Microsoft's recent beefing up of its flagship ERP product, Dynamics AX, with deep vertical solutions signals a clear step up in its drive into the highly competitive enterprise resource planning market, says Microsoft SA's Tracey Newman.
Microsoft last month announced it had acquired four manufacturing, professional services and retail solutions as part of a drive to provide richer vertical solutions for customers in the manufacturing, professional services and retail sectors.
The solutions include:
* A process manufacturing solution acquired from Fullscope.
* A professional service solution acquired from Computer Generated Solutions.
* Retail solutions from LS Retail EHF and To-Increase Denmark A/S.
Newman said the primary reason for making these investments was straightforward: “It's exactly what our customers need today. The best way to extract optimal value from technology is to use solutions that have been designed with specific processes in mind - in other words, technology that is tailored for your industry and your needs,” she said.
“Mid-sized companies need proven industry solutions that can keep pace with the rate of innovation, and that's particularly relevant in the local market. While other ERP vendors go on spending sprees, our go-to-market strategy puts us in the fast lane to drive continuous innovation for our customers and partners,” said Newman.
The market for vertical solutions is a lucrative one. Analyst firm Forrester estimates that the global industry vertical applications market reached $36 billion dollars in 2008, nearly the same size as the ERP market itself.
Most Microsoft ERP customers in South Africa are mid-sized companies plus subsidiaries and divisions of global enterprises. These organisations typically have multiple sites and are looking for increased predictability, including standard business processes and best practices right out of the box, says Newman.
ERP buying behaviour has evolved significantly. The days when customers were willing to acquire horizontal ERP applications and customise them to meet their vertical requirements have largely passed. Customers today prefer to buy vertical solutions that meet their requirements with as little customisation as possible. Fashion retailers want to buy fashion retail solutions, law firms want law firm solutions, and pharmaceutical manufacturers want to buy pharmaceutical manufacturing solutions.
“We provide common industry functionality into one solution, while our partners provide the vertical solutions that serves needs of businesses,” said Newman. “This allows us to expedite the rate of innovation for our customers in the industries that are relevant to our customer base: manufacturing, professional services, distribution, retail, and public sector. Our partners are empowered to focus on the last mile of innovation, which has the greatest impact on a customer's business.”
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