Enterprise Software Realignment: Oracle Vs. Everyone
Ellison is talking Oracle into a corner with SAP, HP and IBM while ignoring Microsoft to his peril. Meanwhile, Philips may put Oracle in the middle of Infor's target.
What many, Larry obviously among them, don't realize is that Microsoft Dynamics, the former bastard stepchild of the Microsoft portfolio, is now becoming the poster child of innovation in Redmond. And Redmond is taking notice big time: hidden in the departure of Stephen Elop for Nokia was a significant upgrade for Dynamics: Kirill Tatarinov, the head of Dynamics, now reports directly to Steve Ballmer.
This is no accident, or, as one of my Microsoft contacts told me, "Ballmer is already busy; he doesn't need more direct reports."
The reason for Ballmer's direct interest in Dynamics is based on three newly discovered values for Microsoft's second-smallest division:
1. Dynamics product pull-through: Once, in the days before Jeff Raikes, there was serious talk about jettisoning Dynamics. Then Raikes figured out that Dynamics is a great driver of product pull-through. Today, every dollar of Dynamics generates from $3 to $9 in additional software sales for Microsoft. Now that's what I call a stack sale.
2. Dynamics' VARs and ISVs get the software & services = Azure strategy: It's clear that the value-add of Azure has to be about driving innovation into the enterprise, and that's not something the average Office or Windows developer really gets. But Dynamics partners live and breathe this concept every day, and Microsoft has been honing the high-value, enterprise-level capabilities of its Dynamics channel this year in a concerted effort to make them enterprise and Azure-ready.
3. Dynamics capabilities will drive much of the functionality in Azure: Dynamics CRM is already queued up to be the #1 app in Azure. Next stop, break up AX into components, and let the partners use them as building blocks for value-added apps. (And do so before SAP's Business ByDesign development kit starts stealing this opportunity.)
While SQL Server, Sharepoint, Communications Server, Windows Server, and other pieces of the stack will have a big play in Azure, the customer working in that innovative new Azure app will most likely be directly interfacing a piece of AX, or Dynamics CRM. That makes Dynamics essential to Azure, and vice versa.
What does the Microsoft factor mean in terms of the aforementioned realignment? Well, despite Ellison's public neglect, Microsoft is setting up a strong case for contending for a big chunk of the market. The case starts with the SME market, where Microsoft is traditionally strong. But the Azure/S&S/Dynamics strategy is heading straight for the large enterprise as well.
SAP's recent strategic definition of the opportunity for on-demand apps to deliver innovation to large enterprise customers locked into an on-premise world plays well for the Microsoft strategy as well.
This places Microsoft front and center in a battlefield where it is deploying 21st century technology against an Oracle that is fighting the battle as though this were still the 20th century. We've all seen this movie before: Black Hawk Down is just one version of the danger of deploying sexy but old technology in a battlefield that has evolved in the middle of the war.
With Microsoft starting to outflank it -- Microsoft's version of a stack is a warehouse full of interchangeable, plug and play container-sized data centers, with virtually no on-site maintenance needed -- Oracle is driving toward a focus on hardware that starts to look a little tired.