Microsoft and users both win with cloud computing, exec says

Microsoft stands to make more money with cloud computing while helping customers save as well, business division head says

Microsoft is firmly on the cloud computing bandwagon and with good reason -- it can make more money by doing so, even as it helps customers cut costs, business division head Stephen Elop said at the Convergence conference in Atlanta on Sunday.

The company has spent billions so far to build out its cloud infrastructure for massive economies of scale, Elop said during a meeting with press and analysts. "What we're doing is taking cost savings and taking them back to the customer."

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Microsoft will win out as well, Elop contended. Microsoft is not only selling applications via the cloud, but raw computing power and a development platform with its Azure service.

"What we've done [in the past] is sell software," Elop said. "In the cloud world we're still selling that same software but we're also participating in a bigger part of customers' IT budgets. We're going after more of the pot." Some 90 percent of Microsoft's engineering team will be working on cloud computing in some way within a couple of years, according to Elop.

Convergence is Microsoft's conference for its Dynamics ERP (enterprise resource planning) and CRM (customer relationship management) applications. It provides the main platform for company executives to speak directly to users of the software, as Dynamics products are mostly sold by partners.

Cloud computing places Microsoft and its customers "at the center of a remarkable transition in and around everything we do with technology," Elop said during a keynote address earlier Sunday. However, "the most important message is that we are committed to partnering with you through this period of generational change," he added.

Elop's keynote focused on how Microsoft has worked to integrate Dynamics software with other parts of its portfolio, such as Office and Unified Communications. The result is a cohesive stack that will save customers money and time, with the whole benefit "greater than the sum of the parts," he said.

In a demonstration, Microsoft showed how an audio equipment seller could analyze Dynamics ERP and CRM data with Excel and contact a supplier via videoconference to track the root cause of a defective speaker that was being returned too often by customers.

Later in the keynote, Microsoft revealed a glimpse at the potential role of multitouch computing in the Dynamics user experience.

Using a prototype multitouch device with a large plasma television, demonstrators showed how the technology could be used as a product gets developed and sold, such as for a virtual whiteboard in brainstorming sessions, or as an interactive, self-service store display, all fed by ERP and CRM data.

It's practically a given that multitouch will find success in the latter scenario, not only to give shoppers a unique experience but as a way for retailers to save money given the high employee turnover they face, said Kirill Tatarinov , corporate vice president of Microsoft business solutions, in an interview.

Meanwhile, Microsoft is set to target retailers more closely with the Aug. 1 launch of a retail edition of Dynamics AX in 16 countries.

Also Sunday, Microsoft announced an update to its CRM Online product and said it will be available in 32 countries by the end of the year.

Hoping to juice sales and pull customers closer to the fold, Microsoft also said that customers of Dynamics GP, a new version of which will be generally available May 1, can buy CRM Online licenses for $19 per user per month until June 30.

That price heavily undercuts rival Salesforce.com's pricing for its Professional and Enterprise editions, which cost $65 and $125 per user per month, respectively.

Despite the even wider disparity in pricing provided by the discount offer, Microsoft will not lose money on those $19-per-month seats, Tatarinov said. "We don't report on the profitability of particular products, but obviously, we are not a nonprofit business."

The new version of CRM Online also adds French, Spanish and Brazilian Portuguese language support; tools for connecting CRM Online with other on-demand and on-premises applications; and a built-in integration framework for Dynamics GP.

Travel Dynamics International, a small-ship educational cruise provider in New York, uses Microsoft CRM and is looking to use it in concert with SharePoint, said Nikos Papagapitos, who directs technology operations at the company.

"Document management is not CRM's strong suit. SharePoint fills that void and then some," he said. But he praised the CRM application, which replaced a clunky, aged homegrown system, saying it was flexible enough to handle the details of Travel Dynamics' niche business.

Microsoft's work to integrate ERP and CRM is appealing, he said. "Given that the two line up a lot it, definitely makes sense to start moving in that direction."

But Travel Dynamics has been using an ERP system from Sage for some years, and it might be several more before any migration to Microsoft occurs, he said.

Dynamics continues through Tuesday at the World Congress Center. About 8,500 people are attending this year's conference, according to Microsoft.

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