Microsoft's new industry focus yields IP buy

Just a day after announcing a new deeper focus on providing specific industry functionality, Microsoft made a purchase of intellectual property

Just a day after debuting a new initiative to produce more industry-specific functionality for users of its Dynamics business applications, Microsoft has announced it has purchased intellectual property (IP) and code relevant to the manufacturing sector.

Previously, Microsoft relied on its partners to meet the industry-specific needs of its customers, but in response to feedback from those communities is now working to add in capabilities to its enterprise resource planning (ERP) applications in five key vertical markets -- manufacturing, distribution, retail, services and the public sector.

Microsoft said at its Convergence conference in San Diego that it has acquired the IP and code for eBECS' lean manufacturing module. EBECS is a Microsoft partner and reseller of Dynamics AX based in Chesterfield in the UK The companies didn't reveal any financial details around the deal.

Lean manufacturing is an approach designed to streamline manufacturing, ensuring the shortest time between receiving a customer's order and shipping that order, by getting rid of any inherent waste of resources involved in the manufacturing process.

Microsoft will use the eBECS module to extend the existing core functionality of its Dynamics AX ERP software so that users can better optimise their processes and connect and integrate their entire supply chains from their customers through to their supply partners, according to senior director of Microsoft's industry solutions, Glenn Bray. By the end of this year, Microsoft will make the English-language module available to its customers, with plans to integrate the code into the next version of Dynamics AX and fully localise it to support all of the 40 languages in which its ERP software is available.

Partners who've been trying to attract high-end customers told Microsoft that they were keen for the software giant to become more proactive about industry-specific offerings.

"They want Microsoft to stand behind a solution," Bray said. Customers are keen to know they can still count on Microsoft's support should a particular partner change the focus of their business to a different industry or run into some kind of trouble.

Microsoft highlighted acquisition as one way it plans to build in additional vertical functionalities to its Dynamics ERP families along with internal development and strategic alliances with its partners. Back in January, the vendor announced a co-development effort with public-sector information management software vendor, Tyler Technologies. The two companies are working together to provide public-sector accounting functionality for Dynamics AX with an enhanced version of the ERP software due to appear in the latter half of 2009.

Looking ahead, Microsoft expected to create multiple relationships with partners in each of its five chosen industries, Bray said.

He didn't believe that Microsoft getting more involved in providing industry-specific functionality would lead to cannibalisation of existing offerings from its partners.

There would be no requirement for partners, for example, to use Microsoft's own lean manufacturing module, Bray said. Instead, partners would be free to choose whichever software was most appropriate for them, so offerings from Microsoft and its partners addressing the same industry needs would coexist.