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You probably saw the release of Panorama Consulting’s ERP market share report for 2017. The Panorama finding that made the biggest splash in industry publications was that Microsoft Dynamics bypassed Oracle to get to the #2 spot with 19 percent of market share for ERP, right behind SAP, which still leads with 21 percent. Infor takes fourth place.
The Panorama report and many of the articles echoing it don’t make a distinction between Microsoft Dynamics 365 – ERP and CRM capabilities on the Azure cloud – and Microsoft Dynamics, the product family that also includes the on-premise ERP systems Microsoft Dynamics AX, NAV, and GP. Also, Microsoft Dynamics 365 reached the broader market right in the middle of the period covered by the Panorama report (October 2015 to November 2016); the results might have been quite different if it would have been available the entire time.
Dynamics in the Enterprise
Microsoft has steadily evolved its ERP solutions, especially Microsoft Dynamics AX, into the enterprise realm. Years ago, they made a successful play for Dynamics AX coexisting with SAP and other large, traditional ERP systems in a “hub-and-spoke” architecture, which you can still find in some companies.
Since then, the competition has become more direct. With Microsoft Dynamics AX 2012 and its rounds of upgrades, the solution has reached a new level of scalability and functionality. And, of course, that is just the starting point for Microsoft Dynamics 365 Enterprise Edition.
It’s worth noting that Microsoft Dynamics is doing so well, given that Oracle goes to market with a much larger direct-sales organization and an extended product family. SAP hangs on to its top position at an elevated cost of sales compared to Dynamics 365.
Costs and Project Durations Become More Realistic
We should note that a tiny handful of poorly managed projects can very much skewer a survey-based report like Panorama’s, and their findings on project costs and durations need to be understood in context.
Panorama finds that all leading ERP vendors have a higher implementation time than expected, and, except for Infor, this has also increased. The implementation times mentioned range above two years, which is much higher than most of the projects Sikich completes – they take about half that time. We see that implementation times depend on solution fit, the expertise of the implementing partner, the client’s planning and commitment, and other factors that don’t always directly relate directly to the ERP system being deployed.
It’s similar for project costs, which Panorama equates with total cost of ownership (TCO). What we find, even for complex Dynamics AX deployments, is closer to half of the $2.06 million average noted for Microsoft Dynamics. We use our expertise and proven methodologies and tools like Sure Step and Lifecycle Services to keep project costs down. We expect that deployment costs for Microsoft Dynamics will significantly decrease with the smooth cloud implementations already underway for Dynamics 365.
Minimal Disruption and Rapid Road to Benefits
Microsoft Dynamics 365 as well as the on-premise Dynamics ERP systems can easily connect to Office 365, Exchange Server, traditional Office client software, Power BI, and so many other Microsoft products – generally within a consistent, familiar user experience. This is likely to be a main reason that Dynamics customers achieve their hoped-for business benefits sooner than other companies, and that two of the key benefits noted in the report, “availability of information” and “improved productivity and efficiency” come naturally to them.
Dynamics implementations result in only minor and short-term business disruptions, a strong contrast with SAP, Oracle, and Infor. According to Panorama, Dynamics projects did not cause anything like the competitors’ disruptive interference, which for many businesses can take between two to three months or even longer. The disruption period for 55 percent of the Dynamics customers was one week or less. I believe this connects directly to the ease of use and familiarity of the Microsoft Dynamics solutions and their interfaces. User adoption comes easier and sooner for Dynamics, as we often observe in the companies we work with.
Panorama states that 26 percent of the companies surveyed accomplished more than 50 percent of the benefits they hoped for. That is better than what Oracle and Infor customers manage. But if you also consider that Dynamics customers get there faster, generating value in less time and at a lower cost, you gain a different perspective on SAP’s #1 position.
In its experience and project performance, Sikich reflects the Microsoft approach. We are experts in the Dynamics ERP systems, and we also have a wealth of experience in the Azure cloud, Office 365, SharePoint, Dynamics CRM, and other technologies, deployed in integration with each other or on their own.
“Customization” in Dynamics is Nowhere Near as Challenging as Elsewhere
It’s interesting to see that none of the Microsoft Dynamics customers Panorama spoke to have “complete” or “extreme” customizations, but more than 50 percent have “some.” In Dynamics, customization means something quite different than it does in SAP, Oracle, or Infor. You have a much easier time bridging your last functionality gaps by means of configurable extensions than in other environments.
Even in Dynamics AX, users can “customize,” or rather, configure, their screens, and you can add fields, build dashboards, and implement extensions without writing code. This is not what happens when companies use SAP, Oracle, Infor, and other ERP products, where most customizations require more advanced expertise in coding and configurations.
2018 Preview: Dynamics Costs and Project Times Continue to Go Down, Savings Increase
Panorama notes that 100 percent of the Dynamics customers achieve cost savings in the cloud, and that 60 percent of the Dynamics deployments are in the cloud while 40 percent take place on-premise. (It appears that hybrid cloud is not a category Panorama considered.)
I expect those numbers will be different when Panorama publishes the next iteration of its report. As mentioned, Dynamics 365, a pure cloud technology, did not even get to market until around the middle of the survey period. We will see many more cloud ERP deployments by Dynamics customers. And, while you can’t have more than 100 percent of them saving costs, they are likely to generate larger and more sustainable cost reductions than they do today.
Many customers I know are still running on Microsoft Dynamics AX 2009. Instead of upgrading to AX 2012, more and more of them anticipate a transition to Microsoft Dynamics 365. As Microsoft streamlines the upgrade path and partners help customers ease their way with great efficiency, cloud-related savings for Dynamics customers will balloon, while Dynamics implementation times and costs will diminish further.
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