Microsoft Dynamics for Manufacturing – Understanding the Difference Between GP, NAV, SL and AX

by Houston Neal

Director of Marketing,
November 17, 2009

In establishing its foothold in the enterprise resource planning (ERP) software market, Microsoft has acquired no less than thirteen companies. Now Microsoft – and their prospects – face the challenge of sorting through the various applications in the Microsoft Dynamics family.

With the recent launch of our enterprise resource planning software service, we decided to shed some light on the Dynamics product family. For starters, here is a chart that shows the target market for each product. Industries are down the side, business sizes are across the top, products lie in the middle. Click on the image for an expanded view.

* These are our estimates and not officially from Microsoft.

Understanding the Microsoft Dynamics Portfolio
In 2001 Microsoft entered the server-based business applications market with the acquisition of Great Plains software. While they originally claimed otherwise, the acquisition was a strategic move to compete with enterprise software providers like SAP and Oracle. At stake were not only ERP applications revenues, but the database and operating system sales that are driven by new ERP projects.

In the $1.1 billion acquisition, Microsoft gained Great Plains Dynamics and Solomon, two accounting and business management systems with 45,000 customers and 2,200 channel partners. This would give Microsoft a strong presence here in the States, but the acquisition wouldn't satisfy their global ambitions.

So, in 2002 Microsoft acquired Danish software company Navision, which offered enterprise-level accounting, human resources and CRM software. Through this acquisition, Microsoft also gained the Axapta product, another enterprise system originally developed by Damgaard – a company acquired earlier by Navision. Navision currently has roughly 70,000 installed customers with over 1.3 million users.

These four products – Great Plains, Solomon, Navision and Axapta – would make up Microsoft's Business Solutions Group, later renamed "Microsoft Dynamics." Of course, there were other smaller footprint products that had been acquired by each of these companies. Meanwhile, Microsoft has made subsequent acquisitions of related companies or technology assets.

Project Green – Denied the Green Light
Microsoft now owned four different enterprise suites, each written in a different language using a different development environment and sometimes running on different databases. Project Green was the codename given to the task of converting all four products to a single code base.

On one hand, Project Green would allow Microsoft to deeply integrate all four products with each other, and with their desktop and server software. This would extend the capabilities of each product, give users a shared experience and reduce the burden of support.

On the other hand, Microsoft would be faced with a very big technical challenge and customer service challenge. The upgrade path for customers would be split – NAV customers might be three releases back while GP customers might on the last release – and customers would face all the demands that come with an upgrade (training, implementation, etc). Not to mention, Dynamics partners that built their offerings around one of the products would also face a migration challenge.

So Microsoft eventually changed its development strategy. Instead of rewriting the code base from the ground up, they shifted to a top-down approach of integrating existing technology from the Microsoft stack. Subsequently, they re-branded the products to the current nomenclature: Dynamics GP, Dynamics SL, Dynamics NAV and Dynamics AX.

For a detailed history of Project Green, we suggest reading Frank Scavo's blog.

Natural Selection
Over the years, each Dynamics product has naturally become popular in certain industries. For example, Dynamics GP – known for it's strong general ledger and human resources (HR) capabilities – has become popular for professional services and the public sector.

Here is a quick breakdown of how the others have evolved:

Product	Differentiator
Dynamics AX	Great for multi-site and multi-country operations
	Strong in manufacturing and distribution
	Good for companies with a primary ERP that want to add software to a division of the company
	Fastest-growing of Microsoft's four ERP products
Dynamics NAV	Biggest seller among all Dynamics products
	Stronger in single-site or distributed implementations
	Highly configurable with a ton of vertical partners
	Easily customizable to sub-verticals within an industry
	Strong in manufacturing and distribution
Dynamics GP	Strong financial management and HR capabilities
	Popular among professional services, finance and public sector
	Robust out-of-the-box functionality
	Focuses on the Americas and English speaking countries
Dynamics SL	Good for project-based businesses (e.g. construction)
	Strong accounting and project management capabilities
	Suited for companies with less than 500 employees
	Does well in distribution

Keep in mind there are roughly 9,000 independent software vendors (ISVs) that provide support and customizations for Dynamics products. These partners have developed hundreds of industry solutions with deep vertical capabilities. So it's possible to find any of the above being used in any size or type of business.

Today, Microsoft is extending functionality outside the traditional scope of some products. For example, in the next release of Dynamics AX, they plan on adding functionality for the public sector. This may be an indication of a move towards a single product – or fewer products – which would help them save on future development and support costs.

Moving towards one or two products is more conceivable when looking at an illustration like the chart below. Here is an apples-to-apples comparison of the modules within each product

Module	Dynamics AX	Dynamics NAV	Dynamics GP	Dynamics SL

Business Intelligence	x	x	x	x
Business Portal	x	x	x	x
Compliance & Risk Management	x		x
Field Service	x		x	x
Financial Accounting	x	x	x	x
Human Resource Management	x	x	x
Inventory Management	x	x	x
Production Planning & Execution	x	x	x
Project Management	x	x	x	x
Quality Management	x		x
Sales & Marketing	x	x
Service Management	x	x	x
Supply Chain Management	x	x	x
Warehouse Management	x	x	x

Where the Sidewalk Ends
The Dynamics' roadmap stretches out to 2017 with all four products extending three versions out from the current release. What happens then? Will Microsoft move the products down- or up-market? Will users be encouraged to migrate to one system over another?

Speculation aside, we expect Microsoft to continue supporting and investing in each Dynamics product. New versions of each ERP product are due out in 2010 (e.g. "GP 2010." Read more on the ERP Software blog) and new features (e.g. "Environmental Sustainability Dashboard") are being added on a regular basis.

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http://www.RahulSharma.in Rahul Sharma

Hi Houston,

You missed two very important things in this article one is support of web platform offered by these ERPs and workflow management module offered by these. Business portal is called Enterprise portal in Ax.

I know MS is eagerly trying to migrate these ERPs to its .Net platform. And if you talk about Ax its so far so good. MS has already migrated Ax web addition (Enterprise Portal) from ASP to .Net.

I still think, one day you will see a consolidated single ERP from MS….a tough task but possible.

Thanks,
Rahul
http://www.officeops.com Eric Boes

Interesting article, especially the module grid.

Microsoft has repeatedly said they are committed to all 4 product lines so I expect all 4 will remain for the next 5 years or more. I doubt that MS will drop the GP or SL product lines unless sales drop off, and with GP at least that isn’t going to happen in the US.

I have heard that interest in NAV is increasing in the US and some GP partners are adding NAV to their offerings.
http://charliem.wordpress.com Charlie Maitland

An interesting post. My observations are:

Market Penetration
I would be interested to know what the sources of data are for the market size and segmentations I would also be interested in the geographical market for the data. As discussed in the rest of the post there are huge differences in geographical market share.

Portals
One aspect that you allude to in the final matrix is the online portal. You only list GP as having an online portal but I think you are missing out on one major component of the Microsoft stack – SharePoint. The GP Portal is simply a set of pre-configured SharePoint pages which Dynamics AX also has, and I suspect other Dynamics products have this as well but I have not investigated this.

Project Green
It terms of Project Green, this was indeed a far more complex project that the marketing team at Microsoft realised.

There are key differences in the way the different products work under the hood, especially in the multi tiered environments.

My own personal view, based on no inside knowledge, is that now all (I think all) the products are aligned to the SQL Server platform we will see a consolidation based on 2 key aspects.

Unified UI, this will be the unification of the UI based on SharePoint, web parts and a browser experience. The inclusion of Silverlight in the core of SharePoint 2010 will only enhance this.

Segmentation between the products will be based on middleware. Depending on the deployment, scalability and transactional processing volumes the products will be segmented such that GP is for lower to mid tier GL transactions with some ISV verticals, NAV on low to mid tier transactions with heavy ISV verticals and AX for high volume and high ISV verticals.

Now I know that is a MASSIVE generalisation and as your graph shows there is lots of overlap. However, by abstracting the database layer to SQL Server and the UI layer to SharePoint that leaves Microsoft and easy mechanism for segmenting the market with minimal work. It also matches the strategic goals Microsoft have for the global unification of the workplace around SharePoint.

Charlie
http://www.vaidy-dyngp.com Vaidy

Hi Houston,

This is pretty good article. As Rahul mentioned above, the WEb Portal Capabilities have not been listed for the ERP Suites. But nevertheless, to give enough idea, this is a perfect article.

Thanks for sharing your thoughts with us.

Thanks
Vaidy Mohan
claudio valtorta

The article is very interisting. I would add a more extended evaluation of the functionalities, comparing the four products particularly in the manufacturing area, costs accounting, I can’t do it by myself as Great Plains and Solomon are not available in Italy, but it could be interisting all the same.
http://www.serenic.com Linda Nicholson

Serenic Software, one of the 9,000 Microsoft ISV’s mentioned in your article, has established a strong presence in the nonprofit space for Dynamics NAV by embedding fund accounting functionality specifically for nonprofits into NAV. The product is called Serenic Navigator, and is fully certified for Microsoft Dynamcis NAV 2009.
GAnstead

Houston,
This is pretty good article.

I share Charlie’s comment about your source of data for the size of company by employee count.

In my experience, all the product lines have penetration across the spectrum you describe, however, I have not seen GP to be primarily targeted at the size of company that you have illustrated (150 – 6000 employee count)! Likewise, I am surprised that you illustrate the target market size for SL & NAV as so low.

Thanks,

Glenn
Mike

Houston,

Great article, follows in line with in what we see and have experienced in the Dynamics market as a whole.

Just a few quick corrections. Both AX and NAV have Portal functions. They both leverage SharePoint to accomplish this and have done quite a bit to integrated with SharePoint with the their current versions. GP and SL both currently use Business Portals to leverage SharePoint as well and have been doing it a few years longer than AX and NAV, but the 4 of them have this done.

Also SL does have inventory management as it pertains to distribution. It may not be as nice as say NAV or AX, but it has been there for quite a while.

Also a comment that AX is Microsoft fastest growing product may be true, but when you move from a very small number any growth is a large growth percentage. Microsoft loves to play with percentages.

Food for thought: That SL, GP, and AX total combined installed base is still smaller than NAV’s installed base.

Mike
Toni Savage

Seems like SL needs a bit of a spokesperson here.
No one has mentioned that SL also has Business Portal/Sharepoint support. I’ve been a SL dealer since 1981, and it definitely is strongest in Not-for-profits and Projects (professional services especially. Much more felxible and easy to use (though tricky to set up because of its flexibility)
The original advantage GP had over SL was that it was customizable, and it served many “vertical markets”, from real estate to printing.
But with the Windows version, SL became much more easily customizable that GP. I have always liked the SL user interface… things like being able to directly paste a journal entry from Excel to the JE screen (or any screen with a grid)
SL is the only package originally designed by an accounting firm (Price Waterhouse) and has always been the “package of choice” in its class for accountants.
http://www.informationdifference.com Andy Hayler

Nice article. Microsoft’s move into the enterprise applications via these acquisitions has not been a pretty sight, and they clearly bit off more than they could easily chew with this rather confused flurry of purchases. However Navision in particular has a good reputation, and certainly there is a place in the market for ERP solutions at a lower level of complexity than SAP and Oracle’s offerings.
http://www.tribridge.com Barbara Archer

Of all four ERP products, only SL is 100% .NET. The package is also the product of choice for Professional Services (although AX is coming on strong but not quite there yet) and Construction/Engineering (none can even come close in this space). One of our customers has 25 sites workwide and has 350 back office users and 3500+ Business Portal users so I would say the it scales very well.
http://techblog.byllemos.com Ingrid Byllemos

Houston,

Great article – thumbs up from here

As already mentioned by Mike – NAV has Portal function in shape of SharePoint.

NAV is not 100% .NET but with the NAV 2009 SP1 and especially with the next versions it is getting closer and closer to it

You mentioned that NAV is strong as a single-site, which is correct – but I must say that NAV also does perform well in multi-sited implementations. On strong side is that each site can run with localized installations. Which means, that for example a Site in USA can have an English language layer where as a Site in Denmark can have a Danish layer – and they will still be able to “talk” with each other without any problems.
http://mibuso.blogspot.com/ Veerendra

Nice Post.
http://dynamicssmallbusiness.blogspot.com/ Matt Landis

Considering the very robust and thriving community surrounding Dynamics GP in the USA I would expect it to find itself among the surviving products.

Matt Landis
http://www.readybms.com Nick Doelman

Great article. One thing missing from the list is Microsoft Dynamics CRM. While not an ERP, it does belong to the “Dynamics” family. That story could be a blog post on its own.

Also the name “Dynamics” is interesting because it was the original name of Great Plain’s original ERP product that evolved from Great Plains accounting. Its quite obvious who was in charge when that name was picked!
Toni Savage

Another thing I note about the grid is that it goes into a lot of detail about the “Distribution” area (inventory, etc.), but only one line about “projects”… as we get to be more and more of a service-oriented economy rather than manufacturing and distribution, the detail lines of things like Project budgeting, quotes, contract management, “service plan” tracking and invoicing, etc., become more important to an increasing number of clients.
I think this is one of the main reasons that Microsoft has committed to keeping the 4 products separate for a while (besides user-interface preferences of different companies).
http://www.tectura.co.uk Microsoft Dynamics from Tectura

Microsoft’s appetite in this market place seems to be growing. The confusion between each of the offerings seems to be calming down now there Project Green has been stopped. The lack of clarity impacted the sales process and allowed the competition to capitalise on the lack of decisive direction, this has now been cleared with the statement of direction for each product. The apparent geographical split of products is causing some concerns as more and more global companies are looking at Dynamics options as a real alternative to the traditional large deployment ERP solution – SAP and Oracle. The Dynamics AX solution is real option with significantly lower implementation costs for global businesses and the functionality is proving to be at least capable for these larger global companies. The key differentiator is the lower deployment costs and a much quicker return on investment, vital in today’s economical climate.