Gartner stirred up some rigorous debate with its recent CRM market share estimates, which put Microsoft Dynamics CRM revenue for 2012 at $1.1 billion, up 26% from 2011. That number was seen as much higher than expected for CRM alone - other estimates usually put the Dynamics business overall - ERP and CRM - at between $1.2 and $1.7 billion.
And the research firm has recently released another report, this one on ERP market share which estimates that Microsoft's ERP business grew 4% in 2012, "mainly driven by Microsoft Dynamics AX". According to Cincom senior manager and enterprise software analyst Louis Columbus, Gartner puts Microsoft's ERP revenue at $1.1 billion in 2012, up from $1 billion in 2011.
Combining Gartner's 2012 ERP and CRM market share reports, the firm now believes the Microsoft Dynamics product line generated at $2.2 billion in revenue in 2012, or between $500 million and $1 billion above where most other analysts see it. Gartner did not respond to requests for comment on their CRM revenue numbers. As other analysts have pointed out, for Microsoft to have pushed past the $2 billion revenue mark for Microsoft Dynamics and not acknowledged it at Convergence 2013, recent analyst events, or elsewhere seems unlikely.
With that Dynamics ERP revenue estimate, Gartner positions Microsoft in fifth place in the ERP market with 5% of market share, behind SAP (25%, $6B), Oracle (13%, $3.1B), Sage (6%, $1.5B), and Infor (6%). The largest segment of market share still goes to "Others" with 37% of the market. The worldwide market size in 2012 was $24.5 billion, 2.2% higher than 2011, according to the report.
Beyond Microsoft, Columbus writes that the Gartner report identifies the fastest growing ERP vendors in 2012 as Workday (114.7%, $190.3M), Cornerstone OnDemand (61.5%, $58.4M), WorkForce Software (39.8%, $11.8M), Ventyx, and NetSuite (34%, $187.1M).
Gartner's assertion that Dynamics AX is the primary driver for ERP revenue growth may be hard to verify based on any public information. In its earnings reports and securities filings, like the most recent where Microsoft Business Division reported a 13% increase in Dynamics revenue for the most recent quarter compared to the previous year and an 11% increase compared in the most recent nine months compared to the previous year, the company did not single out CRM or ERP revenue.
We do know that AX ranks behind Dynamics NAV and GP in terms of total user base. For example, Dynamics NAV has grown steadily in the last three years, from 80,000 installs in 2010 to about 86,000 in 2011 to 89,000 in 2012 to well over 90,000 in 2013. And here is an unofficial breakdown of the customer base sizes that has been passed around the Dynamics ERP community since being shared at Convergence 2013 in March:
While NAV continues to grow its customer base steadily, it could be plausible that AX's larger deals are fueling more of the revenue than NAV and GP, whose pricing plans have been profoundly revised in the last year to offer a better prices for small user bases and less attractive pricing for larger deals where Microsoft wants to instead sell Dynamics AX.http://msdynamicsworld.com