The dynamics of business efficiency

2 Apr 2007

Few could watch the frenetic corporate activity of recent years that saw players like Oracle snap up companies like JD Edwards and Siebel and not realise how critically important the enterprise software space is.

However, when you talk about enterprise software players it is usually companies like Oracle, SAP or Siebel that strike a cord. Rarely do people associate burgeoning market spaces like enterprise resource planning (ERP) and customer relationship management (CRM) with Microsoft.

Certainly Microsoft, as one of the biggest software companies in the world, resonates on issues like operating systems and office productivity suites, especially with the recent launch of Vista and Office 2007 fresh in most people’s minds.

Few, however, are aware that it is about to launch a fresh attack on the enterprise software space. Since 2001, Microsoft has been executing a deliberate strategy to build up critical mass in this space. This began in 2001 with the acquisition of CRM player Great Plains Software, followed by the 2004 acquisition of Navision.

Microsoft set about incorporating these new additions into its Dynamics set of products which address the worlds of finance, manufacturing, CRM, supply chain management, analytics and e-commerce in small and medium-sized enterprises (SMEs).

Since then the Dynamics division has been growing sales at a rate of 25pc a year and by the end of 2006 was a US$1bn global business.

“The Dynamics set of products are all about improving efficiency and breaking down barriers in organisations,” explained Conor Wickham, Dynamics manager at Microsoft Ireland.

“Microsoft bought these companies because of the strength of the underlying software, the code and the flexibility to customise the system. Companies with employees in the range of 50 and upwards would be prime targets for the Dynamics set of products.

“Businesses want technology that helps them to scale out as they grow, whether it’s an expansion or move to new offices,” Wickham said.

Wickham said that Microsoft’s decision to enter the enterprise software market was motivated by obvious weaknesses that dogged the sector. “We conducted a huge amount of research prior to investing in the area and found that less than 30pc of business managers were happy with their ERP implementations. Of those people that the systems were designed to support, only a small percentage used it.”

Asked what Microsoft could do that would be different, Wickham said: “Our strategy is to look at employees in companies who are the people that need the information most. ERP is chiefly about making information available. It enables strategic decisions to be made about a business in the correct way. For example, a financial director of a firm may want to see the information presented in one way but the company accountant would have a different view of the business.”

Companies in Ireland that are already using Microsoft Dynamics products include Eircom, Dale Farm, PalletXpress and Tiles R Us.

“ERP, as Microsoft sees it, is about presenting information in a way that is relevant to a person’s business role and giving them the information they need to make stronger decisions.”

The latest arrival to the Dynamics family is Nav 5.0, which Wickham said would work well in organisations that are keen to scale up their business.

“A key advantage of these technologies is their ability to integrate with other Microsoft products such as Outlook and Office. This has the added benefit of reducing the learning curve. Somebody that uses these products would adapt quickly.

“The other advantage is that a large number of people across a company can use ERP, rather than a few individuals. Finally, ERP is more applicable to people across a company covering a wide area of applications and bringing added flexibility to the business in everything from manufacturing and ordering through transport and delivery.”

A key aspect to the use of enterprise technologies like ERP, he said, was the ability to be able to access applications remotely over the internet. “All businesses are different: a drinks distribution company would have different priorities compared to an electronics component firm. When we look at these companies, the offering can be tailored to suit their specific needs and requirements.”

Wickham said that there is a trend towards greater alignment between Dynamics and the rest of the Microsoft business. “This is where Vista and Office 20007 will come to bear. All our products will link and operate efficiently.

“Users in a business can explore customer records and have greater visibility of everybody’s role in the organisation and boost efficiency.”

Wickham added that Microsoft is building itself up to become a serious contender in the ERP/CRM space. “The market for ERP is growing at between 5pc and 7pc a year. Microsoft Dynamics is growing at 30pc a year, so we’re outpacing the market’s growth.

“We’ve worked hard on these products and have developed a really strong understanding of the enterprise software market,” Wickham said.

Pictured – Conor Wickham, Dynamics manager at Microsoft Ireland