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Microsoft Finally Thinks Small(er) with Dynamics

"You wouldn't know a diamond if you held it in your hand."
-- Steely Dan, "Reelin' In the Years"

Have you ever really gotten into a TV show, or maybe even a movie, and just had a terrible sense of foreshadowing that the whole plot was about to go down in flames like the Philadelphia Eagles on Monday Night Football? (Sorry, we really tried to avoid the sports reference there, but your editor really enjoyed watching his Dallas Cowboys win that game. Look at it this way -- we've officially jinxed the Cowboys for the rest of the season. You're welcome.)

Anyway, you know what we're talking about here. It's the moment when your favorite show jumps the shark -- and we're very sorry for the tired, late '90s reference there, but if Microsoft can dredge up Jerry Seinfeld, we can get the ol' shark reference back out. Maybe an actor leaves, or a key writer quits, or -- worst of all -- a character gets pregnant, meaning a baby is on the way who will magically be seven years old the next season. It's just a sad, frustrating feeling, that sense of dreaded inevitability.

Well, that's the feeling a lot of folks have had for Microsoft regarding Dynamics, Redmond's enterprise software entry. There's just so much potential there, but Microsoft keeps messing with it -- not seeing, in the eyes of some, the diamond it holds in its bejeweled, exquisitely manicured hand.

First, Dynamics was going to be about simplicity, ease of use and, most importantly, cheapness -- if that's even a word. It was going to sweep into the enterprise resource planning market from the bottom up, giving hope to those mid-sized companies that trembled in the presence of monster ERP systems from SAP and Oracle (although, to be fair, both companies do have mid-market offerings of their own).

Then, somebody in Redmond -- keep in mind that the Dynamics leadership keeps changing -- got the notion that Microsoft could go up market with its ERP applications, and the big global systems integrators started sniffing around in territory where previously smaller partners had ruled. Right there, Microsoft began to approach the shark, as if to jump it; complicating Dynamics and jacking up its price tag would have killed much of its appeal and alienated its most potentially fertile market, mid-size businesses.

Well, according to RCP columnist, ERP guru and friend of RCPU Josh Greenbaum, folks in the Pacific Northwest have apparently come (back) to their senses and backed away from the shark again. Microsoft is taking Dynamics back down-market, where Redmond hopes that its massive partner army will crush the more direct-sales-oriented approaches of SAP and Oracle.

Greenbaum likes the move, and so do we -- especially from the partner perspective. The global SIs haven't completely disappeared, and goodness knows there was enough conflict in the Dynamics channel without them. But, with Microsoft mostly backing off of the Fortune 500 with Dynamics, at least smaller, regionally and vertically oriented partners will be back on the front lines of selling and customizing the applications -- and companies will have an attractive, simpler, lower-cost ERP alternative from a major (maybe the major) software vendor.

In other words, it's back to square one for Dynamics, strategically speaking -- back to the first season (to continue the TV metaphor) when the concept was unique, the writing was witty and the characters were engaging. Let's hope it stays that way.

What's your take on Microsoft's Dynamics strategy? Tell us at [email protected].

Posted by Lee Pender on September 17, 2008