"Now the customer's dealing with their partner, the software is from Microsoft, and there's some third-party [hosting service] like Rackspace," Ehrenberg said. "This is more, let's give them the comfort of infrastructure run by Microsoft. Now, I'm dealing with my partner and Microsoft." That said, "over time we expect that our costs in the cloud will become super-competitive," he added.
Why did the availability date for NAV and GP on Azure slip from December 2012 to this June?
There are a few reasons for this, according to Ehrenberg. First of all, the bulk of customers on those products run them on-premises, so Microsoft ended up putting off some work needed to cloud-enable GP and NAV in order to ensure the on-premises version shipped on time, he said. (NAV 2013 was released in October and GP 2013 in December.)
Secondly, Microsoft wanted to make sure the Azure rollout would go right, he added. "We ended up adding a bunch of time to get partners ready," he said, mentioning that other vendors made "early promises" about cloud ERP that "didn't end up happening," in an apparent allusion to SAP's Business ByDesign.
SAP launched ByDesign several years ago with great fanfare but ended up having to scale back the rollout and do some retooling in order to ensure it could make money selling the on-demand software suite at scale.
Microsoft is wise to take its time before opening up access to Dynamics ERP on Azure, both for that reason as well as the mission-critical nature of ERP systems, a factor that has resulted in the software category lagging others when it comes to cloud deployments. Microsoft is confident that all will be ready for launch in June, according to Ehrenberg.
How will Microsoft handle AX on Azure?
The next major release of Dynamics AX will get an Azure option as well. That product is scheduled for early-adopter access in 2014. AX played a prominent role at Convergence as Microsoft, in a shot across the bow of Oracle and SAP, showcased how global cosmetics maker Revlon was standardizing its business on AX.
Microsoft recently rolled out an update to AX that made it possible to run a company on a single global instance of the software, and is hoping to win many more deals like the Revlon one.
"That is essentially going to be first time ever in the industry where someone delivers the ability to run their full business end-to-end in the cloud," Tatarinov claimed during a session at Convergence this week.