Making good on earlier promises, Microsoft Corp. today began delivering vertically oriented application extensions to its Dynamics AX ERP software that were developed with independent software vendors (ISVs) for use by small and medium-size manufacturers.
The extensions are among the initial deliverables available under Microsoft Business Solutions' (MBS) Project Green initiative, a Web services architecture built around .Net middleware to forge an integrated business applications suite from ERP, supply chain and other business applications the Redmond, WA, company acquired during the last few years. The middleware layer is not only providing interoperability among formerly separate business application suites such as Axapta, Great Plains, and Navision -- which are now marketed under the Dynamics moniker -- but is also enabling third-parties to extend MBS applications software with functional components aimed at specific industries or business processes.
The initial wave of Axapta extensions developed under Microsoft's Industry Builder initiative are aimed at a wide swath of manufacturing and related industry operations. For instance, a set of supply chain execution modules was created by long-time Microsoft .Net partner Manhattan Associates Inc. (Atlanta); extensions for process manufacturing, industrial equipment manufacturing, and field service automation fields were built by Fullscope (Atlanta), To-Increase BV (Veenendaal, the Netherlands), and Iteration2 (Irvine, CA), respectively.
MBS' vertical application approach makes sense given the push by competitors large and small to enable their enterprise software suites to be tailored for use by companies in specific industries or to be extended by third-party ISVs and resellers with software components that add missing functionality. "This shows that [MBS is] growing an ecosystem around its products just as SAP is doing with NetWeaver and Oracle is doing with Fusion," noted Ray Wang, a senior analyst at Forrester Research Inc. in Cambridge, MA.
The notion of a reliable ecosystem is critical to MBS as it looks to build on recent momentum after spending a good part of this year recasting its hodge-podge of applications into an integrated Web-services enabled component architecture, quelling customer concerns over its resource-challenged reseller base and restructuring to remove operational inefficiencies that have contributed to the unit's prolonged flow of red ink.
MBS' initial Axapta application extensions serve to reaffirm Microsoft's seriousness about the business software space and the ISV community's continued interest in working with the industry giant, noted Craig McCollum, MBS' vice president of sales strategy, in an interview with Managing Automation.
MBS is focusing primarily on the upper-tier of the mid-size manufacturing market with its initial wave of Axapta extensions for one good reason: that's where the opportunities are, McCollum said. In this segment, "there are very few packages for process manufacturing," he claimed.
"There is ... pent up demand, and what this [announcement] does is give Microsoft, Axapta, and product channels the ability to compete in more complex manufacturing and distribution environments," added Todd Sterrenberg, Manhattan Associates' vice president of channels.
Manhattan Associates, for example, is offering a set of modules with "supported interfaces" that extend Axapta's ERP software with integrated capabilities that cover wireless data collection through full warehouse management. This type of extended functionality should resonate with customers with complex product distribution requirements, including those in high tech and electronics manufacturing as well as those in consumer products and life-sciences related markets, Sterrenberg said.
Sensitive to potential software quality concerns, Microsoft is conducting a "code review" of all ISV-built extensions, which McCollum said will verify "technical alignment" with its software stack. ISVs must also agree to keep current with future additions to Microsoft's software stack, he added.
Like the recently unveiled Dynamics GP 9, Axapta will evolve with Project Green deliverables, eventually sporting more role-based user interfaces that mirror the needs of manufacturing employees across the enterprise, built around the familiar look and feel of Microsoft Office, McCollum said.
MBS plans to roll out Dynamics AX and other Dynamics software extensions in the coming months as it qualifies partners and business opportunities. McCollum declined to say where MBS would turn next other than noting that the Microsoft business unit will only enter markets with partners who have demonstrated industry expertise that can support its lowest cost of ownership claims.
Early Microsoft Industry Builder feedback is positive, McCollum said. While declining to provide specifics, he said MBS expects to see improvements in vertical industry market share and customer value, increases in average selling prices, and improved positioning vis-à-vis Oracle and SAP.
How SAP and Oracle respond to Microsoft's Industry Builder initiative should make for interesting jockeying in the market as each business software vendor moves to align with partners with expertise that is both broad and narrow, Forrester's Wang said. For example, "we could eventually see partnerships with apparel manufacturers for high fashion or footwear," he noted. "They will all need partners that are super-focused on micro-verticals."
Beyond SAP and Oracle, there will be competition from a variety of ERP software vendors, such as Epicor Software Corp., that have built their suites on Microsoft's .Net foundation technologies. "They've done a lot more than MBS on Microsoft [.Net]," Wang said, adding that Epicor is way ahead of MBS in adapting its software to take advantage of evolving application component capabilities.