Inspire 2018: Microsoft updates Dynamics 365 for Finance and Operations customer base stats

July 19 2018

Microsoft reports that there are now nearly 100,000 monthly active users on Dynamics 365 for Finance and Operations (D365FO), the company's cloud ERP for the enterprise market. Microsoft and its partners have grown the customer base to over 2,100 after year two, with more than 600 in production. And according to the graphic below, shared with Microsoft partners at Inspire 2018, more than 80 percent of customers are choosing online rather than on-premises.

(Note: Microsoft has since removed the content below from the publicly available Inspire site where it was posted -Ed.)

D365FO and Retail general manager Muhammad Alam reported at the event that the D365FO customer base has grown 3X over the last year, from 650 to over 2,100 customer, with more than 600 deployed in production.

3X growth in Dynamics 365 for Finance & Operations
NOTE: Microsoft has since removed the source material from the Inspire site

The D365FO platform has been in production for just over two years. Alam said Microsoft believes the 100,000 monthly active unique users translate to 500,000 or more total users created by customers so far. Increasing the monthly actives and boosting their net promoter scores (NPS), which Microsoft requests on a regular basis, remain key metrics for the engineering team.

"From an engineering perspective, what we want to continue to increase, because if not it is a risk of churn," said Alam.

The 600+ customers in production span multiple geographies and run varying workloads. Many customers still look at a twelve to eighteen month implementation timeline, Alam noted. About 100 customers went live in just the last four weeks, Alam said. He noted that Microsoft and partners are looking to shorten that implementation timeframe by encouraging incremental launches over the course of a project rather than traditional waterfall style go-lives.

That group of 600+ live customers brings with it other positive outcomes, Alam said, that should encourage partners. First, they end up more than doubling their software spend in the first twelve months in production and grow it by 2.5X in the first eighteen months. Some customers tell Microsoft they expect to grow their usage by a factor of 10X to 15X, he said. Overall, 50 to 75 percent of growth is coming from customer that were sold in previous years.

Of the 2,100+ customers working with D365FO, two thirds are "net new logos" for the product. By contrast, Alam suggested that cloud ERP competitors may be boosting their customer stats by leaning more heavily on on-prem license transitions.

"We took a different path and took a focus on net new customer first," he said. "And there's a tremendous amount of room for growth."

Citing a broad CIO survey, Alam said Microsoft sees the total addressable cloud ERP market rising to over $21 billion by 2021. Microsoft estimates its own portion of the addressable ERP market is $1.7 billion, including about $900 million in ERP modernization (meaning primarily legacy customers) and $800 million of "ERP surround and replace."

Microsoft ERP addressable opportunity by sales play
Source: Microsoft Inspire online (the source material has been taken down)

Alam also revealed that approximately fifty live customers are already using CDS-driven connected processes that tie D365FO to other D365 apps like "order to cash" and "field service to operations". There are more flows in the works, including "project services to finance" and "Talent to finance".

"Connected processes is something we've talked about for years," Alam told partners.  "CRM and AX should talk seamlessly because that is the vision we sell but we haven't delivered real product truth around it from an engineering perspective...But we've fixed that, making sure that there's product truth. Seamless connectedness across D365 is a core priority for us."

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Prior to co-founding MSDynamicsWorld.com, Jason was a Principal Software Consultant at Parametric Technology Corporation (PTC), where he implemented solutions, trained customers, managed software development, and spent some time in the pre-sales engineering organization. He has also held consulting positions at CSC Consulting and Monitor Group.

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