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Landmark deal for Microsoft and Lotus F1

MICROSOFT DYNAMICS WAS named the official Business Transformation Partner of the Lotus F1 Team in March, marking parent company Microsoft’s debut in Formula One sponsorship.

Lotus F1 Team is one of the established top five teams in Formula One. The team with the distinctive gold and black livery has undergone several iterations over the last 25 years, starting as Toleman before morphing into Benetton, Renault F1 Team, Lotus Renault GP to Lotus F1 Team.

In this time the team has won seven World Championships with drivers such as Michael Schumacher and Fernando Alonso.

Microsoft Dynamics is the Enterprise Resource Planning (ERP) division of the Microsoft Corporation. ERP systems allow companies to effectively manage all parts of their business. From accounting to stock management, production planning to carbon footprint management and HR through to point of sale and customer relationship management, Microsoft Dynamics will be in use at Lotus F1 Team’s headquarters in Enstone, Oxfordshire, United Kingdom.

The total valuation of the deal is unknown, but is understood to have a large value-in-kind provision of all ERP and CRM software, the associated implementation and training, as well as a particularly significant cash element.

The Property

Under the deal, Microsoft Dynamics will have branding on the cars, drivers, team clothing and in the garage and team environment. They will bring guests to F1 races in all markets as well as making use of the team’s conference centre facility in the UK to showcase the ERP and CRM solutions in practice.

Microsoft will also supply significant development resource to the team to help with the implementation of the system as well as additional resource for on-going maintenance, updates and bespoke problem solving.

The Deal Makers

For the rights holder, the main negotiator on the deal was Lotus F1 Team commercial manager, Phil Kennard who reports to Steven Curnow, chief commercial officer, who reports to Eric Boullier, team principal.

For the sponsor the main negotiator was Christian Pedersen, general manager of Microsoft Dynamics AX, who reports to Michael Park, corporate vice president of Seattle-based Microsoft Business Solutions.

The Clincher

According to Lotus F1, the deal offered three decisive benefits to Microsoft Solutions.

1. The ability to showcase an end-to-end Microsoft Dynamics AX and CRM solution in place, making a significant and measurable performance differential for a leading F1 team. Christian Pedersen said that the two parties would work together “to optimise all aspects of their end-to-end operations including design, manufacturing, logistics, and retail through the use of Microsoft Dynamics business applications, enabling them to be even more competitive.”

2. The dedicated B2B platform of the GENII Business Exchange. The Genii Business Exchange uses Formula One as a ‘business accelerator’ providing business development opportunities for its global network of expert partners, members and associates. The platform facilitates business and finance opportunities among the 200-plus companies and sponsors financially involved in Formula One – companies with an aggregate turnover of over $3.8 trillion.

3. The turn-key iRace programme - Lotus F1 Team’s “Drive a Lotus F1 Car” experience. The iRace experience provides corporate guests with the opportunity to experience the performance and technology of a real Formula One car at the Paul Ricard circuit in the south of France. Guests also receive instruction and telemetry analysis from Lotus F1 Team experts.

What does it mean?

Before the sponsorship, Microsoft Dynamics ERP technology was contracted by Lotus F1 Team to help manage thousands of separate components that make up the car, all of which need to be purchased and stored before they are used in the manufacturing process. But the marketing push is a ground-breaking move by Microsoft and should be just the start of an innovative, long-term partnership.

Historically Microsoft hasn’t done large sports partnerships, preferring to concentrate on product development and the more traditional marketing channels. Microsoft Dynamics though is a growing star within the Microsoft product matrix, and the chance to break out and do something different was endorsed by the Microsoft organisation.

Through this partnership, Microsoft Dynamics will seek to put its brand name on the map as the choice for fast-paced business transformation in the enterprise market.

Although unprecedented in Formula One, Microsoft New Zealand was unveiled as an official sponsor of the Rugby World Cup last year and Microsoft will be an official supplier of the Sochi 2014 Winter Olympics. Previous to that, Microsoft agreed a shirt sponsorship deal with the Seattle Sounders Major League Soccer team in 2008 to promote the Xbox 360 video game. At the same time, the Xbox 360 became Major League Soccer’s official and exclusive video game console.

 

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