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Dynamics 365 – Business Edition vs. The World

Last week, within Microsoft’s 3-day Executive Briefing on everything Dynamics 365, the Business Edition was teased out. The Business Edition is Microsoft’s first legitimate effort to meet the business solution requirements of the Small to Mid-sized Business (SMB), and they are about to meet a whole new crop of competitors for the first time.

Hi, my name is Microsoft

You know that feeling the first time you attend a regularly scheduled event? You look around the room at all of the other people, who have been coming for years, chatting in their groups, darting glances over at you, the “new guy”. Microsoft just strolled into the SMB party, and the room is quite full. Microsoft’s arrival is not unnoticed, how could it be, they are the biggest attendee by far. Goliath has just walked into a room full of Davids.

The Davids of Business Solutions

In the Business Solution magic quadrants of the world, Microsoft is used to seeing the same few competitors; Salesforce, of course, but also SAP and Oracle, and occasionally SugarCRM. With the Dynamics 365 Business Edition, Microsoft enters a vastly more populated competitive landscape. In this new space, there are a few more players, like for example: 1CRM, AbsoluteBUSY, Act! Essentials, Agile CRM, AllProWebTools, Aplicor, Apptivo CRM, Avidian/Prophet, Base, Bitrix24, Bluenose, BoomTown!, bpm’online, Buddy CRM, Bullhorn, CampaignerCRM, Capsule, Centerbase, CiviCRM, Commence, Concursive CRM, Contactually, Daylite, Elements CRM, EssentialCRM, Fiitfu, FreeCRM, GoldMine, GreenRope, Hatchbuck, Highrise, Hubspot CRM, InfoFlo, Infusionsoft, Insightly, iSEEit, KarmaCRM, LaserPointCRM, LeadMaster, Maximizer, Method:CRM, MX-Contact, NetSuite CRM, Nimble, Nutshell, Odoo, OnContact, OnePage, OpusFlow CRM, OroCRM, Pipedrive, PipelineDeals, Pipeliner, Podio, Prophet, Really Simple Systems, Radium CRM, Raynet, Relenta, Sage CRM, Salesnet, SalesNexus, Snapforce, SugarCRM, SuiteCRM, TeamWox, Vtiger, Workbooks, X2Engine Sales CRM, Zurmo, Zoho CRM. Whew, okay, that took a long breath to say, and I am sure I missed several.

The Goliath Advantage

Obviously, as with any story with a “Goliath” in it, the presumed advantage is size. But clearly, in the story, David hurls a stone from his sling with all his might and hits Goliath in the center of his forehead, Goliath falls on his face to the ground, and David cuts off his head. And here we have “Goliath” Microsoft entering a battlefield of a hundred Davids. History says this should be quick. But Microsoft has a few advantages over Goliath, for one thing, they can move a lot quicker. If Goliath had just been able to tilt his head to avoid that first, some might say “lucky” shot, the outcome might have been a lot different. I know, it is a biblical story, with other meanings and nuances, I’m just saying, on its surface, it seems like Goliath would not ordinarily go down that easily. If I were a Start-up SMB focused Cloud CRM company, I would be concerned.

A Grand Entrance

Microsoft has a habit of being late to parties, Windows Phone being the most recognized tardiness. When a Goliath arrives late to a party of other Goliaths, it is very difficult to find a seat. Clearly in mobile, Microsoft walked in, right after the music stopped, and there was no chair left for them. But when a Goliath walks into a party of Davids, well, he just takes a wide seat on top of a bunch of them, unintentionally crushing half of the room. If these guys thought it was tough fighting for mind-share with a SMB against all of their non-name competitors, that entire queue is about to be cut. Microsoft will be getting the first look from now on, in most cases. Can this Goliath be beaten? Probably not in a heads-up battle, it will require some new strategy.

Another Punch in Google’s Gut?

Before Office 365 was launched, Google “owned” SMB. A trickle became a flood, and that has completely reversed now. Google’s business products have been relegated to hipster businesses, run by people who probably spend their weekends holding signs at various rallies and protests, and are too stubborn to admit that their “primary” business functions depend completely on a Google “side-business”. The rest of Google’s SMB customers are suffering from Office 365 envy, waiting for the best time, or excuse, to make the change. What does this have to do with Business Edition? Many of those start-up David’s bet their futures on Google retaining their SMB champion title, which they have since lost. When that same SMB decides it’s time for a CRM, for those that already moved to Office 365, Business Edition will be a natural, and obvious choice. Even today, I will occasionally be talking to a SMB prospect about Dynamics 365, who is still using Google’s Productivity tools. As the conversation unwraps around the native Office 365 integration, it becomes clear that this may be their “excuse” to move… and that was with a product that was not designed for SMB.

What is David’s Play?

While I don’t think it is set in stone yet, past discussions have had the price for the Business Edition Sales App at $40/u/m. That is at the higher end of what the other SaaS SMB CRM products are out there for. So do they have room to go lower on price? Given that a lot of them have probably not yet broken even, that will be tough. Can they add features? The Business Edition is a subset of a slew of Enterprise grade features that Microsoft could turn on with the flip of a switch, so that is not a battle they can win. Are there some “holes” that Microsoft will be leaving open, for which they do not have an easy switch to flip, that these players could fill? Microsoft is building an army of partners developing add-on solutions to plug those holes via AppSource, so they would have to move very fast. So what can they do? The only avenue left, is to go even “more” basic and simple.

“Simple” is a relative term

The Business Edition is an App, built on the full product, that exposes a subset of functionality. There is no subset of features of a Space Shuttle that become tinker toys. The good news for the Davids is that there will be a higher learning curve for the Business Edition. Much lower than for the Enterprise Dynamics 365 to be sure, but still higher than the typical David. The bad news for them is, that once that organization gets through that learning curve, the sky is the limit. So is there a play for them to be even simpler?

A Simple as Simple Gets

While the Business Edition is going to be as simple as a subset of Enterprise features can get, that is just the Dynamics Team’s effort. Over on the Office 365 side, they have been bubbling up some Outlook capabilities for basic Lead and Opportunity Management also. So it is looking like the Davids are caught in a hotbox, (a situation in the game of baseball that occurs when the baserunner is stranded between two bases and is in jeopardy of being tagged out).

Can it get any worse for the Davids?

In fact, it does get worse, much worse. For an additional 33 cents per day, a user can add Dynamics 365 Business Edition Marketing, think of this as a potential replacement for Constant Contact or Mailchimp like service. Not only is this really bad news for the Davids, but it should cause Contact Contact and Mailchimp concern as well. Think of that SMB today who may have Google for their productivity, email, docs, drive, etc., then they have this separate SaaS CRM product, and they also have this separate marketing solution, and maybe some Dropbox sprinkled in. Each with their own UI, licensing, user management, etc. all to be managed and coordinated by an already busy SMB customer. While Microsoft does not eliminate this management requirement, they at least put it all into one place to go and do it.

So that is it, Right, no more?

Weeelll. Actually for that extra 33 cents, that customer is getting what is called a “Plan”. Another product that they are going to get with the Plan is Financials, a SMB ERP. Think: Quickbooks on steroids, and again all managed in the same place, same user accounts, etc. It is starting to feel like a checkmate on a 3D chessboard. With one product, Dynamics 365 Business Edition is not only plowing through the field of Davids, but also the SMB marketing and SMB accounting competition as well.

Is any competitor safe?

I don’t get the sense that, in the SMB space, Microsoft is actively seeking to crush the competitors. While aware of them, I don’t feel there is a high focus on them per se. I think Microsoft is simply looking at their existing SMB customers, which on the Office 365 side are many, and trying to solve for their needs. If, in the process, a competitor get crushed under the wheel, it’s not like Microsoft turned the wheel towards them. It is just the risk of occupying a seat that Goliath has eyed, oblivious to the fact that you are in it. “Squishhhh”

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