Monday, 22 June 2009

Microsoft Dynamics: Four ERPs and a CRM

(By Philip Carnelley - Monday 22nd June 2009 5:30pm). We met recently with Paul White, UK lead for Microsoft’s Dynamics (business application) division. Dynamics is a pretty small piece of the Microsoft pie, though if separated off, it would just make it into our top 20 rankings of UK software players.

The Microsoft Dynamics portfolio is a bit complicated, comprising several overlapping products all aimed at mid-size companies. In the UK, MS offers three different ERP products: GP, NAV, and AX, plus its CRM product. GP is English-language only, and is thus viewed as less strategic across Europe. Of the other two, AX is aimed at larger more complex situations than NAV, but both are essentially mid-market offerings. There is also a fourth ERP, SL, which is only offered in the US – plus some other stuff like retail and point-of-sale solutions. Got that now? We hope so! We estimate that Microsoft’s UK revenues from these applications are somewhere north of £50m, though the channel services business surrounding these applications is likely worth five times this or more. CRM – the only one of the products which Microsoft wrote from scratch – is offered more as a development platform than an off-the-shelf application; it is the fastest growing part of the portfolio and could well represent half of Microsoft’s UK bizapps sales next year. One of its big attractions is its close integration with the ubiquitous MS Outlook email client.

Despite the mid-market focus, White sees his real competition as the big enterprise suite/platform vendors, in particular Oracle, SAP and Salesforce. He views traditional mid-market players such as Unit4Agresso, Infor, and even the mighty Sage, as having mature but aging products and sees their large installed base as ripe for plundering. Indeed, White pointed out that even Sage is appeared to be hedging its bets, having bought Microsoft Dynamics NAV partner, Tekton, in March ’08. Tekton is now branded ‘Sage Construction’, and its products now sit alongside Sage’s proprietary construction industry software. Microsoft has a lot going for it in the UK bizapps market. First, its peerless channel to market; second, its huge installed base of platform software, creating a potential virtuous circle of platform sales driving apps, and vice versa; third, its strategy for apps draws directly from its heritage as a tools developer. As such, Microsoft develops products that its many partners – from one-man-and-a-dog operations up to the likes of HP/EDS – can easily customise and integrate. This is attractive to customers and MS partners alike.

As for the ‘Cloud’, it’s significant that White says Microsoft remains entirely agnostic about SaaS. For example, its CRM product can be implemented on-premise or delivered as a service. In his view, the choice for where the product is hosted comes down to how the customer wishes to pay for the software. An interesting view and one that we will develop in future research.

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