Microsoft's Packaged Business Applications: Enterprise Ready?

• By Scott Bekker
• August 14, 2006

Actually Microsoft's latest offerings are beginning to be worth a look, especially within smaller enterprises.

The company has been in the enterprise resource planning market for about five years now, with a business built on the acquisitions of the Great Plains, Navision, Solomon and Axapta technologies. To Microsoft, the "enterprise" in enterprise resource planning was originally secondary. The company early on said it had no designs on the biggest accounts that are dominated by SAP AG, Oracle Corp. and PeopleSoft.

Since then, Microsoft's technology has come a long way, and the landscape of ERP vendors has changed, with PeopleSoft and JD Edwards both being acquired. Meanwhile, SAP has moved down market somewhat from the very largest enterprises to the mid-market, bringing itself into competition with Microsoft, rather than the other way around.

Axapta, now called Microsoft Dynamics AX, has a reputation as the most scalable, robust and enterprise-ready of the group of products Microsoft acquired. With a new 4.0 release out the door this summer, Microsoft thinks it's got a little more to turn the heads of enterprise customers.

"We are seeing increasingly enterprises, mid-market companies broadly asking about Dynamics and specifically asking about Dynamics AX," said Tami Reller, Microsoft corporate vice president, Business Solutions Marketing Group, during the AX 4.0 launch last month.

A scalability benchmark during Reller's keynote showed a change, with Dynamics AX 4.0 scaling linearly up to 1,000 users. That scalability isn't in the SAP/Oracle range, where benchmarks frequently cover tens of thousands of users. But the 1,000-user range is a far cry from SMBs, and squarely within the realm of smaller enterprises.

"This thousand-user benchmark is exciting, and … you'll be able to use that so specifically in your markets to sell AX in places that you potentially haven't been able to sell to date," Reller told Dynamics partners at the Microsoft launch. "We will get the attention of enterprise customers for sure. So it's scalability not only for enterprise customers but certainly for our broad set of mid-market opportunities as well."

Meanwhile, Microsoft is asking less of its customers than SAP or Oracle, and that's been a selling point for customers burned by the implementation delays and shelfware complaints of top-down ERP deployments.

What's happening with the whole Microsoft Dynamics lineup bodes well for the future scalability of Microsoft's packaged business applications. As a company, Microsoft is vertically integrating its technologies, with SQL Server and other servers becoming the backbone for much of the stack while Microsoft Office becomes a ubiquitous front end.

According to Dave Campbell, technical fellow for Microsoft SQL Server, Microsoft Dynamics AX 4.0 is the first release where the SQL Server and AX teams have worked cooperatively to get the most out of the combination.

Within a few years, Microsoft's scalability story may not be limited to the top end of the mid-market and smaller enterprises.

During the Reller keynote, Campbell vowed, "We're not done yet. For this release we did a lot of the first things that you would do. We will deepen the support and extend the performance optimizations we've made going forward. We are working now very closely as a team. What's really been interesting, a side effect of this work is that now the SQL team and the AX team are working to jointly develop and propose new features moving forward. So we're working much more closely than we ever have in the past."