Microsoft Makes Leap To Per-User ERP Pricing

Instead of pricing the four lines per module (or, in Navision's case, per granule), the company instead will offer three tiered "suites" of each product line. (Dynamics GP, AX, NAV, SL are the old Great Plains, Axapta, Navision, and Solomon packages, respectively.)

The most common functions will be bundled in a Business Essentials entry-level SKU for about $2,250 per user before volume discounts. Included will be general ledger, accounts receivable, accounts payable, fixed assets and consolidations, and other core financial management and inventory functions, said Gayle Hoshino, general manager of Microsoft Business Solutions pricing.

A midtier Advanced Management Edition starting at $3,980 per user adds more functions, say, for manufacturing, project management, and the integral CRM sales and marketing from Axapta/Navision lineups. (MBS also fields its own Dynamics CRM application.) Pricing is for concurrent, not named, users.

And the top-tier Advanced Management Enterprise adds additional supply chain planning and configurators, some of which will be priced per server. Overall price depends on modules purchased, the Redmond, Wash., company said.

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Comparable pricing for SAP's Business One is $3,750 per named user. Oracle E-business Suite Special Edition is $2,000 per named user, while the full-fledged E-business Suite is $3,995 per named user.

"We are taking hundreds of modules and granules, actually thousands of permutations, and trying to simplify that while remaining flexible," Hoshino said.

"This is the next step in the Dynamics strategy after going to that common brand across the four lines," said James Utzschneider, general manager for product marketing. The news is expected to be announced by Corporate Vice President Tami Reller this week at the Microsoft worldwide partner conference in Boston. CRN first reported on these plans in March.

The new SKUs will be available Aug. 1, and partners can continue to sell on both models for 90 days after the July 10 announcement. Oct. 13 will be the last day to order new licenses under the old model. Existing customers can stick with their current plan, but new users after that date will have to buy on the new price list.

The company is also upgrading maintenance and support, adding free online training for customers—including all the manuals.

"Our maintenance plan has been a hodgepodge. We're bringing it all together to be consistent and making a much better value proposition," said Christine Bell, director of services and project management for MBS.

Microsoft maintenance is 16 percent of list price compared with 22 percent and 17 percent of license cost for Oracle and SAP, respectively.

Microsoft and its partners cited the need for simplicity as a motivating factor. "This will make life easier for partners in general. And it drives global consistency for partners with customers in multiple geographies," said Andy Vabulas, CEO of IBIS, an Atlanta-based Microsoft partner.

Utzschneider also stressed that this move does not presage a plan to put ERP through broad distribution as Microsoft did with CRM. The products will be available only through MBS partners, as always, he said. Microsoft COO Kevin Turner, who joined Microsoft last year, is jazzed about Microsoft's ERP potential in businesses of all sizes.

"This is a very exciting space. We have great apps in the low end and midmarket with CRM and ERP. We have to get more thoughtful around the verticals. This is a great opportunity to really pick our targets, pick that dozen we want to go deep on," he told CRN recently.

And, in response to questions about Microsoft's enterprise ambitions for Dynamics ERP to compete against SAP, he was bullish as well.

"Certainly I think our ability to scale our ERP system is [something where] we're constantly pushing that envelope," he said. "I think we'll be able to compete at the high end. There are a lot of competitors there, I wouldn't name [SAP] as the only one."