A major tectonic shift in the enterprise software market rumbled through the Microsoft Partner Conference this past July, a shift whose significance was belied by the subtle way in which it was revealed. Hidden in the product announcements and pricing refinements was the recognition that big systems integrators (SIs) are starting to be interested in Microsoft's enterprise software offerings.
It's only a beginning, but it's been a long time coming. Sharing the stage with Microsoft CEO Steve Ballmer at the Microsoft Dynamics AX 4.0 unveiling was a representative from Capgemini. Atos Origin took part in an announcement about third-party vertical solutions. Other SIs mentioned included Bearing Point, Tata, and Wipro.
The significance of this shift cannot be overstated, nor can it be seen as all good or all bad. What it unequivocally states to the market, and Microsoft's competitors, is that the sector that helped create the modern ERP market and made SAP's software a dominant force is now prepared to make a similar bet on Dynamics AX.
Of course, things are dramatically different than they were in the 1990s, when the major systems integrators embraced ERP as a way to sell expensive business process re-engineering projects and lots of other services. For one, many of the original companies are either defunct or have been re-branded. And, of course, enterprise software is now much easier to implement, and the old days of selling six dollars worth of services for every dollar of software licenses are, largely and happily, long gone.
But the entrance of these powerhouses into the Dynamics AX market means two things: AX is now ready for the enterprise, and can therefore generate the kind of big projects and big paydays that attract big integrators. And implementing AX is becoming complex, requiring a level of business and technical expertise that the big SIs, rightly or wrongly, think is their special value-add.
Sure, Microsoft AX is still positioned as the low-cost, high-function alternative to SAP and Oracle, its two major competitors. But when you piece together all the technology that Microsoft wants to layer underneath -- Office 2007, Vista, Sharepoint, and Longhorn, among others -- and combine that with the strategy of selling AX as an integration play for subsidiaries and other entities that are part of a larger SAP environment, you've got a big integrator's dream come true.
This doesn't merely help to alter Dynamics AX's competitive profile, it also signals a shift in the partner ecosystem that has long driven Microsoft's enterprise software market. These traditional partners have been consolidating for years, trying to become big enough to do global implementations, offer increasingly vertical-focused solutions, and still absorb all of Microsoft's new technology without having their entire staff in a perpetual training and certification mode. Having the big integrators in the picture ups the competitive ante for these companies at a time when they're finally starting to make some good money as part of the growing Dynamics market juggernaut.
That increased competition should be good for customers: The big SIs will be able to take AX places it hasn't been able to go. But it will be up to everyone, customer and competitor included, to ensure that moving AX upstream doesn't add a premium to the cost of doing business. Welcome to the big leagues, AX. And caveat emptor, everyone.