The head of one of Microsoft's fastest-growing cloud software businesses explains what sets it apart from rivals like Salesforce

Microsoft

James Phillips, President, Microsoft Business Applications

• Microsoft announced updates to Dynamics 365, its subscription based line of business applications, as it the business grows and the company invests heavily in the space to take on existing players like Salesforce, Oracle and SAP.
• James Phillips, president of the business applications group at Microsoft, told Business Insider that Microsoft has built Dynamics 365 with a "data-first" approach, setting it apart from rivals like Salesforce.
• Specifically, Phillips says that Dynamics 365 was designed from the ground up to analyze all the massive amounts of information that companies are generating from all their various software and systems, making it useful and usable.
• Among the updates: Making Dynamics 365 available to government customers.
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Microsoft has been making moves into customer service and financial planning software with Dynamics 365, its subscription-based line of business applications. It is investing heavily in the space as it adds more capabilities rolling out over the course of this year, to take on established competitors like Salesforce, Oracle and SAP.

In its last earnings report, Microsoft said Dynamics 365 revenue increased over 40 percent from a year prior, though it doesn't disclose specific revenue figures. Microsoft is hoping to continue that growth and today announced several new features for its Dynamics 365 platform that add more capabilities and artificial intelligence features.

James Phillips, president of the business applications group at Microsoft, said that the product's fast growth is a function of the fact that companies need better ways to process all the data that they've been collecting from across their various software systems. Dynamics sits hand-in-hand with the Power Platform, Microsoft's tools for helping even non-technical folks make simple apps, he said, as a way to make all that data useful and usable.

"These applications, Dynamics 365 and the Power Platform that sits beneath are designed to be data first, designed to allow you to collect data from across the organization, from all of your various systems and to analyze that, to deeply understand it and to predict. And that's what's leading to I think the success that we're seeing in the market," Phillips told Business Insider.

Its that detail that Phillips sees as setting Microsoft apart from competitors like Salesforce - in his view, Dynamics 365 is the first system of its kind that was designed to build on top of existing data. That's in contrast to others, which were originally designed to generate that data, not as a way to sift existing information.

"While we're competing with the likes of Salesforce and others, we are as different, frankly to Salesforce, as Salesforce was to Siebel in the last round of disruption. And I think this round of disruption is an even greater sort of force in the market. It's not just the move from on premises to SaaS. This is the move from app-first to data-first," Phillips said.

Salesforce had made strides in this space as well and announced updates to its platform during its annual Dreamforce conference in November that were aimed to help businesses get a better, "360-degree" view of their customers.

To continue growing the Dynamics 365 business, Microsoft three months ago added 1,000 new salespeople to Dynamics 365 sales organization, almost tripling it in size, Phillips said. He said that Microsoft is "all in" on Dynamics 365, and so it has invested heavily in building out the business.

"The magnitude of the investment is unparalleled. And it's largely because our customers are telling us that, if we can give them an application to start with versus a collection of tools to go build solutions, they would strongly prefer that," Phillips said.

The new features will become available between April and September of this year.

Tools for digital transformation

The updates to Dynamics 365 announced today are all related to this notion of "data first." A new tool will make it easier for Dynamics 365 users to consolidate data from more places, including the Microsoft Forms survey tool, to help companies better understand their customers across all platforms.

Perhaps more impactful, Microsoft is officially launching Dynamics 365 for government customers, with the proper certifications for public sector use. This comes as Microsoft continues its push to get government contracts after scoring the $10 billion JEDI deal with the Pentagon.

There are also new AI features in Dynamics 365 to help with financial planning and predicting if sales targets will be met.

In a broader sense, Phillips says that Microsoft's other advantage is that it can offer businesses everything they need as they make their so-called digital transformation and modernize their IT as they move to the cloud. From Microsoft Office 365 and Dynamics 365 for productivity, to Microsoft Azure for cloud computing, Phillips says that whole businesses can be run on Microsoft tech.

"The integration of Dynamics, Office, the Power Platform and Azure, I believe, represents the industry's only complete left to right, top to bottom, unified digital transformation platform," he added.

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