Here’s where the fun really starts for us: MS owns 7% of the CRM market and grew 22.8%, second behind Salesforce SFDC). For ERP, MS owns 5% of the market and didn’t make it in to the top 5 growing ERP players (all of whom were SAAS).
If you are a Dynamics partner today (and therefore interested in the above), you are one of three companies:
1. Dynamics Legacy (GP, SL, NAV, Small CRM): You are outdated already and riding a cash flow business. You need to watch salaries, opex and delivery cost really closely. Sure, you can grow, but to do that, someone else is contracting. The market share growth didn’t come from you.
2. Dynamics AX: Damn, I hope by now you got the vertical message and have already gone in that direction. If not, you are probably running a pure body shopping operation via a dis-intermediated sales channel driven by partners who sell software into vertical markets. The market share growth is largely anemic and is causing you to think “really, all this work and that’s what I get?”.
3. Dynamics CRM Systems Integrator: You bet early on xRM and see CRM as either a vertical platform for the enterprise or do large scale system integration. Chances are you do a ton of dev work (and did before you picked up CRM) and most likely are healthy with Sharepoint. You’re probably too busy to worry about market share growth, except as a reminder that its nice to be a second seat player to SFDC and, frankly, not that far behind.
(Yeah, I know you are thinking about ISVs – they fit into the above.)
With all that written, what are your options as an existing or new partner? If its my money, I’d look for a disruptive technology platform (okay, that really means SAAS) who is partner friendly.
Based on that criteria, you don’t have a good choice for ERP. You can look at Netsuite, Intaact, Accumatica, SAP Business One. NetSuite sells competitively against its partners and has a 10 year track record of being partner unfriendly. They seem to be changing, but if you are in a major economic zone, you’ll be competing head to head. Intaact is pretty low end as a solution, sells direct, but is VERY partner friendly. Accumatica…well, who knows. They really aren’t SAAS but they kind of are via IAAS in Azure and they have on premise, but I don’t see any good vertical focus or sufficient differentiation from the other two. SAP BOne is just pure play on prem – nothing new. Epicor? Hates partners. Sage? Portfolio maintenance play despite X3 – and X3 is like AX 2.5, a toolkit not a product.
What about Workday, Workforce and Cornerstone? These three round out the top 5 fastest growing ERP solutions. But, they aren’t ERP. Their roots are in HCM and Workforce Management with Workday having a basic (sorry guys, but it really is basic) financials package. They show great promise, but unless you already focus on HCM, its a tough switch.
For CRM, the news is great and easy: SFDC. Great product, great company, and the FORCE platform creates a great ecosystem for you but they will sell against you. The opportunity with SFDC is system integration, custom dev or FORCE ISV … EXACTLY THE SAME AS MS! And MS is a little cheaper and is a known quantity for you. All the big SI’s (Cap, PWC, Accenture) are already in place – the smaller consulting companies are mostly dev and ISV. Again, exactly like the MS channel.
1. If you are legacy partner, pick up Intaact and love up your current client base while you watch costs.
2. If you are AX, double down and sell more. Nothing is better out there.
3. If you are CRM, double down and sell more. Partnering with the #2 in a market is a good place to be especially when the company that is #2 is dominant in these accounts on the server and OS side.
4. If you are starting a business? Get a good idea and build a SFDC product (checkout drawloop.com – totally rocking product). Its too costly to get into AX organically today and the FORCE platform gives you access to a whole ecosystem.
5. Do you know HCM really well? Then check out opportunities as Workday/Workforce SI but be clear that you need to be pure play consulting and forget software. Definitely not my first choice.
In the meantime, watch out for SAP. Some rumors are flying about a whole new, mid-market SAAS based product going through a partner channel that will NOT be an upgrade of BOne.
Love to hear your thoughts,
PS: Tim S – thanks for the note.
Christian Pederson, GM Dynamics AX, presented the future of Dynamics AX. But first, some cool facts: Nestle, Chobani, Nissan Motor Company and, for your sailors out there, Beneteau all are running AX. Nestle is complimenting its SAP enterprise deployment with AX in new business units.
Nico Tuissink of Pulse was interviewed. He had two comments I found really interesting: 1) He was encouraged to go to the enterprise by MS but it distracted them. They did best focusing on the upper middle market in key industries, 2) he focused recruiting at people that know the verticals and then trained them on the software.
Wayne Morris, Corporate VP Dynamics Marketing and Seth Patton, Sr. Director Industry Solutions, talked how “Devices and Services” tie into business systems. Frankly, I thought most of the commentary was little thin, maybe because Wayne hasn’t been in role long. The big example was Delta using AX2012 Retail on hand held devices so flight attendants can take food and drink orders on flights. Seth discussed the key verticals: Manufacturing (Process and Discrete), Specialty Retail, Wholesale Distribution, Services (Accounting, AEC and IT), Financial Services (Banking, Insurance, Wealth Management), and Public Sector (Government). Seth then showed a new Windows 8 retail POS app that allowed for easier multi-channel retail complete with dashboard for the sales person and access to BOTH customer purchase history AND web browsing history off the store website. Frankly, very high on the cool factor and definitely something that seems very useful in the retail space since it takes you from that information directly into checkout. This will be available later this year.
For future releases:
- Major release every year (I hope I heard that right)
- R3 comes out Q4.
- Rainier comes out Q4 2014
- CU’s will hit every single quarter. That’s really nice, especially combined with a planned investment in cloud based lifecycle services that is available “today”. Not certain what “available” means but a session is on tomorrow to discuss it in more detail. From the demo Pepjin Richter did, it appears to be a combination of Rapid Start and Rapid Value injected with a shot of metro-steroid coolness.
- New task recorder is out that allows capture of the meta data as you record to more easily put the business process diagram into the Lifecycle services
- R3 will include, Windows 8 apps include Windows 8 Expenses, Approvals and Timesheets – all are in the store today BUT are only demo apps; Expense Management for Windows Phone 8, Warehouse and Transportation (that’s the Blue Horseshoe stuff they bought), Demand Planning, Budget Planning and eProcurement.
- Rainier will included Next Gen UX, Cloud Optimized and better Application Lifecycle Management. I hear (from private sources) that this is a substantial rewrite comparable to 2012. Further, they are going to very much focus on business process oriented apps.
Cool stuff. The challenge for us is this: in order to do this well, the Dynamics partners are REALLY going to have to step up their knowledge of Azure and Tier 1 application deployment and management techniques, including having better trained and deeper platform technologists.
For Dynamics GP:
Product Development Themes:
- Features: MS Connect tool is the primary way MS decides on new features.
- Technology: Focused almost entirely on ease of hosting
- Companion Apps: Windows 8 apps that allow you to access GP data. Very role centric and incorporate all form factors for devices. Will go beyond windows phone to other device platforms.
- Release schedule: Full client available via browser by end of year. Every half year after that, doing new features with a major release every 24 to 30 months. Business Analyzer rewrite in Q4 2013 including complete rewrite in HTML5 and JS and ability to include MR reports in the Analyzer. With next service pack, can go off domain.
Rapid Start gets a big upgrade with the ability to extract setups from an installation then redeploy the same setting elsewhere. That actually makes the tool useful provided the other bugs are fixed.
For Dynamics SL:
Same product development themes as GP, but very focused on projects, as one would expect, and therefore oriented to mobile. SL will also have a Windows 8 Analyzer style product. They’ll stay on a 2 year release cycle with a mid-cycle Feature Pack release. BA is coming in Q4 2013. UI for mobile (time entry, expense, approvals) in 2013 with web services (Approvals, delegations, resource assignments) in same time frame. CRM Project Connection, Project Multi-Company and Multi-Currency coming in H12014 with SL9 along with Resource Management.
Overall, the roadmap is a bit of a yawner. Not MS’s fault – the products are very mature, very stable and don’t need tons of new stuff. But, after seeing the keynote, these roadmaps seem quaintly retro.
Doing things a little differently this year, MS packed three days of keynotes into a single multi-hour marathon of product announcements and demos. It was TOTALLY effin cool!
Here’s some interesting points I picked out:
- MS has 750K partners worldwide doing a total of $650 billion revenue which they grew by 6.5% in the last 12 mos
- They are dividing the world into Devices and Services (software that you can use from your device, cloud or otherwise). They will use this to differentiate themselves in 4 key areas: cloud (think Azure), Big Data (SQL and Azure), Social (Yammer, Sharepoint, Lync/Skype as a converged services, Outlook) and mobility (Windows 8.1 and Azure)
- Azure is the key consolidation point for EVERYTHING in their toolkit. Everything. Really, everything.
- Partners led 3 out of 4 Office 365 deployments
- A complete new Dynamics CRM Windows 8 client is coming in the 2014 release. The previews were pretty awesome.
- SQL Database Premium is coming to Azure in preview later this year.
- PowerBI: This was coolest demo I’ve seen. Coming to Office3 365 later this year.
Overall, Dynamics was mentioned only with respect a LOB app or as CRM – nothing specifically related to ERP. Ballmer did have an interesting comment – “Dynamics is a billion dollar business that gets less PR than a business that size deserves”.
One last thing: If I had to guess about what the pending reorg looks like, and based solely on who was presenting what, I’d have to say its going to be Satya owning Dynamics.
#WPC2013: 30,000 ft above the southeastern US heading to WPC 2013, I find myself pondering the state of the Dynamics partner channel ahead of drinking the Kool-Aid of keynotes and executive briefings. Here are my areas of concerns and my thoughts on same:
|Cloud ERP||GP and NAV are (allegedly) released in Azure as partner sold product offerings. Both have had substantial enhancements to produce better cloud deployment.||Although MS made a big announcement on this in mid-June, it really is marketing spin since this is just installing the same software onto a persistent Azure virtual machine. This is really about the same approach as going to Watserv or DataResolutions and buying virtual server space on which to host ERP. In essence, this is just a deployment option, no different than installing in a hosting center – it is not a true cloud based, multi-tenant ERP product.|
|Direct Sales||MS seems to finally have got the AX and CRM EA pricing model refined and well thought out.||MS continues to encroach on high end CRM and AX deals with a stealth direct sales model. Yeah, I know they say a partner is always involved, but that comments is like one of Justin Bieber’s bed sheet’s – tired, stained and well used. Between EA sales, Microsoft Consulting involvement in key deals, and comp plan changes rewarding field staff for integrating MS Consulting into a deal, we continue to see MS controlling key large deals.To compound the problem, MS does not have a very good sales force. So these deals are often being lost to SAP and Oracle because they a) have read the playbook and are becoming more effective at competing against the TCO message and b) they are just better at high level enterprise selling.|
|Margins||MS provided EA margins equivalent to, or close to, on premise margins for a period of time to encourage EA sales. In addition, they comp’d the local MS sales teams without regard the sale being on-prem or EA. This removes a big hurdle of AX on the EA.||Overall pricing declines and continued pressure on membership costs for MPN are continuing to squeeze partner margins. Although this doesn’t impact the larger partners, the continued escalation of CRM and AX salaries hits them in a completely different and more drastic way.|
|Competitive Hiring||MS is providing an unprecedented level of assistance to partners in recruiting new professionals (college hires) through Sara Gjerdivig’s FastTrax program for Dynamics AX||Many partners still need qualified GP and NAV staff – very few good ones exist on the market. Everyone competes for the same small pool of senior AX talent continuing a salary escalation war that started immediately post recession. Microsoft Consulting makes this problem more acute as they competitively recruit the same candidate pools and hire staff away from partners.Before anyone from MS calls bullshit on that, I have two examples from the last 6 months.|
|Support||More resources are available in open forums||AX 2012 (RTM and R2) was very bug ridden and overwhelmed the technical support team. This problem was so massive that MS constantly missed Partner Advantage SLA’s for support response. Further, the overall changes to support we saw two years ago continue to percolate into crappy systems and bad answers.The move to partner support through MPN remains a cluster fuck of offshore and outsourced crap that delivers no value to the partner. I’ve had two really awful experiences with that team over certification tracking data being damaged at an organizational level. They just suck.|
|Devices and Services||What the fuck does this mean?||I have no idea what this means to the channel. My fear is a “app”-ization of Dynamics with a web services interconnected framework so that discrete pieces of the product can be sold independently. For example, taking AX requisitions and making that Dynamics Requisition Workload on Azure. I can see where some boundary services (EDI, Reqs, Recruiting, CC Processing, eCommerce) can all be developed this way, but core processes (Revenue Cycle, MRP, Fulfillment) are going to be much more difficult. ERP is inherently interconnected, highly available and not batch driven in its inter-modular updates – moving to discrete apps with web services would put that at risk. Further, the continued “Devices and Services” message doesn’t really resonate with ERP and CRM customers so it creates market uncertainty in the CIO and CFO buyers we hold dear.|
|Partner Concentration||The Top 100 partners are still going strong||According to Bob Scott’s Insights, Dynamics partners stratify as follows:
Top 6: Above $40mm
Next 13: From $20mm to $40mm
Next 22: From $10mm to $20mm
Remaining 59: Between $3.9mm and $9.5mm.The majority of the top 19 partners (full disclosure: I work for number 19) have AX as their primary focus. The majority of everyone else is NAV, GP and SL. 2 of the Top 5 are accounting firms with a long tradition of technology consulting.
I have to pull the old numbers, but it seems like the Top20 are getting bigger and everyone else is a bit static.
I arrived last night in New Orleans to attend that perennial crowd favorite, Microsoft Convergence (Not to be confused, of course, with Convergence 2013 the chubby chasers convention put on by Girth and Mirth of South Texas). As soon as the cab dropped me off at the Marriott Convention Center, I knew I was back in the Big Easy based solely on the stench of gumbo, stale beer and that particular sent of desperation given off by middle aged men who insist on “bringing it” whenever they go to NOLA.
Day one is really all about three things:
- Booth setup: Check out the pictures on the @ibisinc twitter feed. IBIS will have both a DynamicsCare and Advanced Distribution Software booth.
- Partner Community meetings: These are the pre-meetings that purport to help partners do better running their business that Microsoft seems intent on destroying through lower software margins, EA sales and direct sales and consulting competition. Yawn. Skipped. Apparently a ton of partners feel the same way – have yet to talk to anyone that wanted to go.
- The Randy and Andy Party: Always a crowd favorite, I’ll be doing my usual show up, say hi to Andy, then getting out before some drunk tries to cop a feel off me thinking, in the beer goggled glory, that I’m actually Marissa Tomei.
If you happen to be at the convention, text or tweet me or stop by booth 2522.
I’m comfortably ensconced in my home office, space heater going, ears ringing with Vegas din, and sipping an AlkaSeltzer laden water to relieve my cold symptoms picked up from too many hours in too many packed conference rooms.
Wow, what a show.
Looking back over all my other previous postings, you may develop an impression of me as an unrestrained fan of SharePoint and its related, integrated technologies. You’d be right. I love the product and especially what I’ve seen in this new release. But, to be objective, let me run through the major items as I see them:
The Yammer acquisition is “terrifically exciting” (could that phrase become any more overused by MS staff?) but is a bit awkward right now. SP 2013 already had a bunch of great activity, newsfeed and micro-blog social components that look very nice. On the surface, Yammer doesn’t add much to that and, in fact, muddies the water a bit since no one at MS is completely certain exactly how they are going to fit in. In the long run, I think it will become the social messaging bus for all the business products (SP, Dynamics) and this will be a good thing. As a Yammer Enterprise user, I see the value of social and am a big believer in what this can do when used right.
If it wasn’t social being talked about, it was search. Combining Enterprise and FAST in this release is a good thing – the two products were unnecessary. Also, as anyone dealing with corporate content governance can tell you, creating stuff is easy – finding stuff is hard. What MS has done is create a search-driven system from structured meta-data and user managed tags that allows users to favorite, like, and share documents and see document previews in the search results. I think this goes a long way to making SharePoint ever MORE useable for content storage and, I believe, will kill file shares in the mid-term.
As with many things in this release, MS didn’t go for hot, new sexy features. They just vastly improved what was already there. PPS, Excel Services, Power Pivot and PowerView all basically function the same but have significant improvements in security model and usability that will make them much more useful to end users. That’s a hard pitch to make to your corporate masters driven by earning releases, splashy news press and units moved but they pulled on their big-boy pants and did it – and they did it across everything, not just BI. By doing so, they are showing a commitment to making this a real integrated platform not just a platform that can be demo’d but doesn’t really work.
Clearly, MS is staking EVERYTING on cloud. From O365 to ERP to CRM to AZURE, you are seeing MS move its entire business model out of your data center and into its own. But, while doing that, they are being realistic in understanding that no-one is going for a full cloud IT model. The ability to federate to Azure ADS and O365 for single-sign-on was very nice, as were the cross-platform development tools to bind all this stuff together and the cross-browser support message that was consistently and repeatedly delivered in every session. With that said, I still think MS is missing the boat on its Azure costing model. All hosting partners charge for a machine of a specific size and for blocks of storage; Azure, instead, charges by proc, storage AND bandwidth making cost management for app deployment in Azure a bit tough to manage costs. I will write more on this in a separate post. They addressed this a bit by allowing SP apps to be hosted in O365 at no charge, so that’s a big plus, but I still think more changes will have to come.
Yeah, I’m a fan-boy of Sharepoint but I’m not an idiot. I’ve seen MS screw up too many times with me being on the receiving end of it to unreservedly admire what they’ve done. The next two or three months, as the product is released and we start using it, will tell the real truth. But, IF they just do what they said they will AND IF they just keeping hitting the flywheel like they did with this release they WILL have a great product for us to use.