From nowhere to player in seven years. That's the story of Microsoft's enterprise resource planning unit, Microsoft Dynamics. Backed by its nearly unmatched resources, the computing giant has leapt into a world dominated by established heavyweights like SAP and Oracle and landed feet first. MD now occupies the No. 5 spot among ERP vendors. However, unlike the big old-timers, MD has carved out its niche by going after smaller, non-enterprise businesses ? and its competitors are only now scrambling to follow suit. This head start, coupled with a market that has significant room to grow and the ubiquity of Windows-based operating systems, leaves MD well positioned to gain even more ground on its rivals. So concurs Garth Dean ? with MD since almost day one when Microsoft entered the market with its 2001 acquisition of his former employer, Great Plains Software Canada Co. When Great Plains entered Canada it had just two employees, but by the time it was acquired, Dean was presiding over a staff of 30. It's a harbinger of where the market is going and what Microsoft is betting is another business coup. We asked Dean six questions.
• What is the greatest challenge currently facing Microsoft Dynamics and what are you doing about it?
We're totally committed to a channel business model so all of our product is sold through business partners and the biggest constraint we all face in the marketplace is a lack of skilled consultants. We have great confidence in the skills of our Microsoft Certified Partners. Training is a vital part of the Microsoft Canada Partner Program, helping partners succeed and grow business skills, and Microsoft Canada continues to focus on creating opportunities to help its partners succeed.
• Who else ? person or company ? do you feel is doing innovative work and in what way?
The area that's branching out relative to the business we're in is software as a service. You could say that Salesforce.com is an early innovator in realizing on that sales model. And it adds some interesting attributes. They've been quite successful. It's a complex marketplace and so as the rest of the vendors start to focus in that area, what we find is that customers really look for more of a variety of choice than what's offered just in software as a service. But that whole concept is definitely changing the way vendors look at the marketplace and product.
• How would you describe your leadership approach/style?
I focus on the business strategy so key for me is trying to understand the marketplace and the business growth opportunities, and building the business development strategy to realize on those opportunities. We have a channel business model so the partner ecosystem is our lifeblood and we spend a lot of time ensuring that [works] ? If you think about the partners/employees as part of our virtual sales ecosystem, it's a very large and broad community. And I spend the bulk of my time focusing on how to leverage those assets. ? I'm certainly not a micromanager. You surround yourself with creative people with talent and help them understand the objectives and then coach them to realize on those objectives. The benefit is you need to bring their influence and their values into the process to really succeed.
• MD has gone from No. 15 to No. 5 by market share in just a few years. Can the mid-size market you primarily target continue to grow the business or will you ultimately have to go after Oracle's and SAP's market?
Actually, the growth opportunity is in the small- and mid-market business segments. And you'll hear SAP and Oracle say that as well. There are a limited number of enterprise customers and it's somewhat of a saturated market. So while we do play upstream in that market as well, there are so many changes going on in technology today that the real opportunity is to bring the value of that technology to small- and mid-sized companies. But to do that you have to do it in a very cost effective and efficient manner, because the price points have to be relevant and the ROI and efficiencies have to be really dominant in order for the customers to be able to make that investment. A key part of it is to help them realize on the investment they do make in their infrastructure. Microsoft is well positioned to do this because we're able to leverage the significant research and development that goes into the operating system in the Windows productivity suite and tightly integrate that into the ERP solutions.
There are two ways to look at the marketplace ? market share by customer or market share by absolute dollar. When you look at it from a dollar spend perspective that'll be dominated by an SAP implementation that may go for millions of dollars. But when you talk about serving that market at large, it's more around volume of customer adds, and the revenue is obviously a spinoff of that. There's a tremendous number of legacy solutions in place in the small- and mid-market [where] not a lot's been done [since about 2000] to realize on what technology has to offer today: the whole explosion of web services and everything else. So typically ERP solutions roll over in a 7-10 year cycle so I really think we're on the verge of a signicantly growing rollover scenario with ERP solutions to allow customers to really take advantage of that next wave of technology.
• National governments and their banks are now stepping in to quell the credit crisis that has been traced back to the subprime mortgage markets. Did lenders and the investors that backed them get a little too greedy and should stiffer regulation be introduced?
I think lenders get to that point of degrees of separation where they remove themselves from risk because they're not the ones that are actually dealing with that first-mortgage end consumer. ? Unfortunately, what that drives is a buying pattern in the marketplace where people who are relatively unsophisticated about lending principles get caught up in the fact that, “Oh gee, I can afford to buy this with little equity because the value is always going to increase.” There's that false sense of security in the economy and really there needs to be some sort of control around that unsophisticated borrower as to what exposure they're really getting into. If you think about other types of investment vehicles, there's a sophisticated investor rule that you can't put investment vehicles in the marketplace without significant controls around them. And that doesn't happen in the individual mortgage environment so it's a little bit scary. Luckily, the economy in Canada has performed strongly and overcome a lot of these areas and so the housing market doesn't seem to be impacted the way it has been south of the border.
• What would it take to get you to participate in an extreme skiing event where you're dropped off by helicopter on a remote mountainside and proceed to ski down rocky, near vertical slopes?
About six months of concentrated training. At this age, it would take a lot. Skiing is for younger people. I'm focused more on golf and snowshoeing these days. We actually live at a ski resort so I love skiing, but I'm not an extreme skier.
