Ballmer offers a glimpse inside Microsoft’s ‘cloud’

SAN DIEGO – On the last day of Microsoft Convergence, the software company’s bi-annual conference for Dynamics customers and partners, CEO Steve Ballmer gave the 8,500 attendees a taste of what’s to come with its future “Live” platform.

“We really have completed the Wave One we talked to you about over the last couple of years, in terms of really bringing these things into our stated strategy,” he said on Wednesday. This includes shared code across all four of Microsoft‘s ERP products.

Over the next five to 10 years, he expects to see the transformation of the software business – from a packaged business to a business where we think about software and Internet services as one integrated experience.

“Some people tell you the world is going to be all Internet services and no software,” he said. “Some people will probably try to tell you the other.” He believes there will be a continuum of software hosted in the cloud, on premise on corporate servers, and hosted and run locally on clients.

“We are hard at work at Microsoft on building the platform that supports that transformation,” he said. “We’re building a platform in the cloud, our so-called Live platform, that facilitates building this kind of interaction.”

During his keynote, Ballmer showed a live demo of the upcoming Dynamics Live CRM. This release will use a multi-tenant code base to deliver on-premise and software as a service, and will be based on the upcoming release of Dynamics CRM, code-named Titan, which will be delivered in 24 languages.

Users will get a familiar interface that helps them be more productive, he said, while businesses will have the freedom to run the software in-house or buy it as a service – and change that as their needs change.

Because Dynamics CRM Live uses the same code base as Dynamics CRM, Microsoft’s partners will be able to deploy third-party applications using any three of the deployment options.

Windows, Office, Dynamics and even Xbox will all eventually have a “Live experience,” he said, though the company is starting with CRM. The Live version of Dynamics CRM is expected to be available by the end of this year. The plan is that eventually Dynamics CRM Live will be integrated with Windows Live and Office Live.

Microsoft’s biggest competitors, SAP and Oracle, are also betting big bucks on on-demand services, particularly around CRM. SAP bought Praxis Software Solutions last year for its on-demand CRM that directly targets Microsoft’s SMB sweet spot, while Oracle is offering Siebel CRM On Demand through its acquisition of that company last year. Pure play vendors, such as Salesforce.com, keep bringing in new customers.

According to a report by Forrester Research‘s Liz Herbert, purchases of CRM software and services will be dominated by small and mid-sized organizations (up to 1,000 employees). Today they account for 33 to 38 per cent of the market, but by 2010 they will be spending US$4.2 billion a year.

Online CRM has an advantage of being readily available over the Web, but if customers have to buy licences, they may not see expected cost savings over on-premise solutions.

 “It will definitely shake up the way people buy,” said Herbert, because if organizations want pay as you go, quick implementation and someone else hosting, they can get it direct from Microsoft instead of smaller parties.

— With files from Howard Solomon

Comment: info@itbusiness.ca

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