Microsoft Dynamics AX Positioned in the Leaders Quadrant of the Magic Quadrant for Midmarket and Tier 2-Oriented ERP for Product-Centric Companies

Editor’s note – July 1, 2009 –
references to the Gartner Magic Quadrant were updated post publication.

REDMOND, Wash., June 11, 2009 — Analyst firm Gartner Inc. has positioned Microsoft Dynamics AX 2009 in the Leaders quadrant of the Magic Quadrant for Midmarket and Tier 2-Oriented ERP for Product-Centric Companies. The report addresses the enterprise resource planning (ERP) needs of product-centric companies or divisions of enterprises that have between 100 and 999 employees and annual revenue between US$50 million and US$1 billion, and is based on a research model that ranks IT products based on the vendor’s “completeness of vision and ability to execute.”

Crispin Read, general manager, Microsoft Dynamics ERP.

Microsoft Dynamics ERP products offer financial management, supply chain management (SCM), customer relationship management (CRM) and business analytics tools.

PressPass spoke with Crispin Read, general manager, Microsoft Dynamics ERP, who joined the company in December 2008, to learn more about Microsoft’s ERP strategy.

PressPass: What do you see as the key differentiators of Microsoft Dynamics AX?

Read: If you look at the overall market and evaluate the level of innovation that vendors in this market are currently able to deliver, Microsoft is certainly in a distinctive position. Our position is based on innovation in our products and the ultimate value we bring to our customers.

For example, our RoleTailored design approach allows for flexibility and customization. We also offer integrated business intelligence tools and simplified compliance capabilities. Since our solutions are flexible and can be easily melded to align with changing business processes, they offer a rapid return on investment and a more attractive cost of ownership than many alternative solutions.

Flow Corp. is expecting a $5 million savings over five years with Microsoft Dynamics AX compared with JD Edwards EnterpriseOne. In today’s economy, cost savings of that magnitude can have a tremendous impact. It is crucial to business success.

PressPass: What are your impressions of the Microsoft Dynamics ERP business since joining Microsoft in December?

Read: Since moving into this position, I’ve been tremendously impressed by several aspects of the business. First, the products are incredibly compelling. Before joining the Microsoft Dynamics ERP team, I had never witnessed so much thought, research and engineering effort being invested in understanding user experience and how that drives adoption, enables users to be more productive in their jobs and drives cost out of an organization.

The unmatched level of flexibility that these applications offer to companies, compared with other ERP solutions that I’ve seen over the years, has also made a strong impression. With Microsoft’s ERP solutions, companies can easily, inexpensively and continually change their processes to correspond with evolving business needs.

In addition, the rich Microsoft Dynamics partner ecosystem is unique in this industry. The strong partner community has become an integral part of the Microsoft Dynamics business with thousands of partners that range from well-known system integrators down to niche companies that serves the needs of a particular microvertical.

There is a palpable sense of connectedness between the customers, partners and suppliers that forms the core of the Microsoft Dynamics business.

PressPass: How do you view the current state of the ERP market?

Read: Beyond Microsoft, there are two main categories of ERP vendors. First, there are very small companies that have been acquired over the years and assembled into entities with a financial focus, closely resembling an investment banking mindset. These vendors are quite adept at generating revenue and pre-tax profit for themselves, but I’m concerned about their customers.

With uncertain product road maps and modest R&D investments often spread over dozens of products, I worry that customers using these “zombie ERP” solutions won’t have access to the innovation they need to drive their business to the next level. Not only will it be difficult for them to survive the rough economy, but it will be even more challenging for them to capture new opportunities when the economy turns around.

Second, there are large companies that offer ERP solutions, many of which are prohibitively expensive to run and difficult to modify and maintain. These inflexible solutions are often running on outdated hardware and software infrastructure. It saddens me to see companies wasting so much money on outdated ERP products. It is especially disturbing when the vendors act like pirates, hiking software maintenance fees, ignoring the current situation where the economy isn’t particularly strong and customers are already under crippling pressure to keep costs down.

Having said that, I am confident that Microsoft can help companies get through today’s tough economy and emerge stronger and more competitive. Microsoft cares deeply about providing value to end customers and partners. In keeping with that guiding principle, we are not viewing the economic downturn as a convenient moment to increase prices and generate new profit channels, but as an opportunity to hone our focus on our customers and offer them tangible and rapid returns on investment.

PressPass: Are you doing anything to help ease the burden on your customers during these tough economic times?

Read: Yes. For example, the zero-percent-financing program that we implemented earlier in the year met with great success. We followed that up with the Business Ready Flexible Pay offer, announced in late April, as a means to give customers the ability to spread their payments into equal installments over three years without the burden of a financing process.

Also, we recently announced a competitive offering to help customers who may not be receiving the level of innovation or value that they expect from their current vendor move to Microsoft ERP products. Starting this month, select partners can offer financial incentives, including discounts on licensing, to customers looking to move to a Microsoft Dynamics ERP solution.

These financial offerings will facilitate the transition from old and expensive ERP systems such as Sage MAS 90 or MAS 200 or Oracle’s JD Edwards EnterpriseOne to a Microsoft Dynamics ERP solution. Our goal is for customers to experience the benefits of a modern platform without having to absorb the short-term transition costs, giving them an even faster time to value.

PressPass: What can customers expect from Microsoft’s ERP products over the coming months and years?

Read: If you look at our overall business, you will see that Microsoft spends a considerable part of its revenue across the board on research and development. The Microsoft Dynamics business is no exception to that company-wide rule, and the resulting innovation has been recognized in this Magic Quadrant. I expect the innovation to continue.

In addition to the work that we are doing in software plus services, our products will become easier to deploy and use. We will further strengthen our application capabilities and deliver an increasingly powerful application platform that our partners can use to extend our applications into numerous vertical industries.

Over the next two years, customers also can anticipate a series of major new ERP releases, accompanied by regular incremental upgrades such as service packs that fine-tune existing products and make them even more efficient.

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