Tuesday, December 16, 2008

At 10% growth is Dynamics gaining or losing share?

When the Dynamics business went from 22% growth in "customer billings" in calendar Q2 down to 10% in calendar Q3 it seemed some analysts were questioning what was going wrong with the business. The simple answer is, it's the economy stupid. At 22% Dynamics outgrew its major competitors (excluding the Saas types like Salesforce.com and NetSuite). It turns out at 10% growth Dynamics is still growing fastest and taking share.

I've run through the numbers for calendar Q2 and Q3 for a handful of ERP/CRM apps providers and found that when you consider organic growth 10% is a very solid Q3 number. A couple of estimates were necessary, but they are based on sound math. Here's how it looks...


Calendar Q2*

Calendar Q3*



















* some of these companies have fiscal years that don't map exactly to the calendar year. In those cases I've take the most representative fiscal quarter for purposes of this comparison.

Again these are "organic" growth metrics. More accurately, I backcasted the revenues. In other words, I'm comparing SAP's Q3 against the combined revenues of SAP and Business Objects from last year. In the case of Epicor, I'm comparing against the prior year total for Epicor and NSB Retail.

These are also growth figures for total revenues. Since Microsoft no longer breaks out the revenue details for Dynamics and instead provides us only with a growth rate on something called "Dynamics customer billings", it is not possible to do this comparison based on license revenue. "Dynamics customer billings" most accurately equates to total revenue, so that's what we have to compare.

Yes, a drop from 22% to 10% growth is not exactly something to cheer about, but by my math Dynamics is now a $1.2 billion business and outgrowing all of these competitors.

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