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If Not Microsoft – Then Who? Choices for the ERP and CRM Partner

According to Gartner (as reported by Forbes), ERP in 2013 was a $25B market with a 3.8% growth rate over 2012.  In the same time period, CRM was a $20B market with a 13.7% growth rate over 2012.  

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 Dynamics Legacy (GP, SL, NAV, Small CRM):  You are outdated already and riding a cash flow business.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.

My advice?

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,

Dwight

PS:  Tim S – thanks for the note.

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VAR 2.0

October 1, 2012 6 comments

Dynamics CRM sold under EA or on a credit card in the cloud.  Dynamics AX sold under EA.  GP and NAV in the cloud.  Software margins declining.  Plague, locusts and riot abound.  Oh, mercy me, what is the Dynamics reseller to do?

No idea.  Or rather to many.  But to me this looks suspiciously like an opportunity for VAR 2.0.

VAR 1.0 had an easy job.  For the most part, we sold high margin software to clients fed by occasional leads from MS; massive interest from clients forced by programmatic (Y2K anyone?) issues or platform changes (Side of web services with that client/server, sir?); and depended on very expensive staff to deliver software training and cutover services that we hoped solved core business problems.  However, we mostly focused on getting the system up within scoped budget and time.

Put another way, we sold a disk to run an application on a machine.  Then we sent some people out to set it up.

Machine.  Disk. People.  Machine.  Disk. People.  Machine. Disk. People.  Repeat until profitable.

VAR 2.0 has to approach this differently.  The machine is gone – the cloud takes care of that.  The disk is gone – the license gets rented.  What’s left?

People.

That’s right, the most expensive, time consuming, annoying, unpredictable and intractable part of your business is what you’ll have left.  The good news, however, is that with the shiny machine and magical disk gone, you can use your people to focus on what’s most important to the success of your business.

The success of your client.

Scary, no?

Screw that, its not scary.  It’s a hoot, a holler and a joy.  By removing software margin from the occasion we also remove a host of un-natural acts designed solely to drive software sales and not to drive customer success. Now, we can serve the client by giving them better systems to run their businesses faster, more productively and with less cost so they in turn can serve their clients even better. 

With machine and disk out of the way, VAR 2.0 can focus on running a deal cycle where the majority of the customers spend is on solving business problems through the proper definition of the business issues, development of rational and productive solutions to said issues, and deployment of same using the tools at hand.   No machine. No disk.  Just people solving problems.

I’ve been thinking a lot about this lately so expect alot more on it here.

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