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The future of Dynamics in a Nadella-led Microsoft

More acquisitions, an increased cloud push and better connections to the rest of Microsoft's products may be on tap

By Chris Kanaracus, IDG News Service
February 06, 2014 02:06 PM ET
 
Satya Nadella (4)
Microsoft
Satya Nadella
 

IDG News Service - Microsoft's Dynamics ERP and CRM product lines seemed safe immediately following former CEO Steve Ballmer's sweeping reorganization of the company last year. But now that longtime Microsoft executive Satya Nadella has been named Ballmer's successor, the time is ripe for more focused speculation on the future of Dynamics. Here's a look at what could be in store.

He knows Dynamics well: Nadella served a stint in the Dynamics business from 2001-2007, so he has an intimate knowledge of the ERP applications and their user bases, as well as Dynamics CRM, which has made strides against the likes of Salesforce.com, thanks to factors including aggressive pricing and the option of cloud or on-premises deployments.

"It's not as if he's going to take a lot of time to come up to speed," said analyst Frank Scavo, managing partner of IT consulting firm Strativa. "I think Dynamics increases in stature at Microsoft under Nadella."

Nadella played a "fairly prominent role" at a Microsoft analyst event Scavo attended several months ago, taking part in a lengthy session that primarily focused on Dynamics and Microsoft's Azure cloud service, which Nadella oversaw before taking the CEO job, Scavo added.

Meanwhile, Nadella has said that to be a leader in enterprise cloud computing, a vendor must have "best-in-class first-party SaaS applications," running on its own cloud infrastructure.

All in all, Nadella will likely be a strong advocate for Dynamics as he settles into the CEO slot.

"We are very happy about Satya's appointment as CEO," a spokesperson for Dynamics said via email Thursday. "Microsoft Dynamics is on a strong growth path and is seeing great traction market. We are innovating at a rapid pace and are excited about what we plan to deliver to our customers in the upcoming months."

Customer enthusiasm: Customers are happy too. "We're extremely excited about it," said Frank Vukovits, co-founder and director of programming for the Dynamics AX User Group, regarding Nadella's appointment. In fact, Nadella spoke at the group's first summit meeting in 2005, Vukovits said. "He has always been a big supporter of the community and sees a lot of value in users and customers getting together and sharing their knowledge to allow them to do more with the product."

Nadella understands business applications and the needs of users that work with them, Vukovits added. "What would have made me nervous is if they brought someone in with a history focused just on sales and licensing, the volume side of the business, versus the need to truly embrace the business customer," he said.

Eyes on the enterprise: In order to substantially grow the Dynamics business, Microsoft will have to go after ERP deals with large enterprises. To that end, it's been building out its global services capabilities, even though traditionally Dynamics has mostly been sold through partners around the world, who tweak the software for customers' needs. Many have also built out industry-specific functionality for Dynamics.

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