How Microsoft Positions Dynamics AX vs Dynamics NAV and Dynamics GP – An Interview with Gordon Macdonald

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gordonIn an interview with the ERP Software Blog, Gordon Macdonald, ERP Product Marketing at Microsoft explains how Microsoft positions its top ERP products.

Microsoft offers four comprehensive Dynamics ERP software products, but how do you know which is the right fit for your company? Is it based on your industry, your size, your geography, your functional requirements, or all of the above? The answer is: all of the above. However, there are now some clear guidelines to help you know where to begin the search.

What are the target markets for Dynamics ERP products?

Microsoft pretty clearly recommends Microsoft Dynamics SL for project-driven companies, but the lines have been more blurred when comparing Microsoft Dynamics AX with Microsoft Dynamics GP and Microsoft Dynamics NAV. Even Microsoft, the vendor that owns all of them, has struggled to clearly define the target market… until now.

In an interview Gordon Macdonald, Director, ERP Product Marketing at Microsoft, confirmed that Microsoft is in a different place than they were a few years ago when there was not a clear separation of where they were going with the Dynamics ERP product lines. Now that has been resolved.

Put simply, Microsoft Dynamics GP and Microsoft Dynamics NAV are specifically designed for the SMB (Small & Medium Business) market and Microsoft Dynamics AX is designed for Enterprise level organizations.

In our Convergence 2014 interview Gordon said, “It has been a tremendous year for Dynamics GP and Dynamics NAV; clearly delineating them as SMB products has been very successful. We have seen a significant reacceleration of SMB business. The difficult decisions that were made [by Microsoft] in the last 2 years have been paying off in terms of momentum in the business.”

Gordon added, “From a channel perspective, a lot has been figured out about the selling models to have a clear separation, which has meant educating our own sales force on differences between an Enterprise and SMB opportunity.”

How does Microsoft define the SMB market?

According to Gordon the SMB market is defined as companies with 25-250 users.

What is a user? The estimate of 25-250 users can be loosely based on employee count, but not always. For example, 25 base users would not include the number of people in the warehouse. It cannot always be connected to the number of desktops either, which was Microsoft’s old way of defining the market, because the number of desktops can be out of balance depending on the industry. So a more accurate definition would be the number of “knowledge workers” inside the organization.

Gordon confirmed “We are building and aiming Dynamics GP and Dynamics NAV for companies with 25-250 knowledge workers”. However, he also acknowledged that this includes “every exception you want at the edges of those numbers” depending on the needs and level of technical sophistication.

For example, there could be a company with only 75 users that has intense needs because of multichannel retail, multicurrency, or global locations. They would technically be SMB size, yet still a better fit for Dynamics AX. On the other hand, a company with 400 employees with a simple streamlined business model might find Dynamics GP or Dynamics NAV to be sufficient for their needs, and much more affordable. So Gordon admits that the segmentation is not a hard and fast rule, just a guideline.

But these guidelines do help focus the product direction.

How will Microsoft focus on the SMB market?

“We recognize that a product for SMB is not just an enterprise product in a smaller box; that is not what works. SMB has a whole set of unique problems and opportunities. So now the focus is: how do we tune the products specifically for the SMB space?” Gordon explained: “There are guiding principles within that space of 25-250 users. They have certain expectations of affordability, about how long it is going to take to deploy, about how much customization they are willing to take on. If you think about it from the bottom up, the difference between someone who has 3 users and someone who has 25 users tends to be the level of industry specificity and customization. So is this outside of the box or tuned to our industry?”

Based on this new, clearer focus, Gordon reiterated several times that the future direction of Microsoft Dynamics GP and Microsoft Dynamics NAV, for the SMB market will focus on three clear tenets:

  • Rapid deployment
  • Ease of Use
  • Cloud on Your Terms

Gordon concludes with the comment: “It is a complex market and there are many exceptions.” But Microsoft has made strides in defining the markets for each product.

Which Dynamics ERP product is right for you?

When you start your ERP software selection process, you can use these guidelines:

  • If you are a large company (over 250 users) you should add Microsoft Dynamics AX to the shortlist.
  • If you are a company with less than 25-250 knowledge users (25-250 employees as a guideline) you should evaluate Microsoft Dynamics GP and Microsoft Dynamics NAV. Microsoft Dynamics AX will only need to enter the picture if there is a unique enterprise level requirement.
  • If you are a project based organization, you should look at Microsoft Dynamics SL.

Next Steps

You can get pricing for Microsoft Dynamics GP and Microsoft Dynamics NAV at

You can find a directory of Microsoft Dynamics ERP partners (for all product lines) at

The key point here is that you have options. Whether you are a SMB or Enterprise customer, Microsoft Dynamics has a comprehensive ERP system for you. And now you know where to start.

By ERP Software Blog Editors,

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