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Microsoft Dynamics takes the 'sober' approach to ERP

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1st May 2008
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Microsoft DynamicsLike many of his rival accounting and ERP software suppliers at Softworld this spring, Microsoft Dynamics product marketing director Gary Turner said recently that "Nothing very interesting is happening in the market other than acquisitions and roll ups."

Eight years on from Y2K, Turner is predicting a new wave of ERP system replacements, but noted that the software industry has changed since the millennium. Software companies used to be driven by research and development, triggered in part by operating system transitions such the leap from DOS to Windows.

In the old days, developers would build up their products, and then kill them. But, Turner said, "The industry is sobering up. Platform redundancy has gone away and is not a driver for change."

As a result, software developers are investing less in R&D and more in sales and marketing. Some vendors may be putting on their slippers and sitting back to tend their customers and core code, but Microsoft Dynamics doesn't have a sizeable legacy customer base to enable it to do that. But it does have other avantages.

According to Turner, smarter managers are now looking at IT differently, as a real business enabler. "IT needs to get out of the way and not be a key decision factor if they want to move into a new market. The reality for legacy ERP customers isn't that simple and there are lots of spreadsheets out there filling the gaps," he said.

One recent Microsoft prospect grew rapidly through acquisition and was looking for enterprise software that would allow it to manage across the business units. That company currently fills its legacy ERP gaps with spreadsheets - so raising the 64,000-row limit in Excel 2007 has made a big difference.

"People buy Dynamics because they can see a commitment to the future, and there's security from that point of view." With the company promising to maintain the NAV, GP and other Dynamics families for 10 years, Microsoft business application customers will experience a slow evolution of products at the component level rather than a forced migration to a single code base, he said.

Since Microsoft acquired Navision and Great Plains in 2001-2, its rebranded Dynamics business application wing has prospered in the upper mid-market, enjoying double-digit growth each year and more than doubling the individual units' annual revenues. "No other vendor is doing that - business as usual is pretty exceptional," Turner claimed.

However, the next tranche of growth will come from lower down the corporate chain and as yet, Microsoft does not have a suitable lower mid-market product to compete against the likes of Sage 50 and Pegasus (Turner's previous company).

Such a product does exist in the Netherlands, called Dynamics Entrepreneur, and Turner has been evaluating it for the UK market. He describes it as "Navision Lite". While there are no launch plans in place yet, Turner told AccountingWEB, "Expect something in the new financial year as a way to boost our footprint."

Unitl then, Microsoft Dynamics is content to focus on the specific sectors it is currently serving through its resellers and business partners and is comfortable ploughing a somewhat pedestrian message. Last year, Kirill Tatarinov took over as corporate VP for the Dynamics division and shifted the focus away from visionary software roadmaps to emphasise the consistency and longevity of its products. A symbol of these changes is an alteration in Dynamics naming conventions so that the newest product release will be Dynamics AX 2009, with year branding mirroring other Microsoft products.

In a recent interview with our sister site MyCustomer.com, Tatarinov explained that Microsoft's strategy was "about delivering software that is familiar to the end users, software that people can use without having to go through massive retraining and massive learning, software that is very familiar to the Outlook user.

"We know that many sales people and many business people effectively live in Outlook day-in, day-out, so we're providing software that effectively looks and feels and plays just like Outlook."

The company was also tailoring its application software to cater for specific roles in an organisation, he explained. "So the credit processing person gets everything the person needs in front of them, at a glance, in one screen and they don't have to leave the screen as they do their daily job, while the accounts payable and receivable clerk has everything they need in front of them, including transaction history, audit logs, and so on and so forth."

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