Microsoft Shakes Up Licensing for ERP and CRM Products

Published: November 8, 2006

by Alex Woodie

This week at the Convergence 2006 EMEA conference in Germany, Microsoft unveiled a new hosted subscription licensing model for its Dynamics ERP products that's similar to what it's offered for its CRM package for some time. The company also announced a new version of its Dynamics CRM software designed to work with Windows Vista and the family of Office 2007 products, and unveiled the Software as a Service (SaaS) On-Ramp Program to help its partners sell and deliver their products over the Web.

The new version of Dynamics CRM announced yesterday, which carries the unwieldy name "Microsoft Dynamics CRM 3.0 for Microsoft Office 2007 System and Microsoft Windows Vista," will borrow from many of the new capabilities offered in Microsoft's Office 2007 suite, which was just released to manufacturing on Monday. Some of these capabilities include the use of a new "ribbon" user interface, which is making its debut in Word, Excel, PowerPoint, and Outlook; new ways to view data when Dynamics CRM is used with Office Excel 2007; the use of Windows Vista "gadgets," which alert Vista desktop uses to certain activities he desktop or home page; the capability to store voice-mail messages in Outlook and track them in Dynamics CRM; and better data security through BitLocker Drive Encryption, a new feature in Windows Vista that will also be used to protect Dynamics CRM data housed in laptops.

Microsoft also announced a new way to obtain Dynamics CRM. Previously, the product has been offered through Microsoft's volume licensing program or through a monthly subscription fee, paid either to Microsoft or a third-party, commonly called Dynamics CRM Live. When the next version of Dynamics CRM becomes available (which the company says will be the same day that Office 2007 becomes available, or December 1), users will also have the option of obtaining Dynamics CRM through the same licensing model used with Microsoft Dynamics ERP products, including Business Ready Licensing and Modular Based Licensing. Microsoft says the change will benefit and simplify the lives of companies that buy full "solutions" that include CRM, ERP, and supply chain components.

Microsoft is mixing up its licensing schemes, and playing around with hosted licensing models. At the same time that Dynamics CRM gains a more dynamic licensing model (see above), Microsoft also announced that it's going to try selling its four Dynamics ERP product lines via the monthly subscription model currently offered through its hosted Dynamics CRM Live option. This move follows an overhaul of the Dynamics ERP pricing scheme in August. That's when the software giant introduced its Business Ready license scheme, which introduces a simpler and more modular approach to selecting ERP modules.

Some Like it SaaSy

Julio De Villasante, director of the Software as a Service (SaaS) for Microsoft Dynamics, says the introduction of a monthly subscription model for Dynamics ERP was made to service the growing interest in selling and consuming entire solutions via the SaaS delivery method.

"Microsoft Dynamics CRM has been available as a hosted application since last March and it has been extremely well received by partners and customers alike," De Villasante says. "Now our partners can also deliver the full suite of Microsoft Dynamics ERP applications, in either a hosted or on-premise deployment model--and they have the option of purchasing, subscription licensing, or a combination of both."

There is no minimum amount of time for new subscriptions to the Dynamics product lines, De Villasante says.

De Villasante says partners are a key part of the new hosted world that Microsoft and millions of users are entering into. "[This] allows our partners to deliver complete subscription-based solutions," he says. "including not only Microsoft Dynamics business applications, but also the operating system, database solutions, applications such as Microsoft SharePoint, Microsoft Office Exchange and Microsoft Live Communications Server, and even their own complementary ISV applications."

To that end, Microsoft unveiled yesterday its new SaaS On-Ramp Program, which provides ISVs with discounted software and the technical expertise needed to develop and deploy Windows-based SaaS applications.

"Microsoft recognizes that many smaller ISVs and startups lack the essential tools and resources necessary to adopt the SaaS business model," says John Zanni, director of worldwide hosting at Microsoft. "With the SaaS On-Ramp Program, Microsoft can help ISVs enter this industry by reducing the cost of technology needed to support hosted software offerings and improving access to other resources."

Specifically, ISVs that sign up for the new program get a Windows Server license for up to eight processors, a SQL Server license for up to two CPUs, and 20 administrator seats. They also get the right to deliver, along with their own solutions, Microsoft infrastructure or application products on a monthly basis, which requires them to sign a Microsoft Services Provider License Agreement. The exact amount of the discount was not provided.

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