IT Insights
A service of Microsoft IT Showcase
Microsoft Dynamics provides retail solutions
for Microsoft Store
September 2014
The following content may no longer reflect Microsoft’s current position or infrastructure. This
content should be viewed as reference documentation only, to inform IT business decisions
within your own company or organization.
Microsoft Dynamics helps Microsoft Store thrive in the new retail reality by
delivering a consistent, compelling customer experience across multiple
channels that’s designed to build lasting relationships, all while providing
agility for the business to easily scale to support growth.
Executive Summary
Microsoft Retail Stores have utilized Microsoft Dynamics AX and Microsoft Dynamics CRM since
their original launch. By implementing the latest release of Microsoft Dynamics AX 2012 R3 and
Microsoft Dynamics CRM Online we enhance our ability to be agile and meet the growing
demands of our retail stores. Deploying in store technologies enables us to deliver on these core
priorities:

Providing amazing, seamless, relevant customer experiences, allowing in-store team members
and corporate staff to focus on building a relationship and loyalty with customers.

Empowering in-store team members with a modern Point of Sale (POS) device so they never
have to leave the customers side.

Reducing deployment, IT support and management costs through retail-specific feature
improvements and seamless integration with existing enterprise resource planning (ERP)
systems.
Introduction
Several years ago, Microsoft opened its first brick-and-mortar stores to showcase our own technology
and to illuminate our innovation story by transforming the buying and ownership experience for
customers in a cloud-first, mobile-first world—through devices, software, and services.
Microsoft Store is a unique retailer because while we are part of a much larger global corporation, we
built the Microsoft Store business as a nimble start-up, going through the growing pains that any new
retailer does. When we decided to open retail locations, we deployed Microsoft Dynamics AX, which
we integrated with the corporate financial system along with Microsoft Dynamics CRM, and some
specialized applications. This allowed us to easily scale to support the growth of our retail operation
and to deliver a compelling customer experience with consistent service excellence.
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2 | IT Insights: Microsoft Dynamics provides retail solutions for Microsoft Store
Situation
Fast forward to today. Our brick-and-mortar business has grown and evolved and faces the same
challenges as any other big retailer. To meet growing business demands, we needed to:

Engage customers. Offering us full omni-channel capabilities that allow customers to shop
seamlessly on their terms: from anywhere, anytime, and on the device of their choice, across any
channel with a rich and consistent shopping experience.

Empower employees. Increasing our in-store team members and corporate staff productivity and
effectiveness and helping our most valuable asset, people, to provide the best possible customer
service experience. By going beyond just standard transaction tools and reports and by deploying
a modern and mobile Point of Sale (POS) solution, we can make the shift to Point of Service and
enable better in-store interaction.

Expand rapidly. Allowing us to anticipate trends and to capitalize on opportunities through a real
360-degree view of the business—while increasing return on investment (ROI) and lowering
supply chain costs.
To address these challenges, we are in the process of rolling out the latest releases of Microsoft
Dynamics AX for our retail operations and Microsoft Dynamics CRM Online for customer relationship
management, including marketing and customer service.
The newest release of Microsoft Dynamics AX includes over 65 retail design change requests based
on Microsoft’s own usage of the solution and knowledge of retail, bettering the product and making
it the right choice. We are using it to delight our customers and to improve our total cost of
ownership (TCO) through:

Reduced system complexity. Providing us a single platform for managing the order from
capture to fulfillment, either as a complete solution or one that can integrate with existing order
capture and fulfillment systems.

Improved customer service. Helping improve our customer service by providing deeper insight
into our customers’ needs in order to deliver experiences that build lasting relationships.

Real-time reports and dashboard. Providing us out-of-the-box integration with other Microsoft
products, including Microsoft Office 365, Microsoft SharePoint, and Microsoft SQL Server, we
have the business intelligence needed to help gain insights from the data we collect every day.
And Microsoft Power BI for Office 365 integration provides reporting for our executive
management team.
We have integrated Microsoft Dynamics CRM with our e-commerce platform to provide our in-store
team and corporate staff with a unified view of our customers across all purchasing channels.
Benefits
In addition, Microsoft Retail Information Technology (Microsoft Retail IT), the IT group that provides
support for us at the Microsoft Store, is seeking some very specific advantages by deploying the
newest versions of Microsoft Dynamics AX and Microsoft Dynamics CRM.
Increased supportability and reduced costs
The new product enhancements in Microsoft Dynamics AX enables Microsoft Retail IT to increase
supportability and to reduce support costs by moving from a highly customized solution to an out-ofthe-box solution.
Microsoft Dynamics AX and Microsoft Dynamics CRM Online are powered by Microsoft Azure
Infrastructure as a Service (IaaS). This allows Microsoft Retail IT to move from a fully on-premises
solution to a hybrid solution. By running Microsoft Dynamics AX in a virtualized on-premises model
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3 | IT Insights: Microsoft Dynamics provides retail solutions for Microsoft Store
and Microsoft Dynamics CRM as an on-line, software-as-a-service (SaaS) solution, Microsoft Retail IT
reduced their infrastructure costs
Microsoft Store, like other large retailers, had multiple enterprise resource planning (ERP) systems as a
result of trying to fulfill various business needs.

We used a third-party ERP for supply chain management but needed a solution for managing the
stores, including Point of Sale. Since our corporate ERP was found to be too time consuming and
expensive, and following concerns about the user experience, the retail stores opted to look at a
two-tier model. We were able to leverage Microsoft Dynamics AX out of the box to handle store
management and Points of Sale.

Microsoft Retail IT also looked into aligning the corporate ERP with our replenishment engine, but
again, the cost was too high compared with deploying Microsoft Dynamics AX for inventory
management.

Another factor was the overall ROI. Implementing Microsoft Dynamics AX could be accomplished
in a short time frame, required less training, and at a much lower cost. In fact, our first two stores
went live in less than six months. And we can set up new stores in Microsoft Dynamics AX in under
eight hours.
Deploying a modern and mobile Point of Sale (POS) solution, utilizing Nokia phones and Microsoft
Surface tablets, provides a complete hardware and software solution that further reduces Microsoft
Retail IT costs.
Improved customer care and marketing capabilities
Microsoft Dynamics AX includes greater promotion functionality (such as BOGO offers, best price
logic, and date/time of day promotions) in the new POS client. Microsoft Dynamics CRM offers many
features for marketing and campaign management that allows us to move from a third-party email
management solution to a full marketing campaign management solution. Microsoft Dynamics CRM
is easier and friendlier for marketing staff to use, helping reduce training and IT support costs.
Integrated tax engine
Our Microsoft Stores deal with customers from all across the U.S. and the world, and as a result sales
tax calculation can be complex. Microsoft Dynamics AX includes a tax engine that uses sales tax
services (Vertex, Sabrix, or homegrown) to populate sales tax rules and logic, giving the correct tax
calculation automatically on each transaction our customers make.
Seamless integration across systems
Microsoft Dynamics AX provides seamless integration with our other corporate systems for key
business processes such as merchandising, supply chain, and financial management.

Product item mastering is integrated into Microsoft Dynamics AX. First-party product item
mastering (such as for Microsoft Surface) is done in our corporate ERP system, while third-party
products sold in the Microsoft Store (such as Windows laptops from other manufacturers and
games that run on Xbox) are mastered in Microsoft Dynamics AX. Despite the use of two item
masters, the information is seamlessly exchanged between systems.

Microsoft considers their stores in the same way as any other retailer with whom they do business
(for example, Best Buy, Staples, Walmart) when it comes to replenishment and fulfillment. Any
time inventory falls below our minimums, Microsoft Dynamics AX and our corporate ERP system
synchronize and kick off the replenishment engine to fill the order.

Financial management occurs in both systems. The Microsoft corporate general ledger resides
with the Finance department in our corporate ERP system, but retail store revenue is recognized in
Microsoft Dynamics AX.
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4 | IT Insights: Microsoft Dynamics provides retail solutions for Microsoft Store
Conclusion
At the Microsoft Store, we had specific needs on our journey of business transformation. We wanted
to operate with agility and to provide amazing customer experiences to build enduring loyalty. We
wanted to empower our in-store team members with a modern POS system so they never need to
leave the customer’s side. We also wanted a solid CRM system to track customers’ purchases and
preferences and to build a relationship with them. With Microsoft Dynamics AX and Microsoft
Dynamics CRM, the Microsoft Retail Store is ready for what's next!
Resources
Microsoft Enterprise: Retail & Consumer Goods
http://www.microsoft.com/retail
Microsoft Dynamics for Retail
http://www.microsoft.com/en-us/dynamics/retail.aspx
Microsoft Dynamics AX
http://www.microsoft.com/en-us/dynamics/erp-ax-overview.aspx
Microsoft Dynamics CRM
http://www.microsoft.com/en-us/dynamics/crm.aspx
Related Case Studies
http://www.microsoft.com/casestudies/Microsoft-Dynamics-AX-for-Retail/Microsoft-Store/MicrosoftLaunches-Innovative-Retail-Business-Delivers-Customer-Service-Excellence/4000009579
(Published April 8, 2011)
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