Foley on Microsoft

(Not) Keeping Up with the Dynamics 365s

If Microsoft makes a bunch of updates to its Dynamics business but nobody is around to communicate it, does it make a sound?

• By Mary Jo Foley
• 04/25/2018

Given that my full-time day job is to follow and write about all things Microsoft-related, I feel like I have a decent understanding of most of Microsoft's products and strategies.

However, there's one area where I am continually struggling to keep up and stay current -- the Dynamics product family. And it's not for lack of trying.

Dynamics is still a relatively small but important part of Microsoft's overall business. It's part of the company's vaunted "commercial cloud" that's on a more than $20 billion per year run rate. It's one of the primary places where Microsoft is hoping to integrate and leverage its LinkedIn acquisition. And it's definitely on CEO Satya Nadella's radar screen.

Despite all that, Microsoft's Dynamics ERP/CRM portfolio and plans are in a constant state of flux and have been for the past couple of years. As soon as the company almost fills in its roadmap, it changes direction with very little (if any) heads up to partners, customers and press.

If I were to guess, I'd say Microsoft doesn't see this as a problem. I think the conscious strategy decision with Dynamics is to keep all product-related discussion at a high "decision-maker" level and assume that specifics like features, SKUs, licensing and naming are beneath its core audience. Digital transformation talk is O.K., but product detail discussions are not.

Since its original public debut in July 2016, Dynamics 365 -- the cloudified and reconfigured bundle of various Dynamics CRM and ERP modules -- has changed and changed again. Making things even more confusing, Microsoft is doing its best to try to get us all to stop using the CRM and ERP monikers in describing these modules.

Earlier this year, I had a chance to speak with Mike Ehrenberg, the Microsoft Technical Fellow who also is the chief technical officer of the Dynamics business, to try to make a little more sense of what's going on.

Ehrenberg acknowledged that things have been moving quickly and there's been lots of change. He said Microsoft found that showing up with giant, pre-configured suites of CRM and ERP products didn't sell well with customers who often had at least some workloads already addressed by existing products.

Microsoft is trying to reach two very different market segments with Dynamics 365: the enterprise and SMBs. However, last year, it did away with this classification, claiming that any size customer could buy into its set of services and software. Nevertheless, some of its products, such as the recently introduced Business Central service built on top of the Dynamics NAV ERP platform, as well as its new Dynamics 365 for Marketing offering, are still very much targeted at SMBs. (And don't even get started about the Dynamics 365 for Marketing licensing model; it's a mess, as Microsoft Dynamics 365 MVP Steve Mordue noted when he did the math.)

Ehrenberg's explanation: "As people look to modernize the business, everybody wants to start in a different place. For some, it's operations. For others, it's the way they engage with customers. And for others, it's how they bring talent on board."

(Microsoft's latest marketing slogan for Dynamics 365 is "end-to-end applications that work great on their own and even better together.")

"We want a value proposition for a buyer around marketing, sales, service, operations, finance, talent," Ehrenberg told me. "You should be able to jump in wherever it makes sense for your company. CMO, CFO, CPO, COO -- we wanted to let what we were doing be focused around how the buyer wants to buy. We are executing and organized that way."

At the same time, because many customers still aren't ready or able to just go all-in on cloud, Microsoft is focused on continuing to offer on-premises CRM and ERP products, even though its battle cry is cloud-first, Ehrenberg said.

After a couple of tumultuous years of announcements and strategy shifts, what's on tap for the rest of 2018 for Dynamics?

Unsurprisingly, given Microsoft's newest rallying cry (intelligent cloud/intelligent edge), Dynamics will be talking about cloud plus edge this year. This will be its hybrid play -- cloud deployment with edge caching. Customers could have Dynamics 365 with an edge node running on-premises in a specific country or for a specific task.

AI will be on the Dynamics menu, as well. Microsoft can show customers how to use machine learning for predictive cash forecasting, for example. Cortana integration is coming still. And integrating other Microsoft assets like Azure IoT and LinkedIn data where it makes sense also are on the agenda.

Here's hoping clarity and consistency are top of mind for Microsoft with Dynamics in the coming months, too.