At 10% growth is Dynamics gaining or losing share?

JasonC

When the Dynamics business went from 22% growth in "customer billings" in calendar Q2 down to 10% in calendar Q3 it seemed some analysts were questioning what was going wrong with the business. The simple answer is, it's the economy stupid. At 22% Dynamics outgrew the major competitors (excluding the Saas types like Salesforce.com and NetSuite). It turns out at 10% growth Dynamics is still growing fastest and taking share.

I've run through the numbers for calendar Q2 and Q3 for a handful of frequent competitors and found that when you consider organic growth, we as a community are still taking share at 10% growth. Here's how it looks...

Calendar Q2*
Dynamics 22%
Deltek 13%
SAP 8%
Intuit/QB 6%
Sage 5%
Epicor -4%

Calendar Q3*
Dynamics 10%
Deltek 0%
SAP 4%
Intuit/QB 1%
Sage -2%
Epicor -1%

* some competitors have fiscal years that don't map exactly to the calendar year. In those cases I've take the most representative fiscal quarter for purposes of this comparison.

Again these are "organic" growth metrics. More accurately, I backcasted the revenues. In other words, I'm comparing SAP's Q3 against the combined revenues of SAP and Business Objects from last year. In the case of Epicor, I'm comparing against the prior year total for Epicor and NSB Retail.

I would rather not see a drop from 22% to 10% growth either, but by my math Dynamics is now a $1.2 billion business and outgrowing all of these competitors. Not bad at all.


Jason
PartnerCompete.com

Alex_Chow

Good information Jason! Glad to see Dynamics beating out all the competitors in terms of growth.

One question though, when you refer to Dynamics, is it AX, NAV, GP, CRM, and SL? Would the growth number look different if these products are split?

JasonC

It would look different, but of course Microsoft doesn't share that information publicly. We don't even get a split of license or product revenue versus service revenue. I had a chat with the Dynamics CFO a while back to understand "customer billings", and while it is a pure Dynamics number, it is all revenue associated with Dynamics.

Having tracked the competition internally as a Microsoft employee for a number of years before starting my own company, it was very disappointing to see MSFT pull back on what they share. I suspect that a license revenue comparison if were possible to do would look even better than what I've done, which is basically comparing total revenue growth for these competitors. Microsoft stopped separately reporting total revenue, license revenue, and profitability for MBS just at a time when the competitive comparisons would have been really fun to call out. Now all we get is "customer billings", and for that all we get is a growth percentage, not a revenue figure. I spent a bit of time in excel to get to that $1.2 billion revenue estimate.

To your question on the product split, the best I can do is guess, and I'd guess that most or all of those four are outgrowing competition. NAV had something like 7,500 customer adds during Microsoft's last fiscal year (somebody on this board please confirm), which I don't think any competitor can match. SAP is selling a more entry level product in B1 and managed about 5,000 adds. On the other Dynamics products all I have is a gut feel. For example, my gut tells me that GP is doing well after a few struggles. I get that based on seeing a number of GP partners who were absent for a year or two from the President's Club and Inner Circle lists appearing back on these lists again.


Jason
PartnerCompete.com

David_Singleton

Wow that is some great research, thanks for sharing it.

=D> =D> =D> =D> =D>

crashnburn

Are there any updates on the separation and growth as a total and especially in separates?

I recently met a very primary Microsoft Gold Partner who was very turned off by Dynamics AX. He said Navision was one of the better out of the whole "MBS" stuff but they had completely moved into the new Sharepoint with Work Flows.

davmac1

If you look at the last quarterly results, Microsoft stated that Office was over 90% of the division revenues, which would put all of MBS under 800M.
I think new MBS license sales got hammered during the great recession and maintenance revenue took a hit as well.
I would think every other software product suffered as well - so how MBS did compared to everyone else would be interesting.
And of course NAV is the best by far and getting better all the time (stealing a line from a Beatles song)!