Unexpected Curves Crash Microsoft's Dynamics 365 Roadmap

At the recent Directions North America conference, Microsoft's announcements about the Dynamics 365 roadmap didn't quite go as expected.

The spring-scheduled release of Dynamics 365, code-named "Tenerife," was introduced as a modular cloud ERP with full Dynamics NAV functionality. The decision to go modular was a change of direction, but not a show-stopper for partners. When Microsoft went on to explain the cloud software would be available to partners as a white-label component for vertical packaged solutions, the brakes screeched.

To its credit, Microsoft listened to its channel's concerns and announced a revised plan to give partners the options of selling branded Dynamics 365, as well as white-label solutions through AppSource. According to a blog post by Alysa Taylor, general manager of global marketing for Microsoft's Cloud & Enterprise Business Applications and Industry division, the modular approach sticks, replacing the original Dynamics 365 vision of fixed-function Business and Enterprise editions aimed at separate markets.

"Microsoft will offer a single collection of Dynamics 365 applications for customers of all sizes and complexity to digitally transform their organizations across all lines of business -- Marketing, Sales, Service, Finance, Operations, and Talent -- at their own pace," Taylor wrote.

Steve Mordue, CEO of Forceworks, sees competitive forces as the drivers for Microsoft's evolving Dynamics 365 strategy. "Microsoft doesn't operate in a vacuum. They can come up with all the grand plans they want in the face of competition, but competition isn't just going to sit there," Mordue said. "They make changes, too, and that sometimes necessitates that you have to make a change before a plan's executed, because you can see that the conditions have changed since you started down a path that make it no longer look like it's going to get to the goal."

Mordue, who is also a Microsoft MVP and participates on partner advisory committees, was as surprised as anyone by the announcements at the Directions North America event, but he's generally in favor them. "I think it's a good strategy. On the CRM side, really what's happened here is they made a decision that it's not making sense to segment our customers by size of customer. It's creating some artificial barriers that didn't really seem like they were needed," Mordue said. "What they've evolved it into, and particularly on the CRM side is, let's instead have our price points -- instead of based on small customer, big customers -- let's have them based on small needs versus big needs. Not worry about the customer size. That makes sense to me."   

All About Verticalization
Underlying the Dynamics 365 announcements, and a continuation of Microsoft's drumbeat to partners, is verticalization. Especially in the SMB market, Microsoft wants partners to overcome their reluctance to move to business models built on industry specialization. Partners, also especially in the SMB market, still fear putting all of their eggs in one basket and continue to try to be all things to any prospect who happens to end up in the sales pipeline.

The new roadmap for Dynamics 365 offers partners two paths to serve customers, both designed to promote industry specialization but not quite so imposing as the white-label-only option. Partners can offer the Dynamics 365 application through the Cloud Solution Provider (CSP) program supporting key business functions, including sales, financial management, project management and operations. Or ISVs can use the Microsoft ISV Cloud Embed program to build and offer vertical cloud solutions directly to customers.

"Obviously, when they first announced it as a white-label-only solution, their entire thought about Tenerife was that you were going to build a vertical application with Tenerife. The whole white-label approach isn't about, build the same thing we have and call it your own. It's, build something specific for a vertical," Mordue said. "Microsoft, I think, came out and assumed that if you're going to go vertical, you're going to want to give it its own name, and I think they just misread that one piece, and now we're giving them the option. Clearly that whole approach is about verticalization."

Consulting Services on AppSource
Since Directions North America, Microsoft has announced an additional way to help partners market services around Dynamics 365. As of this Monday, partners can now offer fixed-price consulting service packages via AppSource, which has huge potential as a lead-generation platform. According to the AppSource documentation, "Consulting services offerings are customer-specific engagements that are conducted on-site and are fixed in scope, can be fixed-price or free, have a fixed duration, and have a clearly defined outcome. Consulting services offerings can be briefings, assessments, workshops, proofs of concept, or implementations."

In the SMB market, no decision has always been the hardest sales outcome to overcome. Many partners have offered fixed-fee implementations, but still customers are hesitant to take the risk. With Microsoft validating the offers by listing them through AppSource, the hope is that more customers will take the leap.

"The new consulting services offer that just dropped Monday, out of preview, for anybody to get involved with, is less about verticalization and more about giving a customer a way to move forward more easily. Right now, a customer, if they've decided they want to look at Dynamics 365 and they reach out and call some partners, they're getting a lot of different stories, because every partner approaches them differently," Mordue said. "The biggest challenge that customers have is really wrapping their arms around what the whole endeavor may cost. Lacking an answer, they'll assume worst case, and that's not a good move either. That keeps a lot of customers standing in concrete, because they just don't know what it's going to cost."

The evolution of Dynamics 365 is likely to continue to offer a changing landscape to partners -- both welcome and not so much. The SMB market for CRM and ERP has been a tough road to navigate since Microsoft entered the race 20 years ago. The cloud makes the turns come even faster, so the wild ride for partners is probably far from over.

You can read more of Mordue's perspectives on Dynamics 365 -- including several blogs specifically about the Directions event -- on his always-informative and entertaining blog.    

How is your organization preparing for Dynamics 365? Send me a note and let's share your story.     

Posted by Barb Levisay on September 28, 2017