Microsoft Building Professional Services Automation (PSA) Software Tool?

Is Microsoft finally preparing to build professional services automation (PSA) software for partners, IT service providers and MSPs? Speculation about that topic emerges every few years. And the speculation is now back.

The latest chatter involves the future evolution of an existing product called Dynamics 365 Project Service Automation. According to MS Dynamics World:

“Microsoft plans to remove Dynamics 365 Project Service Automation from the business applications portfolio, with plans to offer it in combination with other project management tools instead. That revelation came from partners who have seen the latest Dynamics 365 pricing and licensing slide deck from Microsoft.”

So what’s the plan? The short answer: Microsoft is merging Project Services Automation and Project Online into a new project management tool to be called Project Service, the company told ZDNet.

Microsoft Dynamics 365 for Professional Services

Ahead of the new Project Service launch, Microsoft had been promoting Dynamics 365 to professional services firms through videos like this:

Admittedly, Microsoft has stopped short of promoting Dynamics 365 to MSPs (managed services providers) as a true PSA (professional services automation) software platform. So I don’t necessarily see near-term, head-on competition from Microsoft against SMB-focused MSP tools like ConnectWise Manage and Datto Autotask PSA.

Still, we’re curious to see what Microsoft has in store for the forthcoming Project Service platform.

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    Dustin Bolander:

    I was heavily involved when they tried to push into practice management software for attorneys several years ago. They have wanted to be in the bigger professional services market for a while now, just have not been able to break through yet (I think execution has been part of the problem…)

    Joe Panettieri:

    Hi Dustin: I think Microsoft has a two-part challenge here.

    1. The broader PSA market — for all types of professional services firms — hasn’t been quite large enough to fully attract Microsoft’s interest and commitment.

    2. Now, double click down into the MSP-centric PSA market for SMBs, and the market opportunity is even smaller.

    Microsoft loves $1 billion-plus market opportunities. ConnectWise Manage and Datto Autotask PSA, while extremely successful in the channel, currently represent less than $350 million in combined annual revenues, I suspect.

    If Microsoft truly builds PSA, I suspect it will be for either (1) the broader professional services market or (2) something for micro businesses and freelancers who need one dashboard to manage everything they do (something like 17Hats –

    Thanks for your readership and comment. -jp

    Dustin Bolander:

    To be clear, the situation I referenced was MS-driven (and heavily financed) but implemented by partners. They grabbed 10 of their top dynamics partners to go after law & healthcare. So not big enough at the time to dive in directly. Makes sense in the context of your analysis.

    Joe Panettieri:

    Thanks for providing that additional context. Good to know.

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