The Azure Stack Delay: Partners see implications for Microsoft Dynamics AX

posted in: Cloud/SAAS | 0

By: Karen Kroll

In a July 12 blog post, Mike Neil, Microsoft’s corporate vice president, enterprise cloud, stated the company was “targeting the general availability release of Azure Stack, via integrated systems with our partners, starting mid-CY2017.” Azure Stack (now in technical preview) is the company’s platform for building private clouds. According to earlier reports, the company had planned a 2016 release.

In his post, Neil also indicated Microsoft was working closely with its largest system vendors – to start, Dell, HPE, and Lenovo – to “co-engineer integrated systems for production environments.” Over time, Neil added, the company would broaden the ecosystem of supported systems and implementation approaches.

Delaying the release of the Azure stack effectively delays the release of the new Dynamics AX (or AX 7) as an on-premise or privately hosted ERP solution, says Tim Harris, vice president of strategy and solutions with consulting firm Arbela Technologies.

The effect of the delay may be muted, however. Harris notes that the percentage of customers interested in on-premise solutions continues to decline. “It’s shrinking every day, and significantly in the last twelve to eighteen months. People I never thought would go to the cloud are asking for it.”

“We haven’t seen an impact yet,” says Drew Vabulas, regional manager with I.B.I.S Inc., a Sonata Software Company. The firm is a Dynamics partner with supply chain expertise in distribution, manufacturing and retail. A range of customers are looking at SaaS models, in order to outsource their ERP systems, he explained. They hope the move will replace fluctuating costs with fixed costs and reduce the need for IT staff, as well as the challenges that come with operating and maintaining a network infrastructure. “Many companies don’t have the infrastructure to support, for instance, multiple server arrays and multiple testing,” he says.

In addition, the release date for the Azure Stack wasn’t firm even before the delay, so AX partners have not been selling to it, says Charles Head, vice president and head of services, also with IBIS. The company’s communications have focused on the solutions currently available.

Are current AX customers willing to wait for Azure Stack?

To be sure, many enterprise customers continue to prefer on-premise solutions. “They have the in-house expertise and have made large investments in in-house data centers,” Harris says. Many also are concerned about trusting their data to a public cloudy, although Harris notes Microsoft has done a good job of increasing security.

A number of customers that prefer to remain on-premise see the advantages of a private cloud environment. “They don’t need on-staff network administrators and other workers, and don’t need to invest in new servers every few years,” Head says, yet they like the security of a private cloud. Most of these customers are staying with Dynamics AX 2012 R3 until a private cloud is available.

Microsoft has also extended the mainstream support date of AX 2012 R3 to October 2021, with the extended support end date set in 2023.

And there is concern that the recently announced delay won’t be the only one. “I’m concerned we may never get another version of on-premise AX,” Harris says. With cloud adoption rates continuing to increase, the longer delays make the reasons for Microsoft to offer and support an on-premise version of Dynamics AX less compelling. If Microsoft never offers another on-premise version of Dynamics AX, customers who prefer such a solution will either have to move to another platform, or decide to make the jump to a cloud solution.

Azure Stack: Three hardware vendors enough?

Microsoft’s announcement that it will limit the hardware choices for Azure Stack could complicate future planning for customers that have their own data centers, Harris says. Most will want to leverage whatever investment they’ve already made. Some other customers may have different preferred vendors.

Harris added that Microsoft is limiting the choices not just to these brands, but to specific hardware within the brand that will be certified for use with the Azure Stack. The reason? “Microsoft is cautious regarding performance,” Harris says. “They want a minimum standard to run Azure in a private data center.”

While the rationale might make sense, Harris expressed concern that the number of hardware vendors would grow slowly, rather than rapidly. That could further delay the deployment of the new Dynamics AX in on-premise and private cloud scenarios .

Customers and partners who responded to Microsoft’s blog post announcing the Azure Stack hardware decision were largely unhappy. They criticized the move, calling it a disappointment or even a deal breaker in their future IT roadmaps. While Microsoft shows no sign of changing its approach to launching Azure Stack, one Microsoft representative responded to comments by adding that, beyond the initial launch with the three primary vendors, Microsoft “will continue to expand the variability and diversity to meet your needs.”

Head said he wouldn’t have an opinion on the limited number of hardware partners until he had a better handle on what the offerings would look like. However, having three vendors “gives us some ability to provide competitive bids,” he said.

About Karen Kroll

Karen Kroll is a freelance writer and editor, focusing on money and business, along with corporate and consumer finance