Microsoft Business Solutions (MBS) is the fastest-growing, albeit the smallest, business in the software behemoth’s arsenal at $784 million.
Dynamic NAV, the re-branded Navision unveiled at Microsoft’s Convergence conference in Dallas this week, is one of the final pieces in the company’s MBS suite, which has been cobbled together from a series of acquisitions and homegrown solutions into a single business line.
The company has gained traction in this space, despite the profusion of brands and rationalization struggles.
“This has been our best year in terms of revenue, customer adds and new partners,” said Mogens Elsberg, general manager of the Dynamics NAV division of Microsoft.
Elsberg said he could not provide specific market share or dollar amounts, but added that NAV has gained share from competitors in the SMB applications market.
“We’re monitoring competitors and are taking market share. We’re also growing in each individual country,” he added.
Merrill Lynch analyst Kash Rangan confirmed the strong growth for MBS products.
“It had the fastest growth rate of Microsoft’s seven business, at 17.5 percent year-on-year,” he wrote in a research note.
Joe Wilcox, an analyst who follows Microsoft for JupiterResearch, added that the Redmond, Wash.-based company believes strongly in this category.
“They see greater opportunity, both for their partners and themselves, than even Office,” Wilcox told internetnews.com.
Dynamic NAV is sold in 42 countries, and has localized versions for each, meaning that not only is the language specific to a given country, but that the product is adapted to local legal and regulatory requirements.
Elsberg told internetnews.com that the company is gaining traction because it understands its customers better.
“We focused on developing a user experience specifically for each role,” he said.
Two years ago, Microsoft dove into 3,000 of its closest customers’ environments, studying in almost anthropological detail how various employees did their work.
The result of that effort can be seen in the role-based approach to Dynamics NAV.
For instance, NAV allows users to move between structured and unstructured environments seamlessly.
NAV also uses SharePoint, an interface that looks like a Web browser, so that companies, including those who might be resistant to using a traditional ERP application, can increase adoption of the tool throughout their organizations.
“They can expand to employees who would not normally use it,” said Elsberg.
“Role-based is typical of what Microsoft does,” noted Wilcox.
New features have been announced that embed functions tailored for some 50 different generic employee roles.
In addition to improved business intelligence functions, Microsoft announced a new tool to help its partners bring Dynamic NAV to market more quickly.
Dynamic NAV is sold through 2,700 vertical partners, and Microsoft has created a new productivity tool for them, called Rapid Implementation Methodology (RIM).
According to Elsberg, Microsoft’s NAV partners are more like business consultants than computer science experts, which is why Microsoft has designed RIM as a simple development environment for them to work in.
“They’re more concerned with what [the customer] wants to do than how to engineer it,” he said.
Since partners work within business verticals, implementation projects tend to be very similar. RIM thus provides partners with tools allowing them to store and repeat 90 percent of their implementation procedures.
“Then the last 10 percent has to be specific to the individual customer,” said Elsberg.
In addition to helping partners store repetitive processes, it helps them retain knowledge when individual consultants walk out the door.
“RIM lets our partners document intellectual knowledge and also get new consultants up to speed faster,” said Elsberg.
Malcolm Roach, president of Open Door Technology, a Microsoft partner, said that RIM allowed his company to install 11 separate NAV solutions in just one month.
“Prior to RIM, it normally took two to three months per installation and we would never have been able to do so many at once,” Roach said in a statement.
Elsberg noted that Dynamic NAV is targeting the SMB market, and that Microsoft is not taking aim at other ERP vendors.
“We don’t compete with SAP — that’s not our sweet spot,” said Elsberg.
But observers believe that once Microsoft gets its MBS product line sorted out, it will look at all market segments for growth. It has re-branded the various components of its MBS suite (Great Plains has become Dynamics GP, Exacta has become Dynamics AX, and Solomon has become Dynamics SL) and developed a coherent strategy around them.
In his research note, Rangan noted that, “Dynamics should enable Microsoft to compete more effectively with SAP and Oracle in the long run, both mid-market and enterprise accounts.”
Still, between getting Vista out the door (the underlying technology for which is also key to MBS), and rationalizing its product lines, Microsoft has its work cut out for it.
“Achieving interoperability across all of the MBS applications is proving to be challenging to say the least,” noted Eric Klein, an analyst with AMR Research.
