cloud message is getting through, argues Wilson. “It's getting difficult to be in this business and not understand the importance of SaaS as a delivery mechanism. There's a heightened awareness of this in all corners, even among people who have not taken this as seriously as they might in the past,” he says, leaving it unclear as to whether his comments are aimed at Redwood Shores or Waldorf....
That said, the Cloud market is changing. This year will not only see the long awaited release of Microsoft Dynamics CRM Online to customers without an American zip code, but also a ramping up of SAP's low end Business ByDesign offering, not to mention whatever secrets are being hatched at a higher end level by the developers working with John Wookey inside the German software house. It's clearly about to become a far more crowded competitive landscape and one in which customers are going to be faced with far greater choice.
One argument that is likely to be reignited is the integrated suite v best-of-breed debate i.e. do you buy your CRM and your ERP etc from a single provider - the Netsuite approach - or from multiple providers - the Salesforce.com approach. “The paradigm of the suite approach was most enthusiastically promoted by Oracle prior to 2004 when they used to argue that the best model was to have one CRM and one ERP running on one database. Then they happened to acquire another CRM firm (Siebel) and then suddenly the model became integration through Fusion. The reality is that in larger enterprises, you hardly ever buy CRM and ERP together. The ability to integrate between ERP and CRM systems is something that we do all the time. It's not difficult to understand how to do the mapping for that, it's a fairly standard set of processes."
That begs the question however of whether Microsoft, given its new found enthusiasm for the Cloud, will be shipping Cloud versions of its ERP offerings as well as its CRM? Wilson is cagey and noncommittal. “The move towards Cloud-based ERP has been much, much slower than CRM,” argues Wilson. “But it's certainly a trend that we are looking at very carefully. We are looking at developing a broad base of Cloud-based ERP partners around the world.”
Wagging the dog?
The use of the Cloud terminology is something of a new development. Until very recently, the Microsoft mantra has been focused on the concept of 'software plus services', a form of semi-rebuttal to the software as a service rallying cry of the likes of Salesforce.com. But when Microsoft CEO Steve Ballmer recently outlined the firm's Cloud-based future, the once inevitable phrase didn't get a single airing.
So is 'software plus services' last year's marketing message? Wilson argues that the evolution to using the Cloud naming simply means that there are occasions “where we have decided to use standard industry terminology'. Is this a lesson that might be learned at Oracle where CEO Larry Ellison remains stubbornly 'Cloud-phobic'? Wilson will not be drawn, but the wry smile on his face tells its own story.
That said, can it not be argued that Microsoft is now using terminology popularised in the applications market by 'upstarts' like Salesforce.com and NetSuite? Isn't that the kind of 'tail wagging the dog' scenario that helped to bring Siebel down? Wilson prefers to suggest that having more companies competing in the same space with the same terminology actually means more freedom of choice for customers. “If you look back two or three years ago, when you wanted Cloud-based CRM you had one real option and you were at the mercy of that vendor,” he suggests. “Now we're reaching a point where there are three very different companies in us, SAP and Salesforce.com offering Cloud CRM with very different points of view. We have different points of view and different value propositions. That has to be good.”
Another push for Microsoft in the Cloud has been the US federal government market which has recently made some notable defections to Google Apps on the back of the push from Whitehouse CEO Vivek Kundra to push public services applications into the Cloud. To date, there has been some resistance from US federal CIOs, but the momentum seems unstoppable and likely to be replicated in the UK.
"The fastest growing part of our business is the public sector," says Wilson. "One of our largest deals in the UK is a hosted offering already. I do think that the government will be reluctant to go to the Cloud, but for certain applications it will certainly happen. It may happen less quickly than in the commercial sector, but it will happen. We do have federal, national, state and local versions of our apps. If you look around the globe, the problems in the public sector do tend to be similar, even if it's at the level of potholes in the road.
"There are different requirements around things like security of course. If you're talking about the MoD, it's one thing, the City of London, it's another. There is concern of course, The risk of embarrassment and exposure if a vendor in the Cloud loses public information. If you're an agency in the UK or the US or wherever, then you need to decide what the best approach is for you. But public sector demand will take off in the Cloud."
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