Microsoft is emerging as a potent force in the enterprise software market, propelled by Azure and the success of Office 365. The former provides a comprehensive cloud platform and set of services that are, as a platform for enterprise software, second to none. The latter provides an amazing productivity platform and set of services that spans a broad swath of the day to day requirements of today’s business user. And, for what it does, is also second to none.
That’s the stuff Microsoft likes to shout from the rooftops, and deservedly so. What they’re strangely quiet about is the fact that they also have market leading ERP and CRM software products that are right up there with the best of the best. At a moment in the market when public cloud offerings for enterprise software are hot, and the original offerings from leaders like Netsuite and Salesforce.com are looking a little long in the tooth, there’s a deafening silence around Microsoft’s Dynamics product line – the mellifluously named Dynamics 365 for Operations, Dynamics 365 for Sales, and the other Dynamics products that have a legitimate shot at market leadership.
The omission isn’t just curious, it’s also tragic. Microsoft’s inability to promote of a solid set of enterprise software is a disservice to its customers and a larger enterprise software market that only gets better by increasing the choices customers can make.
Why is Microsoft so quiet about what should be a major set of assets in the highly competitive and fast-growing cloud ERP market? There’s a clue to be had in the checkered history of Microsoft’s enterprise software aspirations, starting with the acquisition of Great Plains in 2001. Since that first acquisition, and the subsequent acquisitions of Navision and Axapta, Microsoft’s senior execs kept looking at the paltry revenue and margins that these products could command relative to Windows and Office and for a long time basically shunned what later became the Dynamics product line.
That benign neglect was severe enough that there were many times when Dynamics execs confided in me that they might be better off being spun out and run as an independent company or sold to a larger enterprise software vendor. This second-class status was the norm pretty much until Kirill Tatarinov was promoted in 2007 to run the show, whereupon Dynamics began to come into its own. Even through a couple of reorgs that threatened to repeat the past pattern of neglect, Kirill was able to keep the Dynamics flag flying.
But Kirill left two years ago as part of another reorg that put Dynamics’ fate in the hands of EVP Scott Guthrie, and that’s basically when the silent treatment began.
I don’t blame Guthrie for what looks like that same old indifference, he clearly has other and more lucrative fish to fry, such as Azure and Office 365, the latter of which now has 100 million enterprise users (which begs the question of what very large percent of the global economy runs in part on the Office 365 family – I’m sure the answer would give Microsoft some serious bragging rights.).
More importantly, however, I’m not so sure Guthrie really gets enterprise software in all its complexity and glory. Or maybe he just doesn’t get why Dynamics is that important to Microsoft. Perhaps, just like in the olden days after the Great Plains acquisition, Guthrie’s indifference may be a rehash of an historical perception at Microsoft regarding Dynamics’ limited value to the company.
Regardless, any and all scenarios that marginalize Dynamics are basically a damn shame. And it’s a shame that Dynamics has been placed in the cone of silence – no more conferences, no more analyst events, no more regular briefings – and not just because I’m an admitted enterprise software bigot who likes a dynamic (pun intended) market full of great products pushing the envelope on behalf of customers. It’s a shame simply because I think Microsoft and Guthrie are shooting themselves in the foot in the middle of a very fast and competitive race for a key enterprise software platform prize.
The prize? Leadership in the next generation public ERP cloud, the one that puts classic backoffice ERP into the cloud, straps it to a comprehensive platform full of innovation services (as in the ubiquitous trio of IoT, AI and ML, as well as microservices, etc. etc.), and leads the global economy to the promised age of digital transformation. That one.
But instead of putting Dynamics into the sweepstakes, Microsoft keeps shooting Dynamics in the foot. The latest example of friendly fire came at the Microsoft Build developers conference last month. I’ve been writing a lot about how developer outreach is the new imperative for enterprise software vendors who want to play in the cloud platform business, and I went to Build to take the measure of Microsoft’s latest efforts in this regard. The basic issue is that platform providers need developers who reflexively use their tools, services, and platforms to build those cool new apps that will transform the business world. And historically, Microsoft has done this better than most: witness the fact that Build is one of the larger –if not the largest – pure developer conferences in the industry, and Microsoft’s legions of developers are the envy of the enterprise software market.
The focus at Build on what Microsoft touts as the “intelligent cloud” and the “intelligent edge” did a great job of solidifying what I see as a true leadership position in enterprise cloud platforms. This is particularly true with respect to Amazon and Google, but also more specifically with respect to companies like SAP and Salesforce.com, which aspire to be cloud platforms but are basically leading with their apps, not their platforms.
As such, Build was a showcase for all the cool stuff you’d expect as well as a lot of cool stuff that you might not expect, such as what happens when Microsoft pairs the graph API from Office with its newly acquired LinkedIn APIs, or how well Cortana can do live simultaneous human language translation, or Hololens, which is truly in a category of coolness all by itself.
But while Microsoft did a great job of showing off these and other components of its developer toybox/toolkit, by the end of analyst briefing sessions the day before the official start of Build I realized that, at least when it came to talking to the analysts, Dynamics wasn’t part of the developer story. The irony of this is a little mind-boggling when you think that every enterprise software vendor other than Microsoft would give up a body part or two to be able to address the Build audience and show off what their enterprise products and toolkits could do when married to Microsoft Azure APIs, the Office/LinkedIn graph, Cortana’s natural language processing, Hololens, and pretty much everything else under the hood in Redmond.
In other words, while companies like SAP and Salesforce.com can only dream of the day when they have a developer audience of the size and scope that Microsoft can command, Microsoft is squandering a huge opportunity to use its developer network to do with Dynamics what Salesforce and SAP wish they could do with their cloud enterprise software offerings.
Like I said, I’m not sure how well the cloud enterprise software opportunity is even understood at Microsoft. As an example, I asked Scott Guthrie during an analyst Q&A session what role he saw Azure and its Lifecycle Services ALM tool playing in a multi-platform, multi-cloud, multi-cloud app world. This wasn’t meant as a gotcha, it was actually more of a friendly lob: helping customers navigate cloud “sprawl” is a top of mind issue in enterprise software, and if you ask Amazon’s SAP team this question – which I did recently – they have a lot to say about their plans to support the integration and orchestration of different vendor apps across their cloud. After all, Amazon runs SAP and Salesforce and Workday and pretty much any vendor app that needs a public cloud provider.
Just imagine if you build a custom process that spanned two different cloud properties – a CRM and an ERP product, for instance – and your cloud provider managed the full lifecycle of the process, helped manage the integration and orchestration, and made sure that the process was immunized against the different upgrade schedules of the cloud properties. And that vendor had some great IoT APIs, and serious support for predictive modeling and data visualization. Wouldn’t that be nice?
Unfortunately, Guthrie’s answer came off like a punt that sailed out of bounds. The way he launched into something about running Linux VMs and Cloud Foundry on Azure made me wonder if I hadn’t articulated the question well enough. Maybe, or maybe not. To the right audience, the question wouldn’t be halfway out of my mouth before it was being finished for me: If I was in a room full of enterprise software customers of any decent size, or the enterprise software vendors themselves, this question would have been instantly recognized as the big question in the enterprise as the move to the cloud broadens and customers are forced to confront the extreme heterogeneity in their cloud portfolios.
(Ironically, or maybe not, Kirill Tartarinov, now the CEO of Citrix, and his exec team spent a great deal of time discussing this very issue at Citrix’s Synergy user conference last month. They made the most of the term “cloud sprawl”, and their solutions to the problem, centered around their Secure Digital Workspace and Software-Defined Perimeter, were spot on. The Synergy crowd ate it up.)
So where does this “deafening silence” leave Dynamics? Right now they’re deep in the damn shame category of technology marketing. I had the opportunity to meet with their CRM head, Jujhar Singh, at a CRM conference in April. In presentations to a small group of analysts, and then later at dinner, the message that Dynamics CRM had made some extraordinarily huge functional leaps came in loud and clear. The upshot of the 30 minutes we analysts had with Jujhar was that 30 minutes wasn’t enough time to be begin to touch on all the cool new stuff, and the consensus around the room was that the cone of silence was a huge lost opportunity for Dynamics.
This is true across the product line: at this point it’s becoming hard to recommend or even pass judgement on such a stealthy product line, and from where I stand this is keeping Dynamics out of a deal flow that by rights it should be deep in the mix of. Whether it’s a question of showing off the next gen enterprise software process flows that can be enabled by combining Dynamics, Office, Azure, and the rest of the stack, or simply competing head to head in the public cloud market against the likes of SAP, Oracle, Salesforce.com, or Financial Force, Dynamics is increasingly showing its unfortunate leadership in special category of enterprise software that can best be described as MIA, for missing in action.
There was a time when Dynamics was recognized internally for its ability to be the staging ground for the rest of Microsoft’s technology: if you wanted to see what the full complement of Microsoft’s desktop, cloud, infrastructure and systems software could do, all you had to do is find a decent-sized Dynamics ERP customer. It gave Dynamics a lot of internal cred, and that cred allowed Dynamics to have a seat at the Microsoft table as a legitimate division worthy of some mention.
Apparently that cred is gone, and with no senior exec actively advocating for Dynamics, a market leading product set is left to languish. There’s not a lot of precedent for success with this model of MIA marketing, and, for the sake of the customers and the Microsoft employees who still bleed for Dynamics, the company should get back on the road and start talking about Dynamics again. Or sell it before missing in action morphs into irrelevance or, worse, DOA. As in dead on arrival.