Microsoft Analyst Event Part Two: Dynamics Offerings for ERP and CRM

I recently attended the Microsoft Dynamics Fall Analyst Event (FAE) 2012 in Washington state, which started with a tour of a local Microsoft Store (see Part 1 of this blog series, Microsoft Analyst Event Part One: What’s New for Fall 2012). At the company’s Redmond, WA Microsoft headquarters, Kirill Tatarinov, President of the Microsoft Business Solutions Division (MBS), gave us the 2012 year-end review. One major point that he made was that he and the entire MBS department have been promoted into a full-fledged Microsoft division (no longer folded together with SharePoint and Office), and that the division has been recruiting new executives and rank-and-file employees. I take this as a sign of the company’s serious investment in Microsoft Dynamics.

In spite of many observers writing Microsoft off as no longer relevant in the IT industry, 2012 was the biggest launch year in Microsoft's history, including Surface, Windows 8, Windows 8 Phone, xBox Kinect, SQL Server, and others coming on board. Presumably, Microsoft Dynamics apps will work with all of these products. Even more, Microsoft Dynamics is positioned as the unifying business services fabric for innovation at Microsoft, and it will be (or already has been) bolstered by Yammer, Office, Skype, SharePoint, VS.NET, Bing Maps, and other services. In fiscal 2012, the Microsoft Dynamics business reportedly grew 11 percent (6 percent in Q1 2013). Microsoft Dynamics CRM grew 30 percent in 2012, while Microsoft Dynamics AX grew 30 percent in the U.S. during the same time.

While there have been major strides made in this regard, I still think that Microsoft Dynamics does not fit cleanly in Microsoft’s global sales and marketing plan yet. Major accounts need a global consulting team, but not many of the big global consulting firms focus on Microsoft Dynamics. While Microsoft may own the CIO relationship space, the benefit of this is mainly seen in sales of Windows Server, SQL Server, SharePoint, and other platform (“plumbing”) tools. Microsoft Consulting Services (MCS) has recently added Microsoft Dynamics to its portfolio. If one compares Microsoft Dynamics’ go-to market with SAP and Oracle, the latter two vendors have both the established solutions and consulting ecosystems to cater to large companies. Without this partner ecosystem and direct sales, Microsoft Dynamics will be a value-added reseller (VAR)-driven business. While VARs can be lower cost than large direct sales teams, the ability to control VARs and grow their business is hard.

Microsoft Dynamics ERP

Large enterprises are now a key target market for Microsoft Dynamics AX and Microsoft Dynamics CRM, whereas previously the main focus was on the midmarket (especially in the realm of ERP). These two products are Microsoft’s enterprise-class and global play for MCS, global system integrators (SIs, e.g., Avanade and Hitachi), and global independent software vendors (ISVs, e.g., Cincom is rewriting its Acquire product configurator on Azure Cloud to be integrated with Dynamics AX). In addition to Microsoft using Dynamics AX 2012 for Retail in its retail stores (and in its manufacturing plants worldwide), Carrefour’s deployment of Dynamics AX for Retail in its 1,600 stores proves that the product is definitely becoming a force in the retail industry. Via a Skype call, Herve Thoumyre, CIO at Carrefour talked about his IT strategy being based on simplifying IT with security and governance and on modularizing IT for agility.

As PCs replace cash registers, retail could be a growth market for Microsoft Dynamics. Moreover, if we go cashless, tablets and smartphones with mobile payment tools (e.g., Square) could be the next frontier in retail. Microsoft Dynamics AX now has multi-channel e-commerce capabilities out-of-the-box as well, based on SharePoint 2013. Catering to both business to consumer (B2C) and business to business (B2B) commerce needs, this capability is challenging NetSuite’s SuiteCommerce, until now the only established mid-market ERP product with native ERP and e-commerce capabilities. While Microsoft is using Concur for managing corporate travel needs, it is using its own capabilities for expense reports management, again within Dynamics AX.

The next major release of Microsoft Dynamics AX will be cloud-enabled on Windows Azure.  On the downside, the next release will not be available until 2014. Today, Microsoft Dynamics AX 2012 leverages public cloud services for key features such as RapidStart, Sites, and the Commerce Services. Conversely, Microsoft Dynamics NAV and Microsoft Dynamics GP will be concurrently made generally available (GA) on Azure Cloud in 2013. But, these products remain in their niches and on their proprietary technologies, i.e., users will still have to know Dexterity and C/Side to customize GP and NAV instances, respectively. For its part, Microsoft Dynamics SL is based on Visual Basic and is being developed by Plumbline Solutions, a company that consists of former Solomon Software founders and early developers, and they now report closely to Kirill Tatarinov about their R&D milestones.

Microsoft Dynamics CRM

Currently, Microsoft Dynamics CRM has 2.7 million users in 80 countries, 36,000 customers, 5,000 partners, and over 1,000 solutions in Microsoft Dynamics Marketplace. While Microsoft does not report the individual Dynamics products’ revenues, my estimate is that the CRM business is a third of total Microsoft Dynamics revenues. Recently, the Microsoft Dynamics CRM team announced the details of the next service update for Microsoft Dynamics CRM Online, which will be released in December 2012.

The Microsoft Dynamics CRM December 2012 service update will aim to reimagine the way sales, customer service, and marketing professionals work with their CRM solution by delivering enriched business process definitions and reimagined user experiences, new enterprise social collaboration and communication strength, and new extensibility options and expanded support for compliance standards. This service update introduces a new user experience and deeper connections with Yammer, Skype, and Office 2013 as well as cross-browser support and several enhancements in the solution. The product’s demo on MacBook (was it done on purpose, to prove some point?) was the most impressive during the entire event.

In addition, Microsoft previewed a new Windows 8 application for Microsoft Dynamics CRM. This new app will be available in mid-2013 and will show what is possible with business applications on Windows 8 devices. More details on this announcement can be found at the Microsoft Dynamics CRM Online Newsroom.

The integration of Yammer and Microsoft Dynamics CRM is along the lines of the combination of’s CRM and human capital management (HCM, i.e., solutions with Salesforce Chatter, SAP Jam and its CRM/HCM/PLM, and Oracle Social Network (OSN) plus Oracle Fusion CRM and Fusion HCM. But, Microsoft Dynamics CRM comes with the advantage of being integrated to both Lync and Skype for unified communications (UC), Lync being the recommendation for intra-enterprise (federated) scenarios and Skype the recommendation for any kind of communication (external, consumer, etc.).

Bob Stutz, the new corporate vice president of Microsoft Dynamics CRM, who was previously at Siebel, pointed out that regardless of the “social CRM” trend, the general CRM purpose remains to acquire the right customers, retain the right customers, and grow the share of wallet (SOW) from existing customers. To that end, Microsoft is enhancing all the CRM realms: sales force automation (SFA), marketing automation, and customer service. The rationale of the recent MarketingPilot acquisition was that it had marketing resource management (MRM) functionality on par with Aprimo (now part of Teradata) and scalability on par with Marketo, but at a price where Microsoft saved some bucks.

The platform builds off the MRM core, but extends into strong campaign execution, lead scoring, and web analytics. Within the app, there is a component called the Akela Marketing Cloud, a multi-tenant behavioral tracking and progressive engagement modeling engine for marketers. It can be used to mine clickstreams, page flow, and online/social behaviors. Microsoft will use that engine and combine it with some upcoming work it is doing in social analytics, to fuel new marketing, sales, and customer service insights. Lead nurturing and social listening are some remaining gaps that Microsoft plans to close soon, in whichever way possible.

On the customer care front, the vendor is currently developing a knowledge management (KM) system based on SharePoint, and it will be interesting to watch how it fares there against, Oracle (RightNow and InQuira), and Kana Software. The Microsoft Dynamics CRM team recently announced Spaces by Moxie for Microsoft Dynamics CRM, which enables organizations to provide differentiated and personalized customer experiences at scale. The suite improves the way businesses interact, understand, and deliver superior customer service. Right now, Spaces by Moxie is one of the many partner solutions available to customers, and it can be found in the Dynamics Marketplace. Craig Dewar, director of Product Management for Microsoft Dynamics CRM, recently posted an article entitled “Put some Moxie in your Web Customer Service Capabilities”, which discusses how Moxie fits with Microsoft Dynamics CRM.

Dynamics CRM and AX – Go Forward Global Platforms

Microsoft Dynamics CRM has been Microsoft’s product from scratch, while Dynamics AX’s once proprietary Morph/X development environment is now a native part of Visual Studio (Microsoft has in fact borrowed some nifty design principles from AX); for that reason Dynamics CRM will also be Microsoft’s “pure” product. Thus, its Azure Cloud release will be the real deal. At the recent Microsoft event there was also a great interview with Celso Guiotoko, CIO of Nissan, via Skype regarding Nissan’s dealer management system that leverages Microsoft Dynamics CRM and Dynamics AX. Again, testimony to these products’ global capabilities and breaking the CRM and ERP silos was given. Such examples should mitigate Microsoft Dynamics’ traditional lack of a consolidated enterprise software vision, which has limited the vendor’s ability to really get economies of scale and take away a share of the market from SAP.

The analyst event also included information about lesser-known data platforms and business intelligence (BI) capabilities for Dynamics and other Microsoft products. For a discussion about these, please see the other blog posts in this series:

Microsoft Analyst Event Part One: What’s New for Fall 2012

Microsoft Analyst Event Part Three: What Else Can Dynamics Do, and What’s Next? (coming soon)

Related TEC blog posts:

What’s Microsoft’s Retail Play? (Feb 2012)
The Lesser-Known (Social) Facts about Microsoft Dynamics CRM (Oct 2011)
Microsoft Dynamics CRM: Much More Than Meets the Eye – Part 3 (Mar 2010)
Microsoft Dynamics AX: The Chosen One Among Microsoft Dynamics ERP Equals? – Part 3 (Oct 2010)
comments powered by Disqus