The future of Dynamics in a Nadella-led Microsoft
"Customers at the larger end of the spectrum want some direct Microsoft involvement," Scavo said. But on the product front, Microsoft will have to fill out Dynamics' functionality for HCM (human capital management), SCM (supply chain management) and other areas, he added. The faster they do so, the more easily they can beat out the likes of Oracle and SAP in enterprise deals.
Shopping trips: Nadella's arrival could see Microsoft make additional acquisitions for Dynamics, said China Martens, an independent analyst covering the enterprise applications market.
Dynamics CRM has benefited from the purchases of MarketingPilot, NetBreeze and Parature, but it's an open question whether Microsoft will make more deals, both for CRM and ERP.
Multibillion dollar acquisitions to build out Dynamics ERP seem less likely given Microsoft's propensity to pick up functionality built by partners that is already integrated with a Dynamics application. One example of this came last year, when Microsoft bought some supply-chain modules from Blue Horseshoe.
But a "more substantial investment," particularly in HCM, may not be off the table, according to Martens. Available vendors in this area include Ultimate Software and Cornerstone on Demand.
Getting crowded in the cloud: Microsoft has made some steps to put the Dynamics ERP products on Azure, but it's not clear when all four applications will be available for deployments there. It needs to move faster, because cloud-based competing offerings such as Plex Systems and NetSuite won't wait, according to Scavo. "Eventually these cloud players are going to have more fully functional manufacturing which right now is Dynamics' bread and butter," he said. "They have a little bit of time but that window is closing."
Microsoft could make other moves as well, such as a tightly integrated suite composed of Dynamics AX and Dynamics CRM Online, Martens said. This could give it an additional edge over Salesforce.com, since the latter relies on partners for ERP applications.
"Another issue is how to deal with ERP rivals' focus on further verticalizing their apps," Martens added. "It's a tricky path for Microsoft as it aims to offer customers some of its own industry specificity in financial services, manufacturing, professional services, public sector, and retail while not venturing too deep into its Dynamics partners' vertical turf."
One Microsoft: Nadella has inherited former CEO Steve Ballmer's "One Microsoft" strategy, which was rolled out last year. The plan's goal is to get Microsoft's many disparate divisions and products working together as a more cohesive whole, down to the engineering level.
There was already a stated intent from Microsoft to integrate Dynamics with products such as Yammer and Skype, but much more could be possible if the One Microsoft plan comes to fruition.
With Nadella on board, hopefully Dynamics will have more consideration during the planning process for new products that could be beneficial to it, "versus later on when the product's fully baked," Vukovits said.
Chris Kanaracus covers enterprise software and general technology breaking news for The IDG News Service. Chris' email address is Chris_Kanaracus@idg.com
- Microsoft launches toolset for capturing 'ambient intelligence'
- Microsoft kicks off sales of lower-priced Office subscription in bid for iPad dollars
- At Build, mobility gets a boost with universal Windows apps
- Microsoft gets strategic with its Enterprise Mobility Suite
- Microsoft sketches out final Windows XP security updates for next week
- Microsoft teases touch-first Office for Windows
- Cortana's voice is synthesized in part from an AI character in Halo
- Hell freezes over: Microsoft makes Windows free for some devices
- Windows Phone 8.1 confirmed, with Cortana digital assistant
- Ex-Microsoft employee pleads guilty to trade secret theft
- Whitepaper: The Continuous Innovation Advantage of SaaS This report defines the next generation system of record, outlining the changes and challenges with current technology and how continuous innovation has become...
- Forrester Report: The ROI of Software as a Service Read Forrester's review of 11 vendors in SaaS enterprise resource planning (ERP), customer relationship management (CRM), and supply chain management (SCM).
- Whitepaper: Redefining Enterprise Software Whitepaper In this whitepaper you will learn what changes are impacting business and human capital management today and how the HR department and its...
- Modernize Your Business with Oracle ERP Cloud This eBook explores the core components of a cloud-based ERP solution that delivers enterprise-class software without sacrificing functionality or changes to business processes...
- Cloud Knowledge Vault Learn how your organization can benefit from the scalability, flexibility, and performance that the cloud offers through the short videos and other resources...
- LIVE EVENT: 5/7, The End of Data Protection As We Know It. Introducing a Next Generation Data Protection Architecture. Traditional backup is going away, but where does this leave end-users? All ERP White Papers | Webcasts