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Microsoft Dynamics AX ERP software was revamped and released early in 2016 as a cloud-first ERP system. Manufacturers have a lot to like in the new system, as they contemplate moving to the cloud, according to Gartner research director Nigel Montgomery, who covers ERP systems. In the following Q&A, Montgomery discusses Dynamics AX ERP and how it compares with SAP Fiori UX. He also looks at where Dynamics AX ERP fits in the increasingly crowded cloud ERP landscape.
What do you think about Microsoft Dynamics AX ERP?
Nigel Montgomery: The basics of Dynamics AX ERP are good, the product is good, the visualization and the way that I can engage the data and the system is very good. The UI is exceptional; it's much more flexible than many others out there in the market, so this is all good stuff. The challenge is that, out of the box, it doesn't handle project-centric as well as it should ... therefore, you may need partner add-ons to cover some of those things. I think that's a challenge, because a lot of those manufacturing organizations are getting increasingly project-centric in terms of the way that they engage both from a customization perspective for an individual customer and also in the way they think about individual projects. So, even a retailer that's doing a private label-type situation, it's a project. There needs to be a little bit more of a focus on a project-centric model and bringing in those capabilities that would be needed in such a model -- for example, the costing it out, the planning and even the, 'Can I do this, or should I do this?' type [of] scenario. They have the delivery mechanism for the information; they just don't have the system in such a way to be able to collect that. So, it requires… additional work by a partner, which I think they [should bring in] because I don't think that's going to get any easier.
What does Dynamics AX ERP do well, and what could it do better?
Montgomery: As a make-to-stock distribute-type model, it's a very capable tool and has gotten more capable. I think that the warehousing and transportation functions are very good. One of the challenges that I think that Dynamics has is that it was developed to be relatively generic and cross-industry, which is great in some ways. But, in other ways, [it] means that I need somebody else to fine-tune the things for my particular need. This is where the partners come in, but the challenge is that the bigger they are, the less they want to be working with a small partner to do that; they want the system to be configured the way they need it. It will be interesting over time to see as to whether the GSIs [global systems integrators] either buy those smaller partners with that capability or build it. But it seems, to me, logical that it's going to come from that GSI layer or business integration layer, if you like.
How do you think Dynamics AX UX compares with competitors like SAP's Fiori UX?
Montgomery: I think the new UX [user experience] is more flexible than what SAP Fiori can do at this moment, particularly for the different roles that you've got within a business or workloads within a business. However, the problem with it is that's it's so flexible that you can actually tie yourself up in knots if you're not careful. So, unfortunately, one of these challenges is that with this flexibility and agility comes risk and management challenges. SAP's got something that's more easily structured and, therefore, can be standardized across business units, whereas with AX, it puts this in the users' hands a little bit -- possibly too much. But, at the same time, one of the best parts about it is that freedom to be able to do stuff; it's just that it puts a certain amount of business management or systems management control onto an organization.
What about some of the other competitors in the ERP space now?
Montgomery: Infor has a very good overall go-to-market model now. They have revolutionized their thinking in some ways now around how they go to market. If you look at what Infor has got and how they enable, while it's not necessarily geographically the same, their pockets of capability and their overall story [are] very sound. I think we show them in our vendor rating as a promising vendor, because they have most of the bits that they have to do in place. What they just need to do is prove it through adoption, and that takes time. There's a lot that they can do about it, but I would say that Infor seems to be doing the right things in the right way to set themselves up; and, therefore, they are competitive in some decent-sized deals. So, I think they've got a good story.
Are others doing interesting things in the manufacturing space, particularly with regard to cloud adoption, which has been somewhat slow for traditional manufacturers?
Montgomery: There are some of the other players that I think are interesting that are starting to come into the mix. NetSuite has been in the cloud story for a long time, and they have got some manufacturing capability, but it's not as deep as AX's -- and it's not as deep as some of the others around the patch, like JD Edwards [EnterpriseOne] and so on. But it is capable, and they have good distribution, good price-management-type situations. So, right now, [it has] a good solution, with good capabilities for the smaller organization. NetSuite can play, but I think this movement to the cloud or the acceptance of the cloud being a delivery model brings a whole bunch of other players into the mix, like Kenandy and Acumatica, that are actually out there doing something now. As the issue of cloud goes away or the acceptance of cloud comes in, whichever way you look at that, these vendors have got a story to tell and they have opportunity as well. And, in a way, that's what the likes of Microsoft or SAP have got to guard against.
Do you think manufacturers are becoming more comfortable with the idea of moving to the cloud?
Montgomery: It's just that companies that were against cloud at their manufacturing and operations level, or were hesitant with cloud, that's starting to go away. So, the more it goes away, the more a cloud-only solution seems like a reasonable idea. Before it was, 'You don't do on premises, so I'm not sure I want to play.' I still think there's a fair bit of that, but in a lot of cases, it's becoming more accepted. It certainly is at the SMB level, so I think, realistically, there's some opportunity there. That now changes the market dynamics, because instead of having two or three vendors that could be your potential vendors, you've actually got quite a number of people that could do it. Then, your challenge is how you're going to select between them, and that's where [Gartner gets] involved a lot. We get a lot of companies that say, 'Help us. We've got a list here of people as long as your arm. Just help us narrow it down.' It's not just about the product; it's about licensing [and] it's about how you set it up as a system from a cloud or PaaS [platform as a service] model.
Dynamics AX is software for the upper midmarket.
Which cloud ERP vendors are right for you?
Microsoft offers cloud-based ERP in Dynamics AX.