Microsoft Among HCM Top 500

One Microsoft Way

Redmond, WA, 98052-6399, USA

+1 425-882-8080

http://www.microsoft.com

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Microsoft Recent Developments

In June 2016, Microsoft announced plans to buy LinkedIn for $26.2 billion, its largest acquisition in history, as it aims to strengthen its position in the Cloud applications market.

Microsoft Key Cloud & HCM Applications

Microsoft Dynamics AX, Microsoft Dynamics CRM Online, Microsoft Dynamics NAV, Microsoft Dynamics SL, Office 365,

SCORES Analysis

Microsoft Strengths

In 2016, Microsoft started rebranding its CRM and ERP products as Dynamics 365 in a move that followed the tradition of its Office productivity products – the whole is always bigger than the sum of its parts. The name change, which took effect in 2016, has been set in motion since Dynamics CRM and AX products have been gaining momentum, while NAV, SL and GP have a long history of winning in specific markets. NAV performed well in Scandinavian countries, SL was strong among project-based organizations, and GP held up in North America, especially in distribution vertical. The emergence of Dynamics 365 crystalizes Microsoft’s vision of delivering an assortment of Cloud services designed for different roles – customer engagement, operations and team member. The first is the familiar territories of its Dynamics CRM products for sales, marketing and customer service, coupled with newer apps for social listening, analytics and insights. The operations part of Dynamics 365 is geared toward finance, manufacturing, operations, retail, distribution, procurement, and project management functions. The team member portion handles such tasks as time and expense, employee self-service as well as talent management. Dynamics 365 covers Business Edition($40 per user per month) and Enterprise Edition($210 per user per month) with the former focusing on companies with fewer than 250 employees and the latter for larger organizations. The price points of both editions, which cover all-you-can-eat applications, are competitive when alternatives from other vendors fall short since they typically gravitate toward CRM or ERP, but not both. According to Microsoft, most users have Plan 1, which starts at $115/user/month before waterfall pricing and other discounts, or they purchase the individual apps, most of which are $95/user/month. Only a small subset of an organization requires full licenses for Unified Operations, and customers can mix and match subscriptions vs. needing to purchase the same thing organization-wide. Since the announcement of Dynamics 365 in July 2016, Microsoft Dynamics revenues grew 9% driven by Dynamics 365 revenues, which jumped 78% in its fiscal 2017. With growing sales of Dynamics 365, Microsoft’s cash cow remains its Office franchise with 1.2 billion users around the world. The on-premise revenues of Office including both Commercial and Consumer releases are at least four times the size of their Cloud counterparts based on our estimates. Office’s on-premise revenues are expected to remain the biggest line item within the Productivity and Business Process group at least through 2020. With a $26-billion price tag, the December 2016 purchase of LinkedIn, its biggest acquisition ever, could tip the makeup of its enterprise applications revenues in favor of Cloud services. Regardless of the delivery model, Office and Office 365, which now share a common data model with Dynamics 365, continue to loom large in the future of Microsoft. The issue remains how Microsoft plans to extend its applications portfolio to the more than 500 million members of LinkedIn, some of whom may find new reasons for subscribing to Office 365 and Dynamics 365 as they move more of their sales, marketing, HR and other corporate functions like sourcing online. For one thing, LinkedIn, unlike other social networks, has already established a healthy recurring revenue stream from millions of paid members. When these individuals are seeking out each other for professional and personal growth, LinkedIn becomes more like an idea marketplace than a social network. The 2015 purchase of Lynda.com for its learning content has propelled LinkedIn to the leadership position in the eLearning content segment, underscoring the fact that individuals and companies are willing to pay up for valuable content. The upshot is to continue to monetize those connections through not just membership fees, but also Microsoft apps and tools that it can sell to enrich those interactions. That in itself should reinforce the notion that Microsoft is all about the whole, not just the sum of its parts.

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  • Key differentiators
  • Domain Expertise
  • Product portfolio
  • Solution scope

Microsoft HCM & Cloud HCM Applications Revenues, $M:

Type/Year 2015 2016 YoY Growth, %
Total Revenues, $M Subscribe Subscribe Subscribe
HCM Applications Revenues, $M Subscribe Subscribe Subscribe
Cloud HCM Applications Revenues, $M Subscribe Subscribe Subscribe

* HCM Applications Revenues = License + Support & Maintenance + SaaS ( Hardware and Prof. Services are Excluded )
** All revenue figures are estimates based on public records, Cloud and Non-Cloud business models in Apps Run The World's vendor database, and annual survey results including vendor feedback.

Microsoft 2016 Revenue Breakdown by Type:

Type License Services Hardware Support & Maintenance SaaS
% of Total Revenues Subscribe Subscribe Subscribe Subscribe Subscribe
Revenues, $M Subscribe Subscribe Subscribe Subscribe Subscribe

Microsoft 2016 Total & HCM Applications Revenues by Region:

Region % of Total Revenues 2016 Total Revenues, $M 2016 HCM Applications Revenues, $M
Americas Subscribe Subscribe Subscribe
EMEA Subscribe Subscribe Subscribe
APAC Subscribe Subscribe Subscribe
Total Subscribe Subscribe Subscribe

Microsoft Direct vs Indirect sales

Region Direct Sales Indirect Sales Total
Type % Subscribe Subscribe Subscribe
Revenues, $M Subscribe Subscribe Subscribe

Microsoft Customers

No. of Customers: Subscribe

No. of HCM Applications Customers: Subscribe

No. of Cloud HCM Customers: Subscribe

No. of Cloud HCM Subscribers: Subscribe

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  • Reference wins across regions
  • Customer Size segments
  • Customer wins momentum

Microsoft Opportunities

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  • Market Opportunities at the vertical and subvertical levels
  • Mergers and Acquisitions (M&A), Funding
  • Geo Expansions

Microsoft Risks

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  • Ability to handle internal and external risk and challenges

Microsoft Ecosystem

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  • Health of ecosystem
  • Network Effects of BPO, ISV, SI
  • VAR Partners
  • Direct vs Indirect sales

Microsoft Cloud Platform (PaaS) & Infrastructure (IaaS) Details

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  • Cloud Infrastructure (IaaS)
  • Cloud Platform (PaaS)
  • Cloud Application delivery (SaaS)
  • Data Center (Hosting)

Research Methodology

Data used in research reports are derived from publicly available documents, continuous surveys of applications vendors, customers, resellers, Independent Software Vendors, systems integrators and other verifiable sources.


Vendor shares and market forecast results are based on a combination of existing databases as well as demand side and supply side research conducted throughout the year with validation from vendors, customers, channel partners and documentations such as earnings releases and 10Q and 10K filings, vertical industry studies, regional and country-level statistics from public and private institutions(i.e. colleges, universities, government agencies and trade associations).




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