What's also impressive is how these capabilities sync up with the Dynamics' plan to harness a direct sales force and consulting team to take on the large enterprise market. This approach is absolutely essential for tackling that market. Without having some degree of direct responsibility for project success--either as a prime, or more likely, as a sub-contractor--Microsoft can't hope to compete in this space against SAP and Oracle.
With this direct sales-plus-services team now ramping up, Microsoft will have some great assets to bring to the large enterprise table: A portfolio of well-integrated products that support traditional ERP and DBMS functionality, as well as on-demand/SaaS CRM, mobility, cloud computing, new user experiences like full-motion gesture control (Kinect), integrated communications, collaboration, analytics, search and mapping, office productivity, and applications development. As many of these products are already market leaders in their respective domains, the new Dynamics direct sales and services team is starting from a definite position of strength.
Microsoft will soon become a factor in the large enterprise market in ways that could seriously realign it in coming years. And that's before we get to the consumer/enterprise bridge that Microsoft can now form.
This consumer/enterprise opportunity is one where the company has a distinct advantage. Only HP has an equally impressive position in both sides of this opportunity, now that it has chosen to keep the PC group in-house. Apple is coming in quickly on the heels of the iPad and iPhone, and Google, if it ever figures out how to deal with security and enterprise-class service, may one day break out of its consumerist focus and make a real play for the enterprise. But all the other erstwhile Microsoft competitors--IBM, Oracle, SAP, Salesforce.com, and many others--have no legitimate presence in the consumer side of the market.
This leaves Microsoft with a pretty big runway for dominating this convergence. Assuming it can keep up with a consumer tech market that's looking for Facebook-like social connectivity and Amazon-like simplicity, in an iPad-like user experience--and that's no small assumption, though Bing, Kinect, and Windows 8 should help. Assuming it can keep up, Microsoft could emerge as the essential marriage broker between the enterprise and the consumer in a way that will be the envy of the market.
For now, this position is aspirational, and it may take at least two years before we can judge how well the Dynamics direct sales effort is working and how well the synergies between the larger Microsoft portfolio are turned into products and brought to market. But in terms of potential energy, Microsoft Dynamics is an up and coming market leader.
Microsoft may have missed the goal of $10 billion in the first ten years, but I expect that it won't take anywhere near ten years for the company to reach that goal now. And that's not including what Dynamics should be able to do to boost the revenue of Microsoft's other business units. Playing the role of proving ground for new technology, particularly in the high-margin enterprise space, isn't just good for Dynamics, it's good for Microsoft, too.
Josh Greenbaum is principal of Enterprise Applications Consulting, a Berkeley, Calif., firm that consults with end-user companies and enterprise software vendors large and small. Clients have included Microsoft, Oracle, SAP and other firms that are sometimes analyzed in his columns. Write him at [email protected].