Microsoft CEO Nadella Puts Bullseye on SAP, Oracle and Salesforce

While CEO Satya Nadella has frequently touted the surging growth of Microsoft’s Dynamics 365 suite of enterprise apps, his zeal for Dynamics 365’s growth potential hit new heights in last week’s Q4 earnings call and is an unmistakable shot across the bows of SAP, Oracle and Salesforce.

On my Cloud Wars Top 10 rankings, Microsoft has been #1 for 2-1/2 years and shows no signs of letting anyone come close to its unquestionably dominant position.

While the numbers for Dynamics 365 tell only part of the story, let me put them out there as a starting point: for the fiscal Q4 ending June 30, Dynamics 365 revenue was up 49% and 42% in constant currency, and now accounts for 70% of all Dynamics revenue.

My estimate is that Dynamics 365 could do between $2.5 billion and $3 billion in revenue in calendar 2021, so it is clearly a powerful competitor to the industry’s top enterprise-apps vendors: SAP, Oracle and Salesforce.

And these Q4 earnings-call comments from Nadella underscore that Microsoft has only just begun to fight for enterprise-apps market share and that it intends to do everything possible to become a top 3 player as quickly as possible.

If you think I’m being overly frothy, look at these comments from Nadella.

New suite of apps for “AI-first and collaboration-first world”

“Every business function – including marketing, sales, customer support, and supply chain – will need to be reimagined for an AI-first and collaboration-first world. And the silos between communications, collaboration, and business process have to be broken down. With Dynamics 365, we’re building a new generation of business applications to help organizations adapt to this new reality.

“We continue to gain share. Dynamics 365 revenue accelerated for the third consecutive quarter, up 49 percent year over year.”

A “complete new cycle of business-process automation”

“Let’s just take Dynamics. It’s probably one of the most exciting things we’re seeing is that coming out of this pandemic, there is an absolute new chapter for a complete new suite, all the way from whether it’s sales to customer service to marketing to supply chain or digital manufacturing that’s all going to be reimplemented. There’s going to be a complete new cycle of business-process automation that is going to be AI first and collaboration first.”

The massive synergy between Dynamics 365 and Teams

“And that second part is where that intersection between Teams and business process or Dynamics comes through, because you do not want to have a system of record for anything, whether it is a customer or a part or a forecast that you want to collaborate on, that you don’t want to communicate on. And by the way, the communications and the collaboration artifacts are part of the record. And that’s what I think that this new generation of software will enable.

“You see it in two fronts. One is Teams has become a platform not just for Dynamics, even for Salesforce, for SAP, for Adobe, for ServiceNow. They’re all building great integrations into Teams and we’ll foster that. And Dynamics itself, of course, will integrate deeply with Teams and embed Teams or Azure Communication Services.”

Totally rewritten over past 2 years

“So when you think about our omnichannel customer service module, it doesn’t look like anything from two years ago. It’s a completely rebuilt omnichannel customer service system, which has all the communication functionality built in.

It’s a pretty exciting space and it also speaks to a lot of the questions around where’s the margin, how is it going to sort of evolve? I think tracking what’s happening with Power Platform, Dynamics, and Teams, I think probably, and its intersection to even some of our data layers in Azure is perhaps the best indication of some of our competitive differentiation at scale already.”

Dynamics 365 and Power Apps: more synergy

“The number of organizations using Power Apps has more than doubled year over year. BASF chose Power Apps to give 122,000 employees the capability to build low-code/no-code apps. And at Toyota, fusion teams of pro developers and domain experts are using Power Apps and Azure PaaS services to improve quality control.

All-up, Power Platform revenue increased 83 percent over the past year.”

“Bringing business process directly into the flow of work”

“We’re empowering employees for hybrid work by creating a new category of collaborative applications, bringing business process directly into the flow of work. New integrations between Dynamics 365 and Teams enable anyone in an organization to seamlessly view and collaborate on customer records within Teams, without having to purchase multiple licenses. Customers want this, and no other vendor is doing this today.

And we’re helping organizations reimagine their core business processes, with new apps built for an age of omnichannel communications. With Dynamics 365 Customer Service, organizations like Coca-Cola, Renault, and Xiaomi have a single, comprehensive solution to deliver consistent and personalized support across all channels.”

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