When Windows IT Pro News EMEA last focused on Microsoft's Dynamics range of ERP solutions back in March, 2006, the company planned to converge them into a single product line. That plan has long since been abandoned, but developing a large degree of uniformity across its AX, GP and NAV brands is still a priority, according to Dynamics UK product marketing director Gary Turner.
Feedback from its 300,000 Dynamics customers led Redmond HQ to keep its ERP offerings as separate entities, says Turner. "Those core products we have committed to support for ten years to cast aside any doubts that customers will be forced to migrate onto the latest and greatest new converged product. And because we have rejected the notion of having a single code-based ERP product, we put a pretty strong statement out to the customers and to the partner community that we are in with those three ERP products for the long term and that we’ll not only be continuing to support them for the next ten years, but we’ve also committed to a pretty ambitious development plan which will see point releases on each of the products every two years with an interim release around every twelve months.
"Over the course of the next three-to-five years, we will be building a degree of commonality across all three products while still reflecting the core code bases of some of their core functionalities. An example of that would be that we’re harmonising the user experience across all three products. So this year we’re releasing two major point releases of NAV and AX. AX is going to shift in about a month, NAV will be in the second half of the year. And if we were to hold you up some screen shots of those products at arm's length and ask you to pick which one you were looking at, the plan for us is that would be pretty tough for you to do and that they actually utilise many of the core components and classes at a user-interface level that we’ll be covering across all Dynamics products, whether it’s ERP or CRM."
Turner foresees that over the next decade such incremental moves towards commonality will mean that each original product will eventually consist of only ten or twenty per cent of its own individual programming, with converged code making up the rest.
Microsoft would certainly not be the only major ERP player with a mixed bag of brands. Both Oracle and Infor, for example, market a fistful of ERP suites that they have picked up, like Microsoft, through acquisition. But doesn't such a strategy confuse potential customers? If a manufacturer, say, is looking for a new ERP solution on Microsoft's Dynamics web pages, they will still be offered a choice between AX, GP and NAV.
Turner says: "You certainly can’t make that choice off the back of a website or a brochure. Nor would you make that choice from any vendor from just the marketing materials. You could engage with Microsoft directly to point you down a particular avenue if you had specific requirements. But the way to make that choice is to engage with one or more Microsoft Dynamics partners who will assess your requirements independently of whether it’s one product or the other that ultimately you will be using. And that will usually throw out a pretty close recommendation and that recommendation will be based on the size of your organisation. Are you a subsidiary of a larger organisation? Do you trade in the UK exclusively or do you trade overseas? Do you have a simple or a complex supply chain requirement? Are you a high volume? Are you doing 100,000 line items a day or are you doing 50 line items a day?
"There’s nothing different about that evaluation and discovery process in Dynamics, other than the fact that we have three products that are positioned with a degree of overlap and ultimately customers can make a decision about whether they go for NAV or AX. And a big part of that decision could be actually the partner that they’re partnering with has got some very specific skills in their industry or has a large customer base in their industry.
"So customers generally don’t have that much of a challenge selecting products. Ideally, it would be great just to have one product, but again there's that whole discussion about how we migrate from 300,000 users globally on three different code bases onto one and that isn’t going to happen overnight, not least if we’re going to underwrite that kind of venture. So I think we’d struggle to give you some valuable guidance at an early stage on our website, but any ERP \[company\] has that same problem."
Dynamic's competitors, large and small, in the ERP space continue to build offerings that are based around Microsoft platforms such as SQL Server in particular and .NET in general. Don't Microsoft's own offerings pose a considerable threat to such solutions?
"We’ve been in the space for eight years and clearly there are a number of incumbent ERP vendors and CRM vendors that base their products on Microsoft technology that have been and continue to be around," says Turner.
"So I think that inevitably as we become successful in building out the presence of Microsoft Dynamics CRM and ERP over the coming years, that means that some incumbents then may not be getting the business that they would have otherwise got. But I don’t know whether that makes us any different from any other competitor that they may face. And I think that ultimately customers make the decision about their vendor based upon a number of factors, not least the capabilities of the products, the partner network, the viability in the long term of that solution and I think that that’s an interesting thing to think about.
"In a world of increasing complexity and connected business systems, there are some challenges that lie ahead for all software line-of-business manufacturers. And I think that Microsoft already has lots of customers in the UK and in the global market running on its technology, whether that’s Outlook, Exchange or Windows, to name but three. And actually the Dynamics products are, I guess, three more or four more extensions to that.
"I guess that there’s potentially an interesting controversial angle on that, but we certainly don’t see it that way. We’re not here to take over the world. We’re clearly here for growth in market share, but respect the fact that customers ultimately decide where they go. We can’t influence that just because we’re Microsoft and because we’re big."
Microsoft may not, in this instance at least, be out for world domination but big-ticket accounts in Europe that traditionally turned to ERP suppliers such as SAP are now seriously considering Dynamics.
"I think that it’s not quite as simple as that we are knocking out or replacing incumbent global or European-wide solutions," says Turner. "There’s a very mixed number of scenarios. What we’re seeing with things like AX is that AX is popular as a complete enterprise-wide system for a large organisation such as 3663. 3663 is, I think, the second largest distribution company in the UK and they also operate in Europe. They have some very complex and broad-based requirements and quite a large number of people and a very fast moving industry. And they’re a good example of a business which invested its entire IT structure around Dynamics AX.
"Now, I know that they went to market and considered the Oracles and SAPs and other specialised systems out there, but ultimately they chose AX over them, not necessarily because of deployment or implementation costs or complexity, because AX is a very capable and flexible product, but certainly the overall cost of ownership that they perceived by it being based on core technologies that they’d already made big investments in around servers and deployment of Windows and the high availability, or relatively high availability, of skills around Dynamics AX meant that as an ongoing concern for them, they felt that their cost of ownership would be much less than some of the other vendors you've mentioned."
Turner says that Dynamics' strength is not just in beating the ERP big boys at their own game but coexisting with them. "We have other success stories with AX where it’s a large international organisation that’s running, for example, SAP, centrally and for their subsidiary businesses, who themselves are not necessarily small businesses, but certainly they don’t have the depth of complexity or line of business requirements to be another user of SAP in the organisation. We have businesses that are deploying AX in that in a kind of hub and spokes scenario. They’re not about to kick SAP out, nor do they want to deploy SAP into a subsidiary business unit. And we’re seeing AX in those scenarios in large businesses actually getting pretty good traction."