Disruption in the ERP market
The Dynamics NAV market is changing with the possibility of subscriptions that include upgrades and free support.
Now that Abakion is offering the first complete package solution with ERP (Dynamics NAV / 365) for medium-sized companies, we are talking about disruption (in Clayton Christensen’s original definition of the term).
At the same time, Microsoft is steering all its ERP product development in the same direction with their new launch of ‘Dynamics 365’, which is a standard solution that cannot be customised.
This will change the ERP market for small- and medium-sized businesses significantly.
Microsoft’s agenda for the future
Microsoft has a clear agenda for Dynamics 365: they expect that small- and medium-sized businesses will use standard solutions instead of special customised solutions in future.
They are putting all their eggs in that basket, and Dynamics NAV, Dynamics AX and Dynamics CRM are being melted down and combined in Dynamics 365.
Complete package solution
We are building on that foundation with Abakion 365, which is a subscription that includes more than just the ERP solution. We also include upgrades every 3 months and unlimited hotline support in the subscription, so you as a customer only have one subscription price to consider. All inclusive.
We expect that many other ERP vendors will offer similar subscription models in future, since that is the future that Microsoft is dictating.
What is disruption, and why is disruption in ERP interesting?
Disruption is a term that means that the big players in the market are focusing on their major customers and existing products rather than innovation because of the high returns, but this makes room for companies to set upon the market from below with innovative products that are cheaper and which can subsequently grow up in the market.
That is exactly what Abakion is aiming for with its Dynamics NAV package solution.
Bound by tradition
The ERP market for medium-sized businesses has always focused on providing customised, tailored solutions.
Granted, many companies have been frustrated because it is expensive to upgrade customised solutions, but when it comes down to it, most companies have preferred system customisations over a lack of functionality or the need to change business processes.
Since the advent of the ERP system, ERP vendors have focused on providing consulting hours. This means that customising the system on an hourly basis is good, and that standard solutions are bad for business.
Decades have gone by since then and all other technologies have been moving over into subscriptions and standard solutions. But not ERP, and there are two reasons for this:
- The first is that ERP systems have a high degree of complexity. Although the comparison with mobile telephones is obvious, it is easier to live with missing features in a phone app than it is in an ERP system. So, it is natural that the move towards standardisation is taking a long time for ERP.
- The second reason is the focus on major customers and existing products rather than on innovation, and this lays the groundwork for disruption to occur.
The market will change
At Abakion we have always believed 100% that disruption of the ERP market will take place. We have been working on our package solution for many years so we will be ready.
Now we are even more confident in this belief since Microsoft has chosen to adopt the exact same strategy with their launch of Microsoft Dynamics 365.
Now Microsoft will lead the way, spreading the word about standard solutions. We are glad that an ever-increasing number of people are preaching that message, but we are especially glad that we at Abakion are many steps ahead of the curve, because we can already provide Dynamics NAV as a standard solution and we already have many customers up and running on it.
Apps instead of customisations
Dynamics 365 is Microsoft’s package solution that combines Dynamics ERP (NAV and AX) with Dynamics CRM. It is offered exclusively as a cloud solution, and it is important to note: it will not be possible to customise the solution.
Customers can purchase additional ‘apps’ that are developed as ‘extensions’ in Dynamics NAV, which makes it possible to install and uninstall the apps very easily. But it will not be possible to change the solution itself or modify the apps for individual customers. It is the same concept as with mobile telephones.
The challenge for NAV vendors
The challenge for all NAV vendors will of course be offering apps that have enough functionality that customers do not need to customise anything.
And this is where we cannot help but be a little smug, because we can already do this at Abakion.
We have a lot of customers who have replaced their old, highly customised NAV system with a standard solution and our apps – and they did not need to customise anything at all.
Upgrades and hotline support are included in the subscription
This means that we as the supplier can include future upgrades in the subscription. Our customers on the standard solution never need to go through an upgrade project or migration project again. They are automatically upgraded to the latest version every 3 months.
This also means that we can include unlimited hotline support in the subscription. We are so confident in our business model that we will give you a fixed price for the migration project that will move you over to the standard solution, including migration of your old data.
Take a look at standard solutions
We have no doubts about the subscription-based business model, where you as a customer use a standard solution without customising anything, and where everything is included in the subscription. It is the future of ERP.
In 5 years, small and medium-sized Danish companies will not be buying anything else.
In 5 years, nothing else will likely even be offered to small and medium-sized companies.
Large companies certainly have a level of complexity that will slow this development to a certain degree. Carlsberg and AP Møller will probably always have customised ERP solutions.
But if you are a small or medium-sized company with, say, between 10 and 50 Dynamics NAV users, then it is time to consider moving to a standard NAV solution on a subscription basis.