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Microsoft Streamlines Dynamics Pricing

Microsoft has given its Dynamics line of business management solutions a badly needed overhaul to reduce the complexity of pricing and licensing.

Under the old model, the four different product lines of Microsoft Dynamics -- Dynamics AX, Dynamics GP, Dynamics NAV and Dynamics SL -- had a whopping 1,200 potential different price configurations, since pricing was determined on which modules a customer chose for their enterprise.

"That made it very confusing. If two Microsoft partners were competing for the same deal, it was hard to understand if you got a good deal or not," said Ray Wang, principal analyst for Forrester Research.

Gayle Hoshino, general manager for Microsoft business solutions, said part of the problem for Microsoft was the products came from four different companies with different pricing schemes. Dynamics GP came from Great Plains Software, acquired in 2001, Dynamics NAV from Navision A/S, acquired in 2002, Dynamics AX from Axapata, which was acquired by Navision before Microsoft bought it, and Dynamics SL from Solomon Software, a 2001 acquisition by Great Plains.

What Microsoft  has done with the Business Ready Licensing model and the Business Ready Enhancement Plan is essentially toss out the cost of the modules and simply bill for the per-user seat. Pricing used to be $2,100 per user and approximately the same amount for the modules; it varied since there were so many to choose from. Now, the fee is $2,250 per concurrent user with no fee for the modules.

Instead of hundreds of configurations, the company now has three offerings: Microsoft Dynamics Business Essentials, Microsoft Dynamics Advanced Management and Microsoft Dynamics Advanced Management Enterprise.

Hoshino dubs the three offerings as "good, better, best." Business Essentials is the "good" offering, with ERP offerings like GL, AP/AR, fixed assets, consolidations, sales orders, purchase order processing, basic inventory and some business intelligence.

The "better" offering is Advanced Management, which adds functionality such as project management and manufacturing, some CRM pieces as well as extended functionality around financials and supply chain management.

The "best" offering is Advanced Management Enterprise, which offers even more specific modules. It offers supply chain management, field service, configuration, manufacturing and development capabilities.

The new Enhancement Plan is aimed at both new and existing customers and is designed to keep them as Microsoft customers. It will be a global offering, something new for the Dynamics line. Features include unlimited online training, e-courses, courseware and training manuals and a clever set of software handcuffs called transition investment credit. The latter allows customers using any of the four Dynamics products to apply 100 percent of their Microsoft Dynamics license investment toward the move from one Microsoft Dynamics product to another, or to upgrade within a product family.

This overhaul is the next step in consolidating multiple acquisitions, said Wang. "After spending a year moving to a single brand for all four businesses, pricing was the next thing to keep in mind. They rectified this with the user base model and business ready model, which lets them streamline pricing across their four product lines," he said.

Product consolidation will be the inevitable result, and he believes the products will be as easy to use as Office applications. CRM  applications historically have not been known for their user-friendliness. "They are setting the standard for usability," said Wang. "Microsoft is treating this with an intensity we haven't seen it in a long time."



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