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Microsoft aims to make Dynamics more dynamic

Company, cautiously offering hosted versions of software for midsize businesses, sees licensing changes for ERP.

Microsoft is looking to liven up its Microsoft Dynamics line of applications for midsize businesses.

Bill Gates, the company's chairman, is slated to outline Microsoft's strategy for these customers on Monday at its Convergence conference in Munich. The event, the first Convergence to be held outside the U.S, is for users of Microsoft Dynamics products.

The software maker has been touting a future in which its desktop applications for midsize customers will be augmented by a host of online services. However, it is still treading fairly cautiously when it comes to providing full-on hosted versions of its Microsoft Dynamics products, which include customer relationship management (CRM) and enterprise resource planning (ERP) tools.

With hosted services, companies buy access to software running on an outside server, rather than on their own in-house machine.

Microsoft said in July that by the middle of next year, it will offer a of its CRM product in a hosted version.

"We will then look at what other workloads from our ERP (enterprise resource planning) products make sense to go online," said Satya Nadella, who in September took over from Doug Burgum as corporate vice president of the Microsoft Business Solutions unit. "It's not about an all-up hosted offer."

The company has been working to remake the image of its least-known product unit. Until recently, it went by the name Microsoft Business Solutions, but is now plugged as the home of the Dynamics product line.

Although Microsoft is not offering full-fledged hosted version of its Dynamics products, it is taking smaller steps in that direction. It is adding an option for service providers to license software to customers on a per-user, per-month basis. Danish telecommunications firm

Microsoft has taken a similarly indirect approach in allowing its Exchange e-mail server software, for example, to be offered in a hosted fashion.

The software maker has been working to add services components to nearly all of its businesses, as part of the Live strategy first outlined by Ray Ozzie, Microsoft's chief software architect, a year ago at an event in San Francisco.

As for which Dynamics products Microsoft might look to offer in a hosted fashion on its own, Nadella said Microsoft is already things working on some ideas, but is not ready to talk details.

"Manufacturing may not be the first thing we will tackle when it comes to Live, but things in HR and other areas probably make more sense," Nadella said.