Project Madeira – In My Honest Opinion
Microsoft felt that they needed to fill a marketing gap and have a cloud-based ERP offering. As a result, they announced project Madeira, which I’ve code named ‘Baby NAV’, to release late in 2016. I think this is a fantastic idea and I hope it is a raging success but I would like to offer some cautions to Microsoft.
Microsoft has hinted at Madeira being for companies looking for their first ERP solution, or those upgrading from QuickBooks. If you are buying your first accounting solution you are going to look at the really low-level products like Xero which are products that provide very simplified functionality to the very small business market. To compete Madeira will need to be equally simple. It will be very difficult to ‘dumb down’ NAV to this level. Warning: Can you make NAV this simple?
QuickBooks is very well established and functionally deep for small business. QuickBooks offers strong native bank integration, AMEX reconciliations, expense claim integrations, automated collections processes, form customization and much more. QuickBooks customers will demand all the same functionality and much more before they will switch to a new product. Warning: Just being on Azure is not going to be enough.
Microsoft is highlighting the native Office and Outlook integration of Madeira, which is fantastic as I love Outlook. I understand the cross product links, but I fear that many small businesses are not as addicted to Outlook as I am – which would render this feature moot for many small businesses. Warning: Not everyone uses Office 365 or Outlook.
Microsoft has said they will have a one click upgrade from QuickBooks, or you can choose a predefined chart of accounts. I am very skeptical about this. If you have finally outgrown QuickBooks it is usually because you hired your first internal accountant. This accountant is insistent you move from pure bookkeeping to actual accounting. Real accountants do not want a ‘canned’ chart of accounts, they want a structured and custom chart with divisional reporting to suit the many different business lines that small businesses develop. Moving your QuickBooks Chart to Madeira would be silly. Warning: Do not underestimate the love between a passionate accountant and their Chart of Accounts.
Following on from that thought, is there a gap in the market between QuickBooks and full blown NAV, GP or NetSuite? Assuming you hold on to QuickBooks for as long as you can, you have hired an accountant, you are likely ready to take the jump to a fully featured and complex ERP. We have seen SBF, SBA, small business accounting and other products from Microsoft crash and burn in this space. Warning: ‘Mind the Gap, if there is one.’
Sold by Cloud Solution Providers (CSP’s), implemented by whom? I do not believe Microsoft Corporate have understood how complex an ERP is and how much effort goes into a successful implementation. Mid-market ERP’s are complex and only work well if they are implemented by experts, which takes time and costs money. Someone who sells office 365 for a living, is simply unable to successfully implement an ERP. Now if you are going for the XERO, very small business market, then implementations are not too hard, but my reading says this is not the Madeira market. Warning: Who will do the implementation well?
Now do not get me wrong. I deeply hope Madeira is a raging success as eOne will benefit greatly through selling integration solutions into this new market space, we have a lot to gain. I am nervous on Microsoft’s behalf. This is going to be a difficult project with many hurdles. eOne and many other VAR’s and ISV’s will be here to help Microsoft navigate a course – but they will need to address the above cautions and many more in the short term.
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Thanks for your incisive observations, Martin.
Couldn’t have said it any better. It’s going to be an interesting investment and ride for those that choose that course.
Thank you Martin:
You remain the genius I met so many years ago and I treasure your candidness and insight.
The thoughts expressed here match my own thoughts on many levels. I am using Xero for my own business because I’m small and simple is something that works well for me. The bank and credit card integrations are SO easy even a cave man could do it. Thank you Geico for that memorable phrase.
I doubt Microsoft can muster the enthusiasm to create a QuickBooks-beating, Xero-challenging application. What WOULD BE NICE is an application that achieves much of what a true ERP system has without all the complications of the current GP and NAV choices available now. Thinking Acumatica here…
Microsoft however, IMHO, has burned their bridges to the VAR community by running us off the road and not appreciating the dedication the small VAR’s bring to their clients. We can’t make a living anymore with Microsoft giving away the product, cutting our margins, and running (MANY) of us out of business with the increasingly burdensome effort (and cost) of being a “partner” with them. Acumatica has picked up the VAR torch and is carrying it along nicely here as well.
Your friend, (almost retired),
Great piece Martin
Have you read the interesting analogy in Mark Brummel’s blog?
I’m not sure it entirely works for me.
Implementing any ERP software, but particularly Dynamics NAV, isn’t purely about ‘listening to the music’.
Ultimately it’s about helping the client to actually ‘play the instrument’ for themselves, therefore for me it’s not as passive as just listening to music.
Dynamics NAV is certainly a sizeable orchestra with lots of instruments, I totally agree “it takes a lot of physical elements to be in perfect harmony and a lot of experienced craftsmen” and the results can certainly be very special.
Project Madeira is effectively a cut down orchestra with fewer instruments and limitations as to how they can be played, there is no extemporisation or amendments to the composition allowed. You may hire in a session musician to extend your sound if required and available.
The way in which the different resulting music is delivered, whether it be ‘live orchestra’ or Spotify, is not the key issue.
The key issue is what kind of instruments the client needs to play the kind of music it wants/needs.
Some clients want and need a full orchestra, some want and need string quartet.
Thanks for opening up the subject of small business solutions.
We have been a reseller/ISV for Dynamics GP since 1993 and focus on companies in label and packaging manufacturing and do almost all our sales, installation training and customization work over the internet.
In our market most of sales opportunities are for small businesses so the temptation is to try to do 30 small installs a year instead of 2-3 big ones a year.
We can the the conclusion that its better to focus on installations with 25-75 users. They make good long term clients.
Unfortunately too many small businesses struggle to learn GP, don’t want to pay for training/customization/maintenance/third party applications and many never get it up and running.
In my opinion, this is a very well-considered set of arguments. Thank you for sharing.
I have been working with NAV for a very long time and the one thing that I would add is around the COA.
Customization is likely to be important, which has ramifications around the conversion tools. Equally important is being able to maintain it and the associated ties to the sub ledgers. Today this is done with Posting Groups in NAV and many, many hours have been spent in the field on that topic. A more modern approach to this would go a long way.
Thanks for all the responses. I got a little lost with the Orchestra analogy – although I do understand ever business is different and have different needs and processes. In 2016 I am also seeing many mid market companies adopt a series of cloud/Mobile apps that need to be integrated into their ERP whether that is cloud or on premise. I may have missed the announcement but it will be essential for Microsoft to provide the full API of NAV with Madeira to allow tools like SmartConnect to fill the integration gaps.
Fingers crossed for a successful and competitive mid market Cloud ERP from Microsoft.