Microsoft CEO Satya Nadella made a statement last year at a media briefing that has stuck with me:

Our business model fundamentally is about creating more surplus outside us. We will only be long-term successful if people are making more money around us.

This is quite a pivot for a company which, under Steve Ballmer, literally wrote the playbook around the credo of “embrace, extend, extinguish.” There’s a new dynamic at Microsoft: a new openness, a willingness to share and learn, and an alignment around a bigger picture. The vocabulary has shifted away from products and product groupings to “ecosystems of value.”

Underlying all of this is a new reality. For the first time in its existence, Microsoft is pulling together all of its capabilities to encircle the enterprise and become more than the sum of its parts. This reality reflects itself in its share price, which has risen by around 250% in the last two years. It’s reflected in an ever-growing synergy between Microsoft’s various product groupings: Microsoft 365, Azure, Dynamics 365, Cortana, and everything else. It’s reflected in the fact that enterprises now view the Microsoft business applications stack as a serious enabler of a businesswide digital transformation.

The ecosystem around this stack is ever-expanding, and services firms — systems integrators, consultancies, and boutique firms — are a critical part of it. That said, within this new reality lie two sets of vendors:

  • The first set understands the growing possibilities of the overall Microsoft stack in helping customers achieve digital business transformation. These firms are forward-looking in their investments in Microsoft technologies and are building an organizational foundation to support the development of integrated systems of record, engagement, and insight for customers.
  • The second set of providers are those that, organizationally and until very recently, have viewed the emerging business applications stack at Microsoft as independent, loosely connected pieces such as an ERP system, a CRM system, a business productivity suite, or a cloud computing solution. These providers are starting to pull together their scattered capabilities into better alignment around the broader business applications stack.

I will be covering the evolution of this space closely over the next 12 months. The first piece of research around this theme is live now. I am delighted to announce the availability of The Forrester Wave™: Microsoft Dynamics 365 Services, Q2 2019. This Wave evaluates 12 vendors that provide services around Microsoft Dynamics 365, including Avanade, Cognizant, DXC Technology, HCL Technologies, Hitachi Solutions, IBM, Infosys, KPMG, PwC, Sonata Software, Tata Consultancy Services (TCS), and Wipro.

Dynamics 365 is an important part of Microsoft’s strategy of encirclement, but it’s also an integral part of the broader business applications platform, which customers are increasingly looking to leverage to drive digital business transformation and an accelerated journey to the cloud. This report covers the service providers that work in this ecosystem and describes their capabilities and characteristics relative to each other.

Forrester clients can read the report here. I am keen to hear your feedback.