Mar 21, 2013 (06:03 AM EDT)
Microsoft Gains Enterprise Clout With ERP, CRM
Read the Original Article at InformationWeek
A decade ago Microsoft was dominant in consumer computing and it was building up credibility in the enterprise market. Now it seems Microsoft's biggest strength is in the enterprise market while its sway over consumers is waning.
Fresh evidence of Microsoft's enterprise strength was on display at this week's Convergence Conference in New Orleans, where more than 11,000 gathered to hear about the latest on Dynamics CRM and Dynamics ERP. Dynamics CRM sales grew more than 30% in the most recent quarter (a 39th consecutive quarter of double-digit growth) and the product surpassed 39,000 customers and 3 million users (counting on-premises and cloud-based deployments), according to Microsoft.
The company trails SAP, Salesforce.com and Oracle in the overall CRM market, but Dynamics CRM Online is second to Salesforce.com in cloud CRM. In ERP, where Microsoft trails SAP, Oracle and Infor, sales of the flagship Dynamics AX ERP app are also growing at a double-digit clip and surpassed 18,000 customers last quarter.
[ Want more on the tie between marketing and CRM? Read Why CMO Tech Spending Is Good For IT. ]
More impressive than the numbers shared at Convergence were key customer spotlights. Revlon, for example, is using Dynamics AX to consolidate and replace 21 ERP systems, while Dell is using AX to replace a legacy manufacturing system that supported more than 30 highly customized manufacturing applications. In both cases the savings are in the tens of millions of dollars.
Revlon and Dell are the tip of the iceberg when it comes to consolidation, according to Microsoft. The sweet spot of that trend is among midrange companies with $100 million to $5 billion in revenue, according to Microsoft Business Solutions president Kirill Tatarinov.
"In this range we typically find huge interest in eliminating ERP soup and getting to one elegant, modern system," Tatarinov told InformationWeek in an interview at Convergence. The "soup" in question is a mix of home-grown ERP apps, top-three (SAP/Oracle/Infor) apps and lesser-known legacy ERP systems that tend to be dated and expensive to maintain.
Above that $5 billion (Global 2000) threshold, companies typically already have a core ERP system in place, and they have little appetite to replace it because they've spent millions of dollars getting it to work, Tatarinov said. Dell, for example, is a $62 billion manufacturer that's sticking with Oracle E-Business Suite as its core ERP system, but it's replacing an unnamed legacy manufacturing resource planning (MRP) system with Dynamics AX. (MRP is a component of ERP.)
Revlon, the well-known cosmetics maker, had "one of everything" among the 21 ERP systems the company had in use globally, according to CIO David Giambruno. That included four systems in the U.S. alone, but no one system was dominant, Giambruno told InformationWeek at Convergence.
It's hard to say precisely how much Revlon will save just on app consolidation, Giambruno said, because the project is still underway and followed a massive infrastructure upgrade and master data management project launched five years ago. That effort consolidated all data (and will eventually consolidate all apps) onto to a global, private-cloud infrastructure. Revlon has thus far documented more than $70 million in annual cost avoidance and savings from the total project, Giambruno said.
A Dell spokesperson was not available at Convergence, but Microsoft executives discussed the deployment in detail, even reporting that Dell is saving some $50 million per year by eliminating 30-plus custom apps that were time-consuming and costly to maintain.
Much of the buzz in CRM and, indeed, in the larger IT market is about the growing tech spending power of chief marketing officers. Thus we've seen a string of related marketing technology acquisitions in recent years, with IBM buying Unica, Teradata buying Aprimo, SAS buying AssetLink, Salesforce.com buying Buddy Media and Radian6, Infor buying Orbis, and Oracle acquiring Eloqua.
Microsoft's response on this front was the October acquisition of MarketingPilot , which is to become a deeply integrated extension of Dynamics CRM. In a deep dive offered at Convergence, MarketingPilot was shown to be a very broad and deep product. The product's marketing resource management functionality supports marketing planning, digital asset management, budget management, and creative and project management. Cross-channel marketing functionality includes marketing analytics and dashboards for digital (website and keyword) marketing, email marketing, social media campaigns and traditional (print, direct mail, TV and radio) marketing. Campaigns are automated with supporting behavior analysis, so you know what happens with keyword buys, email response and trade show leads. There's sales enablement functionality for lead scoring and lead assignment.
In short, MarketingPilot competes much more directly with IBM's Unica and Teradata's Aprimo, Microsoft executives said, rather than the much more "limited" (social-focused) Salesforce.com Marketing Cloud or Oracle's recent B2B-focused Eloqua acquisition.
"It's a foundation for getting to a return-on-marketing-investment calculation, it orchestrates multi-channel campaigns and it will become an integral part of the CRM system, so you can go from campaigns to leads to opportunities to orders," said Tatarinov.
Microsoft also touted the fact that MarketingPilot was in Gartner's "Visionaries" quadrant for marketing resource management. But why, after more than 10 years in business, did the company have only about 200 customers (with about 90% using the online, hosted version of the software)? Tatarinov acknowledged that the company's technology and vision were better than its market execution, but Microsoft, he said, will turn that around.
"We're going to do a lot of MarketingPilot, and it represents the foundation for marketing in Microsoft Dynamics CRM," he said.
Microsoft released a new version of MarketingPilot at Convergence with more of a look and feel of a Dynamics product, but it has only been five months since the acquisition, so the deepest integrations to Dynamics CRM -- extending into shared workflows, security and authentication -- have yet to be built.
Couple Dynamics with strong SQL Server, SharePoint and Office365 results, and Microsoft's progress in the enterprise market is apparent. It has yet to be seen whether the company's foibles, fits and starts in the consumer mobile, tablet and operating system markets will blunt that momentum.