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Posts Tagged ‘ERP’

Dynamics ERP Cloud Update from MS

December 14, 2012 2 comments

I recently attended an ERP cloud strategy update from MS in which they outlined their next few years of ERP activity vis-à-vis the cloud.  Here’s what I heard:

SL:  No comments.  No surprises there.

NAV2013 is in a TAP program on Azure with several partners and will be the first cloud ERP delivery expected to release in Q1CY2013.  This will run on Azure, but the IAAS portion of Azure (in other words, it will be using virtual SQL Servers and Application Servers).  It is NOT running on SQL Azure.  They will also be releasing the web client which will work either with the Azure release OR with an on-premise release.  They are also releasing a Rapid Start tool that uses QA interfaces to do initial configuration – clearly this is a method for making the provisioning as fast as possible.  Any customer, regardless of licensing, can move to Azure but would have to pay the cost of the hosting (proc time and storage).

GP 2013 releases Dec 2012 and will be deployed on Azure exactly the same way that NAV is.  However, they have done two things to make managing the environment a little easier.  First, they have allowed the Dynamics system database to be named anything – this will allow a partner to host multiple versions of GP on a single SQL server.  Also, they have developed a web based management console for GP that they say allows easier multi-tenant management.  They did not show it but said it was available with the general release.  I’ve looked at the Beta release of both the Web Client and the Management console.  Rough and not ready for a high volume shop just yet.  However, I’ve seen lots of cycle releases on the web client before BETA so I think it will improve fast.

AX is the biggest release change for the cloud.  v.next AX moves to the cloud 2014/2015 and will release on Azure BEFORE it releases on-premise.  They intend v.next to be delivered exactly like CRM Online (a true multi-tenant app I guess is what they mean by this) and will also offer a Windows 8 native interface.  The entire client will be rewritten under HTML5 and JScript so it is platform independent, but will have an app wrapper so it can be delivered in the various app store marketplaces.  They also intend to take advantage of tablet features (like camera and GPS). 

For lifecycle management, they intend to deliver tools that will allow easier movement of code and data between TEST and PROD.  Such will be workflow based so that approval events move data and code rather than people having to do it manually. In addition, they plan to manage data moves (like copying live to test) so that less manual involvement is needed (copy prod to test and eliminate any private data while, at the same time, stop any automatic emails, as an example).

They also intend for upgrades to be far more automatic with customer selecting the timing of the upgrade and allowing customer to automatically upgrade a test environment so they can do their own testing.  In addition, they will do upgrades to reduce or eliminate downtime by upgrading snapshots and looking at production differential which, in turn, gets upgraded.

Convergence will be where most of this is announced in more detail and they may try to find early adopter customers at Convergence.

 

Apparently we will be hearing more Dynamics related messages integrated to the classic Microsoft stack as we go forward.  Below is their vision of how this works followed by a stack slide showing where everything fits.

image

 

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I love the above two messages.  I think they are will thought out and definitely position the entire stack more cleanly.

One last note:  during QA some people asked questions about ISV support in NAV and GP.  The answer was very unclear and was something like “Azure is more vanilla so, if they need lots of ISV’s, they may want to go to a hosting partner”.  I can’t interpret that at all, so I’ll keep my ears open.

Dynamics AX and Enterprise Agreements–What Next?

September 4, 2012 3 comments

At WPC2012, Microsoft, to the thud of jaws dropping and the jackhammer staccato of CEO hearts, announced that Dynamics AX would be sold under Microsoft Enterprise Agreements.  In addition, any customer on an EA that already owns AX can place maintenance payments on the EA.  The program starts September 1 2012.

For those of you unfamiliar with EA’s, you can look here.  In essence, it’s a three year contract with MS to license large amounts of software at a rather significant discount.  Although technically sold by a partner (in this case a Large Area Reseller), the majority of the work in doing an EA is done direct by the Microsoft Enterprise sales team.

Given that much of the partner channel’s financial model is built off the sale of software directly to the client for a fairly decent slice of margin, this has two immediate effects:

  1. Panic, terror and riot
  2. An elimination of margin and replacement with a CSA fee, claimed from MS, payable (we assume) over the three year period in an amount much less than that one would get from selling directly to the client.

I’m not arguing whether the change is right or wrong.  Instead, I’ve been thinking about the possible outcomes of this in the next 12 to 24 months.  Here are some of my thoughts on such possibilities:

Will Microsoft truly sell direct to the Enterprise ERP customer?

To some degree.  However, let’s not forget that MS does not already have a competent group of direct ERP salespeople.  The have good some good technical specialists and some good channel sales people, but they have very few that can actually pursue a lead to closure.  To build that team, they’ll have to hire competitively against the partner channel and the main software competitors. And, they’ll have to pay out the wazoo to do so since these are scarce resources.  Given that, I assume they will focus their attention on the very largest of opportunities worldwide, rather than trying to close very deal.

If they sell direct, will they do all the demo work?

Good question.  One assumes that if they act like SAP, they would close the software deal and walk in a systems integrator.  But they are chronically short staffed in these areas.  So we have to assume they can’t serve the entire sales cycle for all Enterprise deals and will instead depend on partner relationships where a) the deal is off their critical radar or b) the deal is driven by a vertical solution the partner has tied up (like process mfg or distribution).  The fear here is that AX will be just like CRM – the partner still carries the majority burden of lead generation expenses and gets almost nothing in software margin in return.

If they sell direct, what happens to services?

In case you missed it, Microsoft Consulting services is enjoying yet another rebirth in ERP (and in CRM).  They are focused on building massive amounts of staff in ERP and CRM, most of the ERP staff being AX.  The SSP’s in the region have a good size commission in their plan for bringing in MCS, so I assume they will.  However, like the sale side of the house, MSC can’t get to every deal, so I think they’ll focus on the top global opportunities.  Where they don’t have vertical expertise, given my past experience with them, they’ll either fake it and fail or find a partner to provide staff but project manage everything under their paper.    The big problem here is the SSP’s – with them being comp’d on bringing in MCS, they, quite rightly, will probably introduce every deal to them.  Hopefully, MCS will pick and choose and the SSP will then take it to a partner, but, again based on past experience, I think it more likely that MCS will talk to them, set expectations and then the partner will get involved.  The customer will be confused, the partner will feel pressure to match whatever MCS said, then MCS will want to manage the deal sub-contracting work to the partner under their paper.  This way, the claim the top line revenue and expand their reach, but don’t really have to fight the hard battle of hiring qualified staff.

Are we going to lose maintenance dollars?

Yeah, probably, for any customer that is already on EA and owns AX.

Is all we have left small deals?

Hell no.  There is plenty of moving room in the market for everyone.  However, I do think it will be easier to fly under the MS radar or outside their flight path than to try and compete in the same market.  Specifically, if you have defendable space in a vertical, have your own IP, and/or service a geographic territory in which MS isn’t interested, you have a better chance of being unaffected.

Is MS really serious about this and about selling direct?

To answer the first, yes.  They aren’t turning back. To answer the second, we’ll see.  My fear is that someone up the executive chain had this conversation – “Look guys, we did the same thing with CRM.  The partner channel bitched about the margin cut, but still went on absorbing the majority of the direct sales expense via SE’s and Pre-sales demo resources.  They’ll do the same thing with AX, we’ll just have to suck up maybe a quarter of confusion.  Frankly, the partner’s are so addicted to the business model that they don’t have a choice.  So, don’t worry about this. Things will be fine, we’ll give away less margin, and our sales will continue climbing.”

I can’t claim that conversation happened.  I just fear it did and this is the mindset underlying the strategy.

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Overall, if my guesses are right, here’s what I recommend:

  1. Clean up your sales and marketing expense, specifically your cost to acquire new accounts.  If you can’t cut it in half, you are going to be in trouble.
  2. Be profitable on professional services – for the entire company.  Make software margin the nice whip cream on top but make certain you keep the company running and viable solely on services.
  3. To that end, find and establish space in a vertical and start looking at IP.
  4. Scale up or sell out.  If you are not large, merge with another partner.  If you are an ISV, this probably doesn’t matter quite as much.  Same with a  very unique niche player.  For the rest of us, we better get bigger or risk being left behind.
  5. Spend time making certain the SSP’s in your market know and trust you.  Don’t worry about MS national – focus local.  Do it consistently. The first time MCS burns an SSP (and they will) you need to be there ready to pick it up.
  6. And, most importantly, I think its time to diversify the revenue base away from ERP software and consulting.  I’ll probably write more on this later, but if you’ve already spent a ton of money to acquire a customer, don’t re-spend it on a new one.  Find more services (like BI and Sharepoint) to sell to existing customers.

Good Observations on User Adoption

September 3, 2008 1 comment

Great observations on new user adoption techniques at Energized Accounting, a MS sponsored blog.  These apply to any new MS system, even though they are primarily focused on the ERP market.

Categories: General Comments Tags: , ,
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