Let me preface by saying, I am not an ERP Guy. At our own firm, we use QuickBooks, even though we have access to Microsoft ERP software at no cost. Is QuickBooks better? Far from it, but is it good enough?
A QuickBooks Alternative?
When I first started seeing, what was then known as “Project Madeira”, I remember thinking, “Uhoh, QuickBooks better watch out, Microsoft is coming“. In fact, in those early days, it was presented as a preview of a QuickBooks “alternative”. It sure looked like one. But QuickBooks had quite a head-start. Intuit, founded in 1983 as a personal finance software, quickly moved to small business, and has “owned” that market ever since. It currently has at least three times as many subscribers, just to it’s online version, than it’s next competitor. Microsoft was not even on that map. An ambitious undertaking to be sure.
For the QuickBooks “Out-grower”?
With the launch of Dynamics 365, Project Madeira found a permanent home in the Business Edition, with a shiny new name: “Dynamics 365 Financials”. It was the first, and is still the only, member of the Business Edition “Suite”. The team behind Financials continued to evolve the product, that started as a subset of Navision features, by continuing to return to NAV and co-opting more and more features from this mid-market ERP. Financials soon became more advanced in many areas than Quickbooks, and so the “positioning” of the product changed to “For Quickbooks out-growers”. This was obviously due to the realization that Financials had moved beyond the “Entry-Level” stage.
New Target: Out-Growers
When you look at the, far and away, dominant player in a space you want to enter, you have to be prepared to pick your battles. Intuit has amassed an army of accountants, over decades, who only support Quickbooks, and almost every new US small business is going to end up starting with Quickbooks. That was not a battle Microsoft was going to win, without taking severe casualties. Where Quickbooks is strongest, is with the new SMB, but as that SMB grows, Quickbooks starts to show cracks. It is at this tipping point that Microsoft has re-aimed Financials. Brilliant!
When to say When
Just because you can do something, does not mean you always should. Those that follow “Financials”, are aware that Microsoft is focused on bringing full NAV parity to Financials. Every day, Financials gets more powerful, and as a result, more complex. What was originally aimed at the “S” of SMB, has rapidly moved towards the “M”. Is this a good strategy? Time will tell. On the cloud side, which eventually will be the only side, there is quite a bit of maneuvering room between say QuickBooks and Dynamics 365 “Operations” (AX). Much of that space is currently occupied by on-premise, or hosted, GP, SL and NAV, for which there are no SaaS plans on any roadmaps. As Financials makes it’s way towards being the SaaS “upgrade” for those users, it appears that QuickBooks for the new SMB will maintain it’s position.
Good News for Some ISVs
If certain ISVs, like DBSync, and their awesome QuickBooks to Dynamics integration solution, were concerned about the direction Microsoft was heading with Financials, I feel like they can rest easy. I think Microsoft has over-shot the majority of QuickBooks users, and Microsoft seldom “walks back” product development. I don’t think this was a bad move for Microsoft, they pivoted (intentionally or not), from a market that they would struggle with, to a market that is wide open.
What should partners sell?
So this has become a little murkier now than I thought it would be. I had every intention of pitching Financials and the Dynamics 365 Business Edition “Plan” to SMB customers, at least once the other SMB apps were launched. Since many of these customers will most likely be using QuickBooks (at least in the US), do I try and pitch Financials or DBSync? I guess it would depend on their answer to this question: “Is QuickBooks working for you now?”