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Boston—Microsoft is, without actually saying it, positioning its Dynamics AX 4.0 release for the enterprise to compete with products from the likes of SAP and Oracle. And it’s working hard to convince partners that moving forward with the Dynamics brand is the winning approach to take.

At its Worldwide Partner Conference here July 11 through July 13, Microsoft CEO Steve Ballmer gave an unprecedented keynote address on the eve of the conference, formally launching the 4.0 edition of Dynamics AX.

Microsoft entered the ERP (enterprise resource planning) market about five years ago; Ballmer’s speech might well have been one of the company’s first CEO introductions of an ERP upgrade.

The question then becomes, Why all the fuss around Microsoft Dynamics AX?

Despite having been in the ERP business for half a decade, there are still industry doubts as to whether Microsoft is committed to the business, according to Ballmer. And there’s some speculation as to whether Microsoft plans to stay in its self-defined SMB (small and midsize business) market, or move upstream to tackle the enterprise markets.

Couple that with the fact that Microsoft is in the midst of a massive rebranding and code rewrite of its four ERP suites into a single code base under the Dynamics umbrella, and it makes sense that Microsoft is bringing out the big guns.

“I am shocked that I still get questions [about Dynamics]: What is the role of applications? Why enter this business? What are your design goals?” Ballmer said. “We made a strategic decision to say it’s essential to have [ERP and CRM] building blocks. We saw a world of opportunity in that.”

Ballmer pointed out that Microsoft has invested over $2.5 billion in acquisitions and over $1 billion in research and design around business applications, including ERP and CRM (customer relationship management). More importantly, and this really can’t be overstated, Microsoft Dynamics—AX, SL, NAV and GP—once fully rearchitected into a single code base will sit on top of and integrate with Microsoft’s infrastructure, including .Net, SQL Server and SharePoint Server.

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At the same time, bigger partner deals around Dynamics are enabling Microsoft to go further upstream to tap the enterprise market. CapGemini, a major systems integrator with U.S. headquarters in New York, announced July 10 that it is starting a dedicated AX network to attract more business.

“We are being asked to provide suitable replacements for an old development model. Dynamics AX 4.0 is ideal for this. It provides a flexible platform that adapts to [processes],” Simon Thomason, global vice president at CapGemini, said during Ballmer’s address.

To replicate the AX 4.0 capabilities, Thomason announced a partner network called Power Train that is specifically designed to win more business with partners.

“So no matter what size of an organization you are, or where you’re based geographically, if you’ve got a solution that fills the needs of our clients, we would like to work with you on a global basis—exclusively in your area,” Thomason said.

But the bottom line is that AX is Microsoft’s answer for big businesses. “There’s been no talk of Great Plains, no talk of Navision. It’s AX and CRM for Microsoft in the enterprise,” said Joshua Greenbaum, principal of Enterprise Applications Consulting, in Berkeley, Calif.

To this end, Ballmer highlighted scalability benchmarks around AX 4.0 for SQL Server that scaled to 1,000 users processing 55,000 sales orders in an hour.

Further suggesting enterprise deployments, the AX 4.0 release is available in 36 languages, has .Net customization capabilities and a Web services layer that is “exactly consistent with our overall strategy to really build for a global company,” Ballmer said. “[AX 4.0] has much stronger support for multi-country, multi-currency than ever before.”

And AX, it turns out, is far and away the strongest of Microsoft’s ERP suites in terms of technology, according to Greenbaum. (It’s rumored that Dynamics AX will be the code foundation for the consolidated Dynamics suite, expected around 2008.)

In terms of functionality, AX 4.0 is a major upgrade, according to Satya Nadella, vice president of Microsoft Business Solutions at Microsoft, who gave a product demonstration during Ballmer’s AX launch. Consistent with Microsoft’s “People-Ready Business” theme, the upgraded software is roles-based, has an Outlook style of navigation and enables users to manage their business through exceptions. It also is integrated with SharePoint Server, which means users can compose and search across structured and unstructured data in AX.

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The AX 4.0 release is also integrated with Microsoft’s Active Directory, which means users can have exposed business processes and business logic live on the Internet, “not just content,” Nadella said.

The upgraded suite also has new business intelligence capabilities.

“The first thing we tried to tackle [in AX 4.0] was reporting, but the data model is complex; AX has anywhere from 2,000 tables,” Nadella said. “We took advantage of SQL Report Builder and generate the necessary Meta data in context of this report, so all fields, all data, is relevant. It’s something we call perspective.”

AX 4.0 also has a list of Web services exposed out of the box, which partners have the ability to extend. “You can take business data and expose it to your partners—they can get an RSS feed. That’s a simple app you can write in Visual Studio, provided you have the Web services exposed,” Nadella told an audience of Microsoft Business Solutions partners.

Ballmer said partners should expect another year of “very good growth” for AX selling into enterprise-class companies, including those in the manufacturing, e-business, wholesale and, increasingly, services companies.

“I want you to sense my enthusiasm and excitement,” Ballmer said, before getting to the details of the AX release. “We’re really on a roll, and in much more of a substantive place than we were a couple years ago.”

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