Doug HenschenExecutive Editor, InformationWeek
Executive Editor, InformationWeek
Microsoft Gains Enterprise Clout With ERP, CRM
A decade ago Microsoft was dominant in consumer computing and it was building up credibility in the enterprise market. Now it seems Microsoft's biggest strength is in the enterprise market while its sway over consumers is waning.
Fresh evidence of Microsoft's enterprise strength was on display at this week's Convergence Conference in New Orleans, where more than 11,000 gathered to hear about the latest on Dynamics CRM and Dynamics ERP. Dynamics CRM sales grew more than 30% in the most recent quarter (a 39th consecutive quarter of double-digit growth) and the product surpassed 39,000 customers and 3 million users (counting on-premises and cloud-based deployments), according to Microsoft.
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The company trails SAP, Salesforce.com and Oracle in the overall CRM market, but Dynamics CRM Online is second to Salesforce.com in cloud CRM. In ERP, where Microsoft trails SAP, Oracle and Infor, sales of the flagship Dynamics AX ERP app are also growing at a double-digit clip and surpassed 18,000 customers last quarter.
[ Want more on the tie between marketing and CRM? Read Why CMO Tech Spending Is Good For IT. ]
More impressive than the numbers shared at Convergence were key customer spotlights. Revlon, for example, is using Dynamics AX to consolidate and replace 21 ERP systems, while Dell is using AX to replace a legacy manufacturing system that supported more than 30 highly customized manufacturing applications. In both cases the savings are in the tens of millions of dollars.
Revlon and Dell are the tip of the iceberg when it comes to consolidation, according to Microsoft. The sweet spot of that trend is among midrange companies with $100 million to $5 billion in revenue, according to Microsoft Business Solutions president Kirill Tatarinov.
"In this range we typically find huge interest in eliminating ERP soup and getting to one elegant, modern system," Tatarinov told InformationWeek in an interview at Convergence. The "soup" in question is a mix of home-grown ERP apps, top-three (SAP/Oracle/Infor) apps and lesser-known legacy ERP systems that tend to be dated and expensive to maintain.
Above that $5 billion (Global 2000) threshold, companies typically already have a core ERP system in place, and they have little appetite to replace it because they've spent millions of dollars getting it to work, Tatarinov said. Dell, for example, is a $62 billion manufacturer that's sticking with Oracle E-Business Suite as its core ERP system, but it's replacing an unnamed legacy manufacturing resource planning (MRP) system with Dynamics AX. (MRP is a component of ERP.)
Revlon, the well-known cosmetics maker, had "one of everything" among the 21 ERP systems the company had in use globally, according to CIO David Giambruno. That included four systems in the U.S. alone, but no one system was dominant, Giambruno told InformationWeek at Convergence.
It's hard to say precisely how much Revlon will save just on app consolidation, Giambruno said, because the project is still underway and followed a massive infrastructure upgrade and master data management project launched five years ago. That effort consolidated all data (and will eventually consolidate all apps) onto to a global, private-cloud infrastructure. Revlon has thus far documented more than $70 million in annual cost avoidance and savings from the total project, Giambruno said.
A Dell spokesperson was not available at Convergence, but Microsoft executives discussed the deployment in detail, even reporting that Dell is saving some $50 million per year by eliminating 30-plus custom apps that were time-consuming and costly to maintain.