Dynamics GP is not going away any time soon.

This is a response this article I saw on linked in last week. In this article Peter Joeckel was inspired to suggest that Microsoft's Dynamics 365 Business Edition means the death of Dynamics GP. To summarize my article below for those that are short of time, I believe Perter's arguments to be total bollocks, and GP will still be going strong in 10 years from now.

Peter, I read your article with interest, but I believe you are way off the mark this time around. Let me dig a little deeper as to how I came to this conclusion.

You say: After years of trying to kill off the Dynamics GP product line and partner channel mainly by neglect and focusing on other ERP and CRM product lines, the introduction of the Microsoft Dynamics 365 suite of products looks like another big nail in the coffin, if not the final stake through the heart.

Firstly, no one has attempted to kill off Dynamics GP. That is just nonsense. Dynamics GP customers represent one of the largest ERP customer bases globally. Firstly lets take a look at the $'s behind GP based on the published user numbers and do a little math. It has been reported by Microsoft, via powerpoint, that 48,000 companies use Dynamics GP. I am a realist and understand this may not be current paying customers – so let’s round it down to say 35,000 paying and renewing customers. Each of these customers pays roughly 18% of the original software price annually as a renewal. If we take an average software cost of $50,000 (and this number may be much higher as I have sold deals at $500,000 software) - the math’s come out at around $315,000,000 annually. No body, not even Microsoft kills off a business with $315mil in recurring revenue (and a very low cost to deliver and bank that cash).

Secondly, there is still a strong partner network selling Dynamics GP. These partners still sell many brand new GP deals every year. I know that at eOne we had another very strong year selling ISV products to these new customers. Why do partners sell a tool that ‘Microsoft is trying to kill’? Well it’s because GP is a really good ERP solution, deeply functional and very mature. In addition the implementation partners are excellent at what they do, and deliver great value with their consulting skillset. There is huge value proposition for a mid-market company to implement GP today with a good partner.

Third, I speak with GP partners every day and across the board they are recruiting people to join their teams to keep up with the demand from prospects and existing customers. So there is no nail, no coffin and stakes in the heart only kill vampires.

Fourth, you may have been drinking a little much Kool-Aid here. There is a large part of the mid-market that is not yet ready to commit their financials to the cloud. These companies protect their customer lists, their margins, pricing contracts and profitability like their business depends on it, because it does. They are just not ready to go cloud. It is only a matter of time before one of these cloud ERP companies are hacked and data will be stolen – hacks are not limited to Yahoo and Democratic email accounts. (I accept that there are a large number of companies that are very happy to run their financials online).

Beyond security, I also question whether a cloud ERP is as efficient as a regular Windows-based, on-premise solution. For those users that spend all day, every day using an ERP solution for order entry, payables, collections or financial transactions – a browser is not always the best environment.

You say: Anyone that would like to argue the fact that Microsoft has disastrously impacted the Dynamics GP product line, and in turn the Dynamics GP implementation channel, should spend some time talking to:

* Any Dynamics GP VAR

I do talk to them every day – they are selling software and making money. A key point here is profitability and you will find entrepreneurs follow the money! Feature for feature GP beats just about any competitor and a good VAR can still show that. Old fashioned VAR’s who are still selling the way they did 7-8 years ago will definitely fade away – and deserve to go out of business, good riddance. They will do no better with attempting to sell Acumatica, Intacct or Dynamics 365. The market has changed and unless a reseller can put a complex business solution together that incorporates the best of cloud apps and mobile apps together with strong accounting and back office functionality – they will not make it in today’s market. A bad sales process will not let you sell any ERP product regardless of how cloudy it is!

* Partner recruiters for Acumatica, NetSuite, etc.

Other ERP offerings have been chasing the GP reseller and customer market for as long as I can remember. There were ACCPAC wrapped busses driving around WPC 12 years ago. Why? Because the GP partner channel is as good as it gets in an ERP reseller channel. Many partners are picking up other ERP solutions to expand their business and of course hedge their bets. That’s entrepreneurship. This is not a sign of GP going away. It is a sign that GP partners are smart and that they are positioning to take some of the cloud ERP revenue through Acumatica, Intacct, Dynamics 365, hosted GP or Netsuite.

You Say: I believe that the executive teams at a company like Acumatica should publically thank Microsoft for helping them build their partner channel because I am willing to bet that they must be doing so privately.

Acumatica is built from the bones of a Microsoft product – Dynamics SL. Acumatica of course wants GP partners on board because they know how to sell. I believe that there are NO GP partners that have adopted Acumatica and now have that as their main revenue source. It is a nice extra offering and extra revenue and a ‘just in case’ for if your predictions here come true. 

You say: Let’s be clear, publicly Microsoft has to come out and strongly support the Dynamics GP product line and publish very clear guidelines on how long they will support the product. I also believe that those commitments will be honored, but the fact is that there is no good logical position for the Dynamics GP product line in the Microsoft Cloud world of Dynamics 365.

On this point we agree – Microsoft as a company are focused rightfully on the cloud. GP will continue to be supported and developed as per the strong road map – but it is not Microsoft’s love child. That said it never has been. ERP has always been a footnote on a Microsoft end of year report. GP is a fully featured Accounting/ERP product. Accounting has not changed much in the last 15 years. People still need invoices printed and emailed, they still bank checks in AR, and pay bills with AP. GP does all this and much more really well – and Dyn 365, Acumatica or SAP do not do it any better.

Microsoft wants the ERP cloud to be huge – so they are investing heavily. That’s makes sense. This in no way means it is right for everybody or every mid-market company or for every ERP reseller.

There is a long history of ‘what Microsoft wanted the market to think and do – not becoming a reality’ and that is because the market is not a robot. The market does not just fall in line.  Let’s think Seibel CRM, Microsoft Accounting, Small Business Financials, Windows Phones, Nokia, Parature, Dynamics Marketing, Groove etc. Point being – just because Microsoft wants something to be true – does not make it a reality. 

You Say: Of course, Dynamics hosting partners that are moving their Dynamics GP environments to Azure might dispute that fact, but is that a great long-term business or a short-term fix? I lean towards it being more like rearranging the deck chairs on the Titanic, after hitting the iceberg.

You are welcome to that opinion. There are certainly a list of benefits from going to a hosted cloud model. The biggest advantage is that you maintain complete access to all your data when and how you need it. The thought of someone telling me how I can access my own company’s data and how I can manipulate it, send shivers down my spine. There are some great offerings that are very attractive from various hosting companies including my current favorite at Power GP Online.

You Say: Let’s look at some facts:

Over recent years, the Dynamics GP partner community has felt like the ugly stepchild in the Dynamics family, prettier only than the Dynamics SOL (formerly Solomon) folks that have been relegated to punch line status. This ignominy exists because of the emphasis placed on the Dynamics AX (formerly Axapta), and to a lesser extent (until recent events!), the NAV (formerly Navision) product lines.

Firstly it is SL and not SOL! With a desire to compete with Oracle and SAP it is not a surprise that Microsoft targets the enterprise space with Dynamics AX. With $10,000,000+ software deals in this space it is attractive to a Microsoft Exec, an ERP reseller and an ERP sales person. No surprise AX got some love. It has not been all roses for Microsoft in the enterprise ERP space. The push into the enterprise space has led to the AX legal team being extremely busy and one of the largest of the AX divisions (hearsay I admit).  

That said, Microsoft have begun to remember the mid-market and how important that market segment is. Kirill Tatarinov had bet his career on the success of AX and Enterprise, but saw his mistakes and began to put more emphasis on NAV and the mid-market before his departure. Dynamics 365 Business Edition show that Microsoft are putting an equal emphasis on the mid-market as well as enterprise. Dynamics GP remains a strong offering in that mid-market. I am excited that Microsoft is showing interest and speding dollars in the mid market ERP space, regardless of platform on which this has been developed.

You Say: Before the introduction of Project Madeira (aka Dynamics 365 for Financials), the Dynamics NAV folks also felt like second-class citizens as Microsoft trumpeted Dynamics AX as their enterprise solution and Dynamics NAV, GP and SOL were lumped together in an SMB designation. (Long term, I now believe that the NAV folks see themselves as the future kings of the Dynamics ERP hill but more about that in another post).

Definitely NAV was the favorite mid-market solution because it was multi language and supported the European market. I accept GP will never be sold much in Europe. That’s OK. It still dominates in the English speaking North America, Canada and Australian markets as well as having a big active customer base in South America and the Middle East. Just because it is easier for Microsoft to push their global solution, does not mean it is the best solution locally in North America.

You Say: With the introduction of Dynamics 365 everything changed dramatically and most likely permanently. To understand the future of Dynamics GP you have to step back and take a look at the bigger Microsoft picture.

Microsoft now have an extra offering, a cloud based solution which is NAV on Azure. That’s nice and exciting and they will no doubt sell a bunch of it. I do not see any connection between this success and the death of GP. GP has been competing with cloud solutions for a long time and winning. There is functionality inside of GP that users love and this ease of use does not exist in NAV (Smartlist's for one).

You Say: Industry analysts say that Satya has bet the ranch and his legacy on pivoting Microsoft to a cloud company. Does anyone remember how much he was willing to overpay to buy Salesforce? Only Benioff’s record attempt at greed killed that deal.

Agreed. The cloud is good. It is not for everyone, right now.

You Say: As Carl Sagan would say, why spend “literally billions and billions” buying a CRM package when Microsoft already has a CRM solution of their own? Because it is a cloud product and Microsoft has to show growth in their cloud business to make stock analysts happy. That in turn makes the board happy and so on down the line in regards to executive compensation and employment. No one has ever gone too far off track “following the money trail.”

I do not see how this paragraph is relevant to the death of GP. Dynamics GP provides a unique offering of deployments including on premise, on azure or hosted - these options are not available for 365.

You Say: Cue the bagpipes for the Microsoft Dynamics GP funeral. Truly sad because at one point the Dynamics GP partner community was arguably the best in the mid-market by far.

Hmm. Interesting conclusion. The GP partner channel is still there and going strong. I still think you have missed some seriously important points in the article:

1: Who is going to sell Dynamic 365? Ingram Micro? Cloud Providers? Office Re-sellers? No because they would not know a debit from a credit and no Financial Controller I have ever met would buy from them. Microsoft has reduced price and margin for re-sellers making it less attractive to sell this for a VAR or a salesperson.   

2: Marketing way ahead of Technology: The Dyn365 marketing train is mile ahead of the software. Much of what is on a glossy brochure is not yet reality. There is a great deal of development effort going in for sure, but no one is sure of what the end result will look like. ERP is complex and way more difficult than shipping office products. When promises are not met – history shows this can kill a product faster than anything.

3. Numbers and Dollars? Microsoft is investing heavily in everything cloud. Not everything will survive. If we get 6 months, 12 months or 18 months in and the sales team are not hitting the numbers budgeted for Dyn365, what happens? Well one of two things - more spend on marketing the product or you kill it off. Microsoft does this all the time. 

4. GP passion: As you said the GP channel is the best, by far. They love that product like a child and some even more so. It is more than software, it is a lifestyle, a hobby, a passion, a business and a retirement plan. The GP customers are equally passionate and turn out by the thousands every year to user conference after user conference. They love this stuff and GP runs their business.

5. GP will prevail: In 2003 I had a Microsoft employee tell me not to develop my new ISV solution in Dexterity as it was going away and GP would become Project Green (funnily enough headed up by one Satya Nadella). Project Green was shortly after dumped on the scrap heap. At the time I ignored that advice and this tool went on to be OEM’ed by Microsoft and sell 15,000 copies into the mid-market. GP seems to be such a good solution with such a good partner channel that it will just prevail regardless of the difficulties.

You Say: In retrospect, the “Great Plains” acquisition by Microsoft was doomed from the outset by the natural cycle of software obsolescence; its once revolutionary, but now aging technology. Anyone know of any recent college graduates with a Dexterity major?

There has never been a Dex graduate in the history of the world, so simply a stupid sentence. All GP development has been in .net for at least 5 years. This paragraph suggests you were not qualified to write this article in the first place. 

Of course all things come and go and all things change. Except accounting. GP will not be around forever. Neither will Salesforce or Microsoft or Ford or GMC.

Now do not get me wrong, I am not anti-Dynamics 365. I in fact love it and am gearing my business to make a lot of money in that cloud ERP space. I pray that it is a raging success. That this success is the death of GP is simply ludicrous and misinformed. Does GP have challenges ahead? Absolutely. Are there more competitors in the market? Yes. Is Microsoft ‘all in’ on the cloud? Yes. Will GP still be selling in 10 years from now - I am willing to bet against anyone that it will be.    

If I was buying a new ERP right now for my mid-market company would I take a long look at the power of GP, Dynamics 365 and other mid-market offerings? Absolutely. I would choose the one that best suited my needs and helped me manage my business most efficiently.