Microsoft Dynamics 365 – A Cloud Bundle to Keep an Eye On

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Microsoft certainly didn’t wait long to start their new fiscal year off with a bang.  And by “bang” I mean creating a “solution” that will continue to push its customer base into the cloud and further entrench Microsoft within organizations for the foreseeable future.

Less than one week after the close of Microsoft’s fiscal 2016 and five years after launching Office 365, Microsoft announced the upcoming arrival of Microsoft Dynamics 365.  Dynamics 365 aligns perfectly with CEO, Satya Nadella’s very public mission to make Microsoft a pure cloud company and platform.

Microsoft Dynamics 365 will be available starting in the fall and will combine Microsoft’s Dynamics CRM and ERP offerings into one cloud bundle.   According to a July 6th blog post on Microsoft’s website, the cloud bundle will include “new purpose-built apps” to help manage specific business functions, including: financials, field service, sales, operations, marketing, project service automation, and customer service.

There will be two Dynamics 365 options available to the market.  There will be a “Business” option geared towards small and midsize businesses and an “Enterprise” option designed for larger organizations.  In addition, Microsoft has indicated that customers will be able to purchase only the components (i.e. business applications) of the bundle that they actually need.  Having worked on many cloud based deals, this seems almost too good to be true and thus I will withhold judgment until I see the specific contractual language.

Beyond the two options and flexibility to purchase what is actually needed, Microsoft has indicated that there will also be two ways to license Dynamics 365.  Customers will have the ability to license by application or by personalized role.  Corporate Vice President for Microsoft Dynamics CRM, Jujhar Singh, has stated that the role-based approach will “give customers the flexibility they need to support modern, more agile, more diverse employee roles – enabling them to access functionality across all applications with Dynamics 365.”  Specific details, including pricing, have yet to be released and will be important to assess.

Presumptively, the “365” within the name comes from the fact that Microsoft wants it to be immediately known that there will be a deep integration with their Office 365 solution.  Dynamics 365 use of a common data model with Office 365 will simplify data management and integration across the applications and business processes.  Takeshi Numoto, Corporate Vice President, Microsoft Cloud + Enterprise; stated this integration will “connect the structured workflow of business apps with the unstructured work of collaboration and productivity.”

Microsoft has spent a significant amount of time, energy and dollars convincing their customer base to adopt their online Office solution.  In many instances, we have seen Microsoft provide additional discounting beyond the standard volume discount to push pen to paper and get organizations over the hurdle of moving to their cloud solution.  Given Microsoft’s success in getting organizations to adopt their Office 365 offering, it only makes sense that they would now shift their attention to getting these very same organizations to adopt their cloud based ERP and CRM solutions, and why not make or entice them to do it all at once through a cloud bundle such as Dynamics 365.

Microsoft is clearly executing to a plan that includes piggy-backing off the success of Office 365 to improve Microsoft’s business applications sales.  Microsoft’s market share in both the ERP and CRM business application space are currently lagging.  Further, Microsoft views business applications as a huge market that is highly fragmented.  Numoto stated that Microsoft has a “huge opportunity to bring this together for the marketplace.”  By bringing this together through Dynamics 365, Microsoft is hoping to be more competitive against the likes of SAP, Oracle and Salesforce by differentiating themselves with the ultimate goal of grabbing more market share.

In order to further motivate organizations to give Microsoft’s cloud bundle a chance; Microsoft announced Power BI and Cortana Intelligence will be natively embedded.   Microsoft is well aware of the fact that organizations are placing a significant amount of importance on bettering their abilities in predictive analytics.  Numoto pointed out that having Power BI and Cortana Intelligence natively embedded will “help customers achieve their business goals with predictive insights, prescriptive advice and actionable next steps.”  Microsoft is positioning itself to ride the wave of IoT and its ability to provide organizations the ability to make business decisions off direct inputs.

Given the fact that Dynamics 365 is not due to arrive until the fall, there is time to further understand and flush out some important details.  One such detail would be figuring out what Microsoft Dynamics 365 means for the customers that have already adopted Microsoft Dynamics CRM and/or ERP products (on-premise and cloud versions).   At this time, it seems Microsoft is not intending Dynamics 365 to replace any of the existing products but rather it will serve as a complement to the existing Dynamics CRM and ERP solutions.   Microsoft plans to continue to support Dynamics CRM, Dynamics AX, NAV, GP and SL solutions and will offer customers connectors should they wish to operate under a hybrid model.   Microsoft has also mentioned there will be a migration path when customers are ready to make the move to the cloud.   Based on this, it will be important to challenge your Microsoft representative to identify a window of time in which Microsoft will be willing to support.  It will also be important to ascertain what exactly the envisioned migration path would entail.  Would it come at a cost?

With regard to the customers that are current utilizing Dynamics CRM Online or cloud versions of Dynamics NAV, GP and AX it will be very important to understand two things from Microsoft.

  1. Does Microsoft intend to force a move to the bundle (especially if the customer is only utilizing CRM or ERP) or will the customer be given a choice.
  1. What will the financial implications be should the choice be made to move to Dynamics 365 (i.e. will there be a credit involved for current customers that are willing to move mid-term?). Singh has stated such customers will enjoy a seamless transition but it will be important to better understand just how enjoyable such transition will be and if it is going to be required.

Another important question that comes to mind, is whether or not this is simply a repackaging event under the guise of a new product release.  There are already assertions being made that Dynamics 365 will mostly be a repackaging and re-architecting of the capabilities of Dynamics CRM, Dynamics ERP (i.e. AX) and Project Madeira.  This is something your Microsoft representative needs to fully explain as part of any pitch they look to make in the near future.  If it is a repackaging more than anything else, what benefits or solutions are ultimately being provided through the new cloud bundle and at what cost?

There are certainly many unknowns at this point and certainly a good amount of questions that need to be addressed.  Given this, we will be keeping a close eye on any upcoming Microsoft developments and announcements as they relate to Dynamics 365.  Be sure to come back to our blog as we will be reporting out as we learn more.

We would also be interested in hearing your perspective and thoughts and/or concerns regarding Microsoft’s continued push to the cloud and the potential implications it may have on your business.  Please do not hesitate to comment below or send me an email at amansfield@upperedge.com.

This blog was originally posted on the UpperEdge website, found here:

http://www.upperedge.com/2016/07/microsoft-dynamics-365-a-cloud-bundle-to-keep-an-eye-on/

Adam Mansfield

Trusted advisor to Fortune 500 executives. Expert in negotiating and drafting best-in-class agreements: - Software (ERP, CRM, WMS, HCM, SCM; PLM); - IT services (Implementation, AMS, Hosting); - Cloud computing (SaaS, IaaS, PaaS); and - Outsourcing - Data Center Deep experience in: - Vendor evaluation and selection methodologies; - Sourcing strategies; - Procurement processes and procedures; - Vendor management; - Contract negotiation; - RFP creation and proposal review; - Pricing analysis and modeling; - Mitigating risk and cost exposure; - Benchmarking; and - Intellectual property, business and contract law

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