Microsoft and the enterprise/consumer opportunity. Time to go “all in” again?

Microsoft Dynamics has many ambitions, many of them warranted, to become a force for innovation and change in the broad enterprise software market. And Dynamics has a problem, or really a set of problems, that in essence originate from a single source: the rest of Microsoft.

As Dynamics performs yeoman’s service defining, or at least trying to define, the enterprise value of its parents company’s increasingly broad innovation portfolio, the rest of Microsoft is having trouble following suit, or a times even playing in the same card game. Windows 8 and Windows 8 phone were both launched largely devoid of any mention of the enterprise,  and the Yammer acquisition was jammered into the Office division, where the desperately needed business context for making social collaboration relevant is missing in action (unless you think collaborating over a PowerPoint preso is the raison d’etre of social collaboration). Lync 2013 was launched in a similar way – despite a lot of sloganing and some nifty demos, there was no link to real business processes (or to anything  but Lync, apparently).

It’s as if Microsoft corporate is so obsessed with maintaining its position in the consumer market that it is willing to squander an unprecedented opportunity in the enterprise – while ignoring the fact that owning the convergence of enterprise and consumer is the not-so-secret ambition of every company Microsoft is competing against – Apple, Google, Salesforce.com, SAP, and Samsung, to name a few. (Samsung recently began touting Knox, its enterprise secure version of Android,  Google’s Chromebook Pixel  is hedging a bet that touch-screen laptops will be a hit as a converged enterprise/consumer world, and even Blackberry is now trying to cheat death by advertising phones that switch between personal and business mode.)

To my biased eyes, Microsoft’s consumer first/enterprise-almost-never marketing focus is both foolish and unnecessary. Foolish because it is giving the competition a ton of runway and comfort that Microsoft might just muddle its way to mediocrity in the enterprise, and unnecessary because all the rest of Microsoft would have to do is follow Dynamics’ lead: the enterprise software division is actually doing a great job of defining the broader enterprise/consumer message for the company. So how hard would it be for Ballmer to convene all the marketing heads of his different business units, lock them in a room, turn on the blender, and have them create a master message about this enterprise/consumer opportunity?

They could start with Dynamics’ retail initiatives, which are blending Windows 8 touch-based POS systems with back office AX supply chain management and consumer-quality social marketing with enterprise-class business analytics. They’re even prototyping a Kinect-based virtual dressing room for retail – how’s that for enterprise/consumer convergence?  Or they could push customers like Revlon, which is both consolidating 21 ERP systems into a single Dynamics AX instance, but is also building Windows 8 tablet-based apps.

Putting a little enterprise into the larger Microsoft message isn’t just about helping Dynamics make its aspirations come to life. Take Windows 8 as a desktop OS: right now, IT departments are in a frenzy to upgrade an older generation of desktops running Windows XP. The problem is that Microsoft has sort of whiffed on the marketing opportunity for Windows 8 touch, and it would be a little too easy for IT departments to buy non-touch PCs (which are a few hundred dollars less expensive), particularly as Microsoft hasn’t made a great compelling argument about the relative value of Windows 8 touch versus non-touch in the enterprise, much less elsewhere.

But if Microsoft could make a better case for Windows 8 touch as something other than a consumer product, it might be able to direct that refresh towards touch-screen laptops that can double as tablets and blunt the inroads that the iPad and the Pixel Chromebook can or have already made into the enterprise. That in turn would provide the critical mass of platforms that developers need to start targeting their efforts on creating apps that can leverage the ability of Windows 8 to support an end-to-end process that spans touch, mobile, and traditional desktop productivity.

A little enterprise in the overall Microsoft message would also help Windows 8 phone, which in my opinion could use a lot of help right now. Blackberry is trying a comeback, Samsung is trying to make Android enterprise-secure, and the iPhone isn’t designed to be managed as an enterprise resource. If only there were a compelling reason to use Windows 8 phones in the enterprise. We can’t hope to know based on current Windows 8 phone marketing, which compels us to imagine ourselves as soccer moms instead of busy executives, and hipsters instead of blue collar workers.

And what about Lync, which actually is an enterprise product but is marketed in that dead-end space called unified communications? How hard would it be to show how Lync can be used to enhance a collaborative supply chain planning process, or field service maintenance? Put on some blue collars and roll up your sleeves, Lync.

On the other hand, just a couple of degrees of focus on the enterprise from Microsoft’s high-profile consumer product lines would help Dynamics face its biggest challenge: how to define a compelling case for its products in the top tier of the market against three much bigger competitors: giants SAP and Oracle, and even much smaller Infor, which at $2.8 billion in revenues is still more than double Dynamics’ size.

The draft that the rest of Microsoft could give Dynamics would help establish that all-important compelling case for why Dynamics should have a seat at the table against these three competitors, all of which have the advantage of incumbency in the top tier of the market where Dynamics now wants to play.

I think Infor makes for the most compelling case why the rest of Microsoft needs to lean in a little more and help Dynamics make its case. Infor owns a customer base that is famous for sticking with the status quo – the whole reason Infor has made it this far is that its customers have stubbornly refused to move off their ancient enterprise software systems, providing Infor with a steady stream of maintenance revenue over the last decade. Infor is banking on keeping them in thrall for another decade (or until CEO Charles Phillips can engineer an IPO or sale of the company) by refreshing the user experience and analytics capability, delivering innovation by tying its other products together using its ION middleware, and offering a hybrid cloud/on-premise deployment model.

While Dynamics has been able to pick off Infor customers over the years as they have run out runway with the Infor products, that was easy in the pre-Phillips days when Infor had nothing new to offer. But now that it does, Dynamics’ job just got twice as hard. These Infor customers have already proven their reluctance to reimplement on new software, so if Phillips can offer them a way to stay put and innovate, Dynamics now has to look even more compelling in order to get these Infor customers to go through the pain of a migration to a wholly new platform. Just relying on a feature/function bake-off in the core ERP processes won’t be enough – Dynamics has to go the extra mile, and having more air cover from the rest of Microsoft would be a good start.

This extra mile from the consumery side of Microsoft would also help support the changes it has been making in how it sells to the enterprise, which has seen major changes in how the company licenses AX in the enterprise: Microsoft has been selling enterprise licenses of Windows, SQL Server and the rest of its enterprise software for years. In the last year it added AX to the mix, and brought Microsoft Consulting Services in as well:  I spoke with a large Asian heavy equipment distributor that is engaging with MCS to do a massive, world-class business transformation, using AX as the core product. MCS is the prime contractor, and full panoply of Microsoft technology is at play in this account. This is the kind of marquee win that Microsoft will use to solidify a strategic beachhead in the enterprise. With MCS pulling and the consumer side pushing, this beachhead could be secured much more quickly and in a more compelling way.

It’s been a long journey for what is still the smallest part of Microsoft in terms of revenue, and it’s clear that on the sales and services side of Microsoft, Dynamics is getting the attention it deserves: it’s Microsoft’s overall marketing that hasn’t aligned with what Dynamics is doing or the converged enterprise/consumer opportunity. Global systems integrators are now on board, AX 2012 and Dynamics CRM are enterprise class products, and the recent acquisition of MarketingPilot adds some important capabilities in the somewhat over-hyped marketing automation, execution, and planning market. It’s starting to look like a really good enterprise story. It could be even better if only the rest of  Microsoft would play along.

 

 

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  1. Pingback: After Convergence 2013, Analysts and Influencers Share Their Outlook on Microsoft Dynamics ERP and CRM - MSDynamicsWorld.com GP News - Microsoft Dynamics GP - Microsoft Dynamics Community

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