Microsoft To Shift ERP Pricing

The company offers Great Plains, Axapta, Navision and Solomon lines—now under the Dynamics brand—on a per-module basis. That leads to a complex sales cycle as VARs figure out the best solution. The current price list for Dynamics GP, NAV, SL and AX is 13 pages of single-spaced small-font type. “That’s why we get the big bucks,” joked one partner.

Microsoft also will initiate what some call the “Office-ization” of ERP by rolling out ERP “suites.” A basic or standard edition would bundle functions that most companies use—accounts payable and receivable and general ledger, for instance. That would sell for a set per-user price. Customers who need more advanced functions—say credit-card processing or other perks—might go for a Professional edition with more functions and a higher per-user price.

Partners say this will ease comparisons to SAP BusinessOne at $3,750 per user and Oracle eBusiness Suite Special Edition at $2,000 per user.

Specific pricing is not certain, but the software giant is expected to roll out this plan at its annual partner conference in Boston in July.

Existing accounts will be able move to the new model or stay with their current module plan indefinitely. New users, however, will be sold and licensed on a per-user basis. There will be a 90-day transition period for the partners to acclimate themselves and their customers to this change, sources said.

The current thinking is that users with a small number of modules now would end up paying more in a per-user scheme, while those with many modules would pay less.

“There will be a sales toolkit to help VARs determine how customers will be affected,” said one partner who has been briefed. “Remember, Microsoft sees MBS as a direct competitor to Oracle and SAP.”

That is a significant change from Microsoft’s current per-module pricing but will put its products on a comparable footing with the SAP and Oracle midmarket products.

A spokesman wouldn’t comment on packaging changes but confirmed that Navision currently is offered via optional per-user pricing in Europe.

Microsoft plans to outline changes at its partner conference. Existing customers can make the transition or stay on per-module pricing and licensing. But new customers will move to the per-user scheme, several sources confirmed. The plan is to give the MBS channel 90 days to make the transition, although these details could change.

Microsoft, already slammed for the complexity of its licensing is faced with the daunting task of easing ERP sales even as it continues to field four product lines and as enterprise software competitors are coming down full force into the midmarket where Microsoft, Redmond, Wash., hopes to dominate.

Even true-blue MBS partners said they found Oracle’s aggressive E-Business pricing compelling.

Oracle did a good job packaging up basic financials and common workflows in Special Edition and integrating a partner interface to speed deployments, said Ron Zapar, president of Re-quest, a Chicago-area Oracle partner.

Some Microsoft partners worry that this change will confuse and possibly alienate customers.

Per-user pricing is “fine if it’s an option, but definitely not fine if it’s a forced transition,” said Linda Rose, president of Rose Business Solutions, a solution provider in San Diego.

John Hendrickson, CEO of InterDyn-Business MicroVAR, a Minneapolis MBS partner, said the whole thing will probably be a wash for his company. “Microsoft has done promotional bundles in a particular vertical, and they’re nice and simple and there’s usually a discount. But most of my customers like buying only what they need,” he said.

Another partner was hopeful the change could spark new sales by making it easier to pitch Navision to customers, many of whom equate SAP with ERP.

But another worried that this is the first step toward putting Microsoft ERP, now sold by a subset of Microsoft partners, into enterprise agreements and thus broad distribution.