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Microsoft’s Strategy to Promote Dynamics 365

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Apr. 6 2017, Updated 7:36 a.m. ET

Microsoft Dynamics 365 is a bundle of SaaS offerings

Previously, we discussed Microsoft’s (MSFT) increased interest in the enterprise collaboration space, as evidenced by the launch of Microsoft Teams. Later in this series, we’ll discuss how Microsoft’s interest and dominance in the collaboration segment made it an overall SaaS (software-as-a-service) leader. 

For now, let’s delve into the rationale behind Microsoft’s launch of Dynamics 365, which is intended to replace Dynamics CRM Online. Launched in late 2016, Microsoft’s Dynamics 365 is an Azure-hosted product that combines CRM (customer relationship management) and ERP (enterprise resource planning) offerings.

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Microsoft’s holistic approach toward its cloud offerings

Dynamics 365 launch falls in the plan proposed by Microsoft’s CEO, Satya Nadella, to align and mainstream the Dynamics offering, which was earlier categorized in a separate Business Solutions unit. This strategy is similar to what had already happened with Office, when the previously separate products were bundled into a single Office 365 suite. 

With Dynamics 365, Microsoft would bundle CRM, ERP, PowerApps, Flow, and other cloud business application platforms and make them available through a single subscription.

Within the SaaS[1. software-as-a-service] space, ERP and the Collaboration segment saw the largest growth. ERP reported 40% year-over-year growth, and Collaboration saw 30% growth. Collaboration is the largest segment in the SaaS space and, after ERP, grew the most in the SaaS space.

By combining all its cloud offerings, Microsoft has aimed at providing a holistic cloud offering, which could have driven its success in the Collaboration segment. This initiative is visible by the leadership of Microsoft’s Skype for Business in the enterprise collaboration space. Microsoft’s dominance in the Collaboration segment enabled it to achieve a leadership position in SaaS.

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