Microsoft Dynamics is a suite of enterprise resource planning (ERP) and customer relationship management (CRM) software solutions created by Microsoft. The Dynamics solutions provide integrated functionality for financials, supply chain, manufacturing, project management, customer service, field service, marketing, sales, and more.
A Brief History of Microsoft Dynamics
Microsoft entered the ERP market in 2000 with the launch of Microsoft Great Plains, an accounting and ERP solution aimed at small and medium-sized businesses. A year later, it acquired the Danish firm Navisionand Sales, which offered similar functionality.
In 2002, Microsoft rebranded these offerings under the Microsoft Dynamics banner and expanded the capabilities through both in-house development and further acquisitions. Significant milestones include:
- 2002: Microsoft Dynamics NAV launched.
- 2005: Microsoft Dynamics AX launched for larger enterprises.
- 2007: Microsoft Dynamics SL launched for project-driven businesses.
- 2011: Microsoft Dynamics CRM launched.
- 2016: Microsoft Dynamics 365 launched as a bundled SaaS solution of ERP and CRM modules.
Today, Microsoft Dynamics 365 is the main platform, incorporating elements from all prior Dynamics solutions. Many use Microsoft Dynamics development services to implement this platform properly.
Overview of Main Microsoft Dynamics 365 Modules
Microsoft Dynamics 365 comes in modules so customers can start small and add capabilities as they grow. A brief overview of the core apps:
Finance and Operations
Financial, accounting, and supply chain functionality for managing budgets, invoices, orders, inventory, production, etc. It replaces Microsoft Dynamics AX.
Supply Chain Management
Tools for manufacturing, inventory, warehouse, and transportation management. Provides end-to-end visibility and optimization across global supply chains.
Sales
CRM capabilities for automating processes around leads, opportunities, accounts, contacts, and sales pipeline analytics. Helps sales teams manage the entire customer journey.
Marketing
Functionality tailored specifically for digital marketing teams, including customer journey orchestration, campaign management, digital ads, landing pages, etc.
Customer Service
Ticketing system, case management, and field service capabilities include scheduling, dispatching, work orders, agreements, etc.
Project Operations
Tools for project managers include estimating, resource management, budgeting, forecasting, billing, and reporting.
Human Resources
HR solution for talent acquisition, onboarding, training, performance management, compensation, and benefits administration.
Business Central
Financial management and operations solutions aimed at small and midsized organizations. Simplified version of Dynamics NAV.
Several industry-specific editions of Dynamics 365 exist, such as those for retail, financial services, manufacturing, government, and nonprofits.
Benefits of Microsoft Dynamics 365
So why do more than 250,000 organizations use Microsoft Dynamics? Some key advantages include the following:
Comprehensive functionality. Dynamics 365 spans CRM, ERP, HR, project management, and more on a single platform, eliminating the need to integrate disparate systems.
Cloud-based. As a SaaS solution, Dynamics 365 allows for rapid implementation without large upfront infrastructure investments. It also enables access from anywhere on any device.
Scalable. The modular approach allows customers to start with what they need today and scale up as the business grows.
Customizable. Low code configuration tools allow customers to tweak Dynamics to meet unique business needs without expensive custom coding.
Integrates with Office 365 and Power Platform. Native connectivity with Microsoft productivity tools like Office 365, Teams, SharePoint, Power BI, and Power Apps drives productivity.
Vertical expertise. Prebuilt solutions are available for major verticals like manufacturing, retail, and professional services.
Global availability and support. Dynamics 365 is localized for multiple countries/languages and supported by an extensive partner network of solution experts.
Secure and compliant. As a Microsoft product, Dynamics 365 meets major compliance standards like GDPR, is out of the box, and is hosted on secure cloud infrastructure.
Value pricing. Dynamics licensing is based on actual usage rather than users. Tiers are designed to help organizations contain costs.
Implementation Approaches
Microsoft provides customers with multiple options when deploying Dynamics 365:
- Microsoft Cloud. This public cloud option leverages Microsoft’s fully maintained multi-tenant infrastructure. Customers do not need to manage hardware.
- Dedicated Cloud. This is for customers who want single-tenant isolation on Microsoft cloud infrastructure. Separate physical hardware is guaranteed.
- On-Premises. For highly regulated customers, Dynamics can be run on private cloud infrastructure. Microsoft supports hybrid connectivity to link on-prem systems with the cloud.
- Microsoft Cloud for the US Government. This environment meets demanding security/compliance requirements for US public sector organizations. It is operated out of the continental US by screened personnel.
Implementation approaches can combine elements of the above based on specific organizational needs. Dynamics is designed for flexible deployment models.
The choice of cloud vs on-premises may impact available modules. For example, Marketing, Talent, and Customer Insights apps only run on Microsoft’s public cloud.
Competitors
As a leader in enterprise cloud applications, Microsoft Dynamics 365 competes against solutions from SAP, Oracle, and Salesforce. SAP is powerful across finance and the supply chain, and it is a best-of-breed CRM/CX with no native ERP functionality. Integrations are needed to connect sales with the and Infor, among others. Each vendor has strengths and weaknesses:
SAP. Very strong across finance, supply chain and manufacturing modules but not as strong in CRM/CX. More expensive than Dynamics 365.
Oracle. Significant capabilities for more complex needs but not easy to implement. Total ownership can be higher than Dynamics 365.
Salesforce. Best of breed CRM/CX but no native ERP functionality. Integrations needed to connect sales with back office.
Infor. Competitively priced applications for industry verticals like manufacturing. However, there is a limited R&D budget to match larger rivals.
For complex global deployments, SAP and Oracle remain popular choices. However, Microsoft Dynamics 365 is increasingly displacing these solutions to become the #2 enterprise cloud application vendor based on lower TCO and faster time to value.
Dynamics 365 competes most frequently against NetSuite and Sage Intacct among mid-market customers. Dynamics 365 Business Central also targets small businesses needing basic financials and operations.
Conclusion and Future Outlook
Microsoft Dynamics 365 provides a flexible and scalable platform for essential business functions, from finance and supply chain to sales, customer service, and marketing. Its modular structure allows customers to start with high-priority needs today and expand over time.
As Microsoft’s primary solution for enterprise cloud applications, Dynamics 365 benefits from strong integration with ubiquitous Office 365 productivity tools and access to Microsoft’s advanced AI capabilities. Microsoft aggressively grows its industry expertise through vertical solutions and an expanding partner ecosystem. Recent analyst reports forecast Microsoft’s enterprise applications revenue growing at twice the rate of its main competitors.