Ryan Cunningham:
Hello. This is Ryan.
Steve Mordue:
Hey, Ryan. Steve Mordue. How's it going?
Ryan Cunningham:
Oh, Steve Mordue. How you doing? Does this mean I'm in trouble?
Steve Mordue:
No, you are not in trouble, but you are about to be a guest on my Steve has a Chat podcast if you have time and are up for it.
Ryan Cunningham:
You mean like right now?
Steve Mordue:
Like right now. Already recording.
Ryan Cunningham:
Hey, okay. Let me check my calendar. There's nothing I'd rather do right now than being an impromptu guest on a Steve show.
Steve Mordue:
Well, we'll try and make sure you don't regret that decision.
Ryan Cunningham:
I regret a lot of decisions, Steve. But it wouldn't be the first.
Steve Mordue:
So let me ask you first, how long have you been with Microsoft?
Ryan Cunningham:
I just crossed five years.
Steve Mordue:
Five years.
Ryan Cunningham:
Just this past fall.
Steve Mordue:
I used to be a Salesforce consultant. We were Salesforce consultants for about 10 years and we moved over to Microsoft when they first moved CRM online back in 2011. So about 10 years ago.
Ryan Cunningham:
Sure, yeah.
Steve Mordue:
And I remember there being a few bumps making that transition going from on-premise to online, but then it kind of leveled out into what I kind of called the lazy river ride. It was predictable, it didn't move very quickly. There was no urgency and then James took over and he brought in all you young guys. It's been like a rocket roller coaster ride ever since. You ever got one of those really big roller coaster rides where you start praying for it to end, but you know it's not going to. It's just going to keep looping around and you can't get off. I almost feel like for a lot of us partners that have been around at least since it was lazy river, man, my head is rocking from all of the stuff you guys are doing.
Ryan Cunningham:
We don't do lazy rivers very well, Steve.
Steve Mordue:
Not anymore.
Ryan Cunningham:
Not anymore.
Steve Mordue:
Not anymore.
Ryan Cunningham:
At least class three rapids around here.
Steve Mordue:
How is it like on the inside for that kind of pace and ideation and everything that's going on internally?
Ryan Cunningham:
It's a great question. It certainly has not been constant here either. And again my experience in this community is not as long as yours. I joined at about five years ago and specifically joined the Power Apps team long before Power Apps was really a thing. I joined the team when Project Siena was for those that are familiar with that term, the sort of precursor to Power Apps was kind of in an early beta phase and there were grand ambitions of expanding out who could build software, but not a lot of... How do we say it coming out? Not a ton of product truth yet behind that.
Steve Mordue:
So I was in the audience, I think for one of your very first presentations before a big group of this product. You looked a little deer in the headlights at the time.
Ryan Cunningham:
I still feel that way sometimes. But if you take that over the course of the last five years where that idea has solidified, that product has gotten more mature. Certainly there's still more work to do, but we've gone from literally zero humans using at least standalone Power Apps to millions around the world and really also in the same breath gone from very long tail, very simple use cases to this grand merger with the Dynamics platform and customers building and trusting frankly much more sophisticated workloads to the platform.
Ryan Cunningham:
The world has changed a lot for us internally in how we approach this problem as you go through that product maturity life cycle. In the early stage, it's really about can we make anyone successful here? Now, it is much more about how do we scale and how do we focus on enterprise trust and developer productivity and really turn millions into hundreds of millions and that's...
Steve Mordue:
Oh, we got a little stall there.
Ryan Cunningham:
Right. Did I lose you for a second?
Steve Mordue:
Just for a second. I kind of sometimes think of Microsoft kind of like the Japanese manufacturing economy where they saw ideas that we would come up with and then they would put all their resources to make it better, faster, cheaper whereas a lot of the things we're doing in the power platform are not things that weren't being done before by others, it's just that someone on the team somewhere recognize hey, there's this movement going on out here with some of these smaller players and I think it's got some legs, so let's let's drop all of the arsenal that we have available as Microsoft onto this idea because clearly, we weren't the first low code platform right, but suddenly we're bringing everything Microsoft has to bear on this idea and to see it blow up like that.
Steve Mordue:
You can say that for almost everything that we've got going on, the bots, the flow, all of these sorts of things. We weren't the first, but then we came in and just put all this horsepower into an idea.
Ryan Cunningham:
Yeah. And it so much is about execution and executing at the right time and doing it for the right people. I think part of the reason why we internally work quickly and don't want to be on the lazy river is also because I think we tried to approach it with this fundamental... This is going to sound weird, but distrust of our own instincts to say, "Look, we have a thesis that people are going to want to build software faster. We have a thesis that they're going to want to do that beyond just forms over data." That's going to take many different forms, but in the nitty-gritty details of who's actually going to find the most value in individual features and individual assembly of those features, there's a lot of margin for error.
Ryan Cunningham:
And the sooner you get real software into the hands of real humans and they can use it and react to it and give you feedback actively about it, but also just give you feedback through their usage or non-usage of it, then the sooner you have real data to adjust and change and do the next thing.
Steve Mordue:
So it's not really like build it and they will come, it's more like build something and let's see who comes.
Ryan Cunningham:
Exactly.
Steve Mordue:
And then build some more.
Ryan Cunningham:
Exactly. Develop a relationship with those people who have come and then make sure that you're building it in a way that they're going to get really excited about it and then extend to others. So we really prioritize when we have enough of a hypothesis to head in a direction get there as soon as possible in the world and then work really closely and quickly once you've landed there to make it great and learn, and be willing to be wrong and be willing to change.
Steve Mordue:
Don't worry. I pointed out when you [crosstalk 00:07:43]. It's a lot of moving parts. I know you came in through the Power Apps door but have since kind of got your fingers into the whole pieces of platform it feels like. There's a lot of moving parts going on. Whenever you have that many moving parts, there's going to be bumps and issues along the way. So I can imagine that's just a continuous thing that somebody's building something over here. Somebody over here. Maybe they didn't coordinate as well as they should have and it gets discovered later and then I imagine these little fire drills going on internally [inaudible 00:08:20].
Steve Mordue:
Left hand wasn't talking to the right hand enough. Let's get that stuff going on. Is that part of your role is to referee those sorts of things or identify them?
Ryan Cunningham:
I guess you could say that. And that's also part of growing a product and a team across a really wide surface area. How do we put in place the right listening mechanisms to customers, to data and reviews internally so that we can catch those things sooner and react to them more quickly. Because in many ways the ambition here is to span a really wide area of software and do it with a platform that has value and relevance to a number of different people in that spectrum, which is fundamentally really hard.
Ryan Cunningham:
It's one thing to build a focused experience for one very focused narrow niche of people, it's another... That alone is hard. It's another to build a set of tools that a lot of different people can use. But I think that was actually part of our... If you rewind several years ago and look at what we did between the Power Apps software project which started independently and the Dynamics platform and bringing them together, we really realized at the limit these things converge. At the limit, making it easier for non-traditional software people, citizen developers, amateurs, makers, whatever you want to call them and making it faster for professionals to build apps, those two ends have to meet each other at some point for this to really scale. So let's rip that band-aid off.
Steve Mordue:
How close do you think we are? How close do you think we are to getting to that ideal point? I mean, I think there's still... Even when I look at the citizen developer stories, a citizen can go so far and obviously we'd like them to go as far as they're able to go, to comfortably go and pro dev takes over. I have to assume there's a continuous motion inside to keep trying to move that line. Let's simplify some of these formulas that may be required that are just whatever those stopping blocks where you see a citizen is able to get this far, it hits a wall. Can we get them to the next wall? How much is going on in that process?
Ryan Cunningham:
It's a great question and it is really one of the central things that keeps driving a lot of what we do. I mean, we also look at a professional's experience through that journey, right? You look at not enlightened professionals such as yourselves, but all of the other software people out in the world who are very skeptical of platforms and who have an instinct to start from scratch and write everything themselves and go through some-
Steve Mordue:
Some of that could be financially motivated also.
Ryan Cunningham:
Oh, sure.
Steve Mordue:
Yeah.
Ryan Cunningham:
Right? But I think realizing that two trends are really converging here. To your point earlier, low code is not new, but we've had low code in two very different camps. This is the company that shipped Excel 35 years ago, 36 years ago. We certainly know low code for true amateurs and there's always been this world of people without a software development background working around the boundaries of the software they're given with tools to solve problems and that goes straight to-
Steve Mordue:
To Access wizards.
Ryan Cunningham:
Absolutely. Excel macros, VBA, Access, InfoPath and a number of other products outside of Microsoft. That's an enduring tradition. Then on the other side, what we've been doing is professional software people for the last 40 years is just adding layers of abstraction and tooling and not repeating ourselves and borrowing from other people to more efficiently assemble solutions as well. You can look at a platform like what XRM was unofficially and Dataverse and Power Apps on top of it now is just a natural extension of making professionals more efficient by not doing everything from scratch.
Ryan Cunningham:
Now, that's where those two trends converge and you're absolutely right to answer your question. We focus on okay, we made a number of people successful at that. There's a plenty of existence proof in our community and in our growth numbers and in our customer stories of people coming at the product from both of those directions and getting really successful and having a lot to show for it. Now of course behind the scenes, we're still, I would say very hungry. We're still at a couple orders of magnitude less than the addressable market of software consuming humans of what we could be serving even for all the astronomical growth we've seen in the platform over the last couple years.
Ryan Cunningham:
I mean, so it is absolutely about how do we take people coming in the front door. I'm a Teams user. I have some Excel skills. I happen to stumble on this Power Apps thing. How far do I get on my first try? What brings me back? How do I go from a user who expresses intent to a user who has a moment of success, to a user who then has an app that's used in production. And even from that point to somebody who keeps coming back to keep putting apps in production.
Ryan Cunningham:
Then similarly as a professional, how do I expand my tool set from Azure and Visual Studio and how do I have good experiences in my first try with a platform. How do I get to a point where I put something out there that humans are using in the world and I feel good about it. We really closely look at retention. We look at funnels through those early experiences. We look at satisfaction. All those annoying prompts of how likely are you to recommend Power Apps to a friend or colleague. Those are really valuable data points for us in addition to just the general growth rates overall because of indicators of the likelihood to be successful and grow in the future.
Steve Mordue:
I know we definitely have had success with enterprise organizations in particular where IT has embraced this and shepherded the process and built in their own systems like at the whole chevron way that they go about making power apps developers out of their employees and they've got a very specific process. I guess the other side of the equation is a smaller company that doesn't have those kind of resources. It's just Bob who's always been handy with spreadsheets. Suddenly he's trying to figure his way around. It seems like that's the one where we can't give that guy too much help.
Steve Mordue:
In enterprise they're going to have their system. Maybe have classes internally. They send their people to and stuff like that. It's a smaller organizations where he's left to the documents he can find and what he can understand. I think one of the things that Microsoft has always been a little bit of a challenge with Microsoft and documentation in particular is that they assume a certain level of understanding, in particular Microsoft and there's lots of folks that are coming to the platform that have zero understanding of Microsoft or history or know anything. Even acronyms or none of it.
Ryan Cunningham:
Right.
Steve Mordue:
It's almost like you can't make the documentation too dumbed down to get to that success. Well, how big is the team up to? Now, the last number I heard, and this has been a while ago, it was like 7,000. It was a pretty, pretty good sized team for the bag. How big is it now?
Ryan Cunningham:
That's a good question. I'm not trying to dodge you. I suppose I could look it up. I don't know for sure what James is... That whole business applications group org size is, but that's actually probably a decent estimate now that's not too inaccurate. Now, that's spread across a really wide surface area. All of the first party Dynamics apps have dedicated teams working on them. There are a number of other orgs within that organization focused on things like advancing AI and whatnot and then there's the core platform team, the Charles Lamanna team which I'm a part of which we structure into a core team focused on the backend, on Dataverse. A core team focused on each of the front-end products, so Power Apps, that's my team, Power Automate, Power Virtual agents. Then we also have a dedicated group in the platform org around admin and pro developers, and those experiences.
Steve Mordue:
I think when he came in, there was closer to a thousand on the team. So I mean the team has exponentially grown because you can't keep a lazy river going.
Ryan Cunningham:
Nope.
Steve Mordue:
You got to have speed when you got that many people on the payroll all working on something. So I also recall a time and I know it's still there, where there was a maniacal focus by the business applications group on the competitors particularly Salesforce at the time. I know that Salesforce is still in the radar. It does feel like we've kind of moved from really being focused on one primary competitor as we've launched all of these different applications into other competitive spaces where now you guys have hundreds of competitors that are all out there. How much do you guys focus on what the competition is doing internally and how you guys gauge what directions to go?
Ryan Cunningham:
It's really important to be aware of what people are doing in the marketplace. And we do spend a lot of time making sure that we have an intimate and hands-on not just academic understanding of what a lot of different software companies are producing out there.
Steve Mordue:
So you guys have licenses for everything.
Ryan Cunningham:
Well, where we can and it gets complicated because Microsoft also partners with many companies. Some companies we have agreements with about who will or won't use what software and we've got a lot of great lawyers to help us navigate that whole [inaudible 00:18:23]. I think the point is look, we're adding software to a world that already has a lot of software in it. It's important to look left and right and be aware of what else is out there because none of this stuff gets consumed in a vacuum by customers. You go to any moderately large customer organization, there's already a CRM system or seven in place. There's already an ERP system or eight in place and there's already a bunch of individual systems around that for point things and that's just the world we live in.
Steve Mordue:
And if they're exploring something, they're seldom exploring one thing.
Ryan Cunningham:
Exactly, right? And often if they're exploring especially a platform. There's a lot of existing things and a lot of the conversations become about how does this work in an existing ecosystem and how does it work? How can it potentially consolidate some of those things? We had Ecolab at a recent digital event talking about some of their Power Apps and Dynamics implementations. The average field employee at Ecolab had something like 27 different individual tools that they had to use to get their job done and it was a mix of... I mean, they had dynamics and they had Salesforce, and they had an ERP system, and they had a whole bunch of individual custom homegrown things and this experience was just really terrible for somebody out there on a tablet or a phone trying to inspect your water filter at your company.
Ryan Cunningham:
Starting to bring in Power Apps as a front door to some of those other systems without replacing them and just even making the wayfinding better is key. So look, it's important for us to be aware of what the world is doing. I would say it's never as simple as pure competitor or not in that picture because look, if you're a company like Microsoft, a lot of the names you rattled off or alluded to are also Azure customers and they're partners with them in other places. We're fundamentally a platform company I think is what it comes down to.
Ryan Cunningham:
The world is better when people can choose what they want to choose and are able to interoperate with those things at scale. Now obviously, there's incentive for us to have them using our stuff in that mix which is why we care a lot about it, but there's really not... Especially if you look at the body of what we offer even just in the platform, there isn't a clean head-to-head competitor right now for all of it. There are certainly competitors for each piece and I think being aware that those customers have choices and that we want them to genuinely choose the best and we want to be the best, that means we have to be aware of what best is and what customers define as best is just as important as what the guy down the street is offering. I think that the business applications group has the advantage of the enormous coattails of Office 365, now Microsoft 365.
Steve Mordue:
Sure. I don't know how many calls I get from a brand new customer who the primary reason they're looking at this platform is because they're already using Microsoft 365. And this idea that we want everything to work together and talk together. I think those coattails are an example of coattails that some of the other companies just don't have. You look at Salesforce for example. They don't have this productivity suite with millions and millions of users. So their story is going to be... We can integrate story and I just see more and more... I think we have to give such a credit for this because for many years Microsoft had a mixed reputation with IT.
Steve Mordue:
There are lots of people that hated them and all sorts of different things and such. It kind of seemed to have changed the attitude of the company to where IT who used to be like we're using on-premise exchange that's the only Microsoft thing we're going to touch. Now, they've brought in Microsoft 365. Now from an IT standpoint, it's you know what, I don't want to make my life any more difficult than it needs to be. What's the most logical choice for business applications when we're already stood up on all of this stuff and it's an enormous advantage and a huge coattail for the whole business applications group to ride in on.
Ryan Cunningham:
Yeah. I mean, this is why we focus so much on the platform working well in Teams for example. We've put a lot of effort into that this past year. I mean, part of that is the world turned upside down and changed and everybody started working in Teams. The other part of that is it's a huge advantage for a customer to be able to program and customize the collaboration environment whatever that is. Again, there's a long history of that within Office with SharePoint and InfoPath and stuff like that, but being able to look at that in a modern world and say, "I already have every employee working every day inside the team's environment. If I can start to put line of business applications in that environment, it's much easier for those employees to discover and it's much easier for them to then work around and collaborate around when those experiences require some form of collaboration."
Ryan Cunningham:
There are major Microsoft customers, Fortune 500 customers with tens and hundreds of thousands of users in their tenant that have more than half of those users using a Power App and Teams every month. You see IT departments using it. Those are not necessarily bottom-up Citizen Developer apps. You see IT departments really seeing that as a way to sort of re-imagine maybe what we might have called an intranet site 10 years ago sort of imagine an employee-facing app in the place where employees are already working.
Steve Mordue:
Sometimes, I actually feel a little guilty that one of our biggest growth years was a result of a virus and certainly the same could be said of Teams. I mean Teams was doing fine, but a virus really catapulted Teams to the position that it is. You feel a little guilty, but then again it is what it is and somebody has to feel that that need and it does create some massive opportunity.
Ryan Cunningham:
For me, especially rewinding to March and April, and May, I mean this was really a pressure test of our whole promise. The whole shtick and spiel of saying you can develop apps faster, you can do it quickly, you don't have to go through all the time and expense of software development, you can put it where people want to use it. Got a lot less nice to have in March of 2020 went from a lot of people from, "Oh, that sounds cool. I'll check that out someday."
Steve Mordue:
Someday.
Ryan Cunningham:
This is interesting to this is the only game in town. There were moments where I don't... I hear what you're saying. It is difficult to go feel like you're thumping your chest about business success in a year where a lot of people have had a really hard time and I really want to be sensitive to that. At the same time, the platform has really directly and indirectly helped a lot of people with those struggles. A whole number of both through the healthcare response to COVID, solutions that were implemented almost literally overnight in some cases for major state governments around the US and national governments abroad to first roll out large-scale testing programs on portals with CDS or Dataverse behind it and then roll out economic assistance programs on the same platform.
Ryan Cunningham:
Now rolling out return to work solutions on the same platform. Those are things where the traditional model of start up a waterfall development process, go write a giant requirements document, triple bit it, go through... You don't have the luxury of the Gantt chart in this world and you have to be able to move fast. And those are places where that is the platform we've been building for is that environment where we got to move fast. We have to do it non-traditionally and we have to do it with a lot less effort.
Ryan Cunningham:
This last year has really forced us to hone in on that value prop and prove that it's real, and frankly adjust a lot to make it more real for people who are trying to get that value. So I would say we have learned a lot in the course of this pandemic. A lot of people have. But we've also been able to do some good for the world in the same breath.
Steve Mordue:
It definitely was interesting timing because if you guys probably had to pick a time for a super crunch test of our platform maybe you don't like to see it in another year out or something.
Ryan Cunningham:
Yeah, sure.
Steve Mordue:
You can't cage these things, but it kind of hit when you guys still had some wiring to finish and I would imagine that the pressure on the team... It's one thing to we got to be out to market quickly because of competition. It's another thing because something like this has come. It has to bring a huge amount of pressure the team. We need to take Teams to the next level. We need to take build your own apps the next level and suddenly we've got an entire workforce that is now working from home that never planned to be working from home that is completely ill-equipped for that entire motion and these people need this stuff fast.
Ryan Cunningham:
Not to mention an entire generation of students who are now learning remotely, many of them in every age group from my first grader up to colleges and in universities. It's affected everybody. But you're right. I mean, the platform has been stretched at every level and it's not just the power platform. You're right. It's also very much Teams. I saw a really interesting internal presentation from an engineering leader in the Teams org comparing, "Look, here's what our load and traffic pattern looked like in January of 2021 and then to scale superimposing that on what it looked like in March." Not to say that, "Hey, look at all this great growth," it was really to say, "Look at what it took to go scale a planet scale service that dramatically that quickly." That was not a pleasant experience for the engineers having to work on that. That was [crosstalk 00:28:54]-
Steve Mordue:
A lot of late nights.
Ryan Cunningham:
... 24/7 as any other response. No software is perfect. We like to gripe about everything and I share my set of barbs with stuff, but man, I have a ton of respect for the Teams engineering group and how well they have handled that just massive overnight change.
Steve Mordue:
So as we're recording this, vaccines for the virus are rolling out and I assume at some point in the coming months, it'll be behind us. In the meantime, it was around long enough to push lots of people to work from home longer than maybe their company owners thought would have to happen, but now they've gotten used to that. They've made accommodation. They've made it work. What do you think is going to happen when this particular crisis has passed and there's the ability to go back to normal? What do you think is going to happen with all these folks? Are we going to see a mass return to offices? Are we going to see people say, "This is working"? What are you guys thinking?
Ryan Cunningham:
I mean, it's a good question. I don't know that I can speak for all of Microsoft on this one, but I think at least in our own team-
Steve Mordue:
What do you think?
Ryan Cunningham:
I mean look, our team is already very globally distributed. We have the majority of our engineers and core products, PMs working in the Pacific time zone, but we have a significant group in Paris. We have a significant group in Bangalore. We have individual pockets. We have people in Fargo, North Dakota. We have a team in-
Steve Mordue:
Israel?
Ryan Cunningham:
We certainly have team in Israel. We have teams in parts of Europe. We have a team in Toronto. If nothing else, I think the core of [inaudible 00:30:49] sound based team has developed a lot more empathy for the experience of the very significant portion of our group that works around the world. I'm very experienced joining Teams. And I really hope that that continues if nothing else even if we all end up back in offices at a more regular level.
Ryan Cunningham:
We've learned at digital events and conferences and stuff. Certainly, it is not the same as being in the room with people catching up and networking, finding those discovery and unplanned moments with humans. And I do believe that we will go back to getting in rooms together both as employees, but also as colleagues. I really hope that we get to do that again soon. However, some of the digital events that we've pulled off as unelegant as some of them have come together also very rapidly having to figure out how to completely reimagine conferences like Ignite virtually in just a few months, those themselves were gargantuan tactics. In some cases there were orders of magnitude more participation in those events than when you had to get on a plane and fly to Orlando to get the benefit really. So there's-
Steve Mordue:
If I'm Microsoft, I don't know how eager I am to go back to in-person events given the success of like you say, I mean, so many more people able to attend. Microsoft's goal in having an event isn't for us all to hang out and have beers, it's to disseminate product information to his broader audience as possible and as deep a format as possible. Sitting in a session room, watching some guy present a slide deck, maybe it's a little more interactive, but not enough more interactive to justify the 30 people behind me versus 3,000 people that could be behind me in a video meeting.
Steve Mordue:
So from Microsoft's standpoint, you would think that, "Hey, great news. We don't have to go back to doing live events," which are, I think, they got to be a huge expense, a huge logistical challenge, all that sort of stuff. So the only reason to go back-
Ryan Cunningham:
I mean, I imagine-
Steve Mordue:
... would be camaraderie or something.
Ryan Cunningham:
Like all things moderation. I'm sure we will... I hope we will reconvene at least some live events and I'm sure we will. I think we've learned that there's probably a bias before this year, this past year that the digital portion of a live event would be much less valuable. I mean, even already, I don't want to overplay that hand. Even already, we would frequently get more total usage over a lifespan of content consumed digitally when it was produced at the live event than at the live event itself.
Ryan Cunningham:
You could take a keynote at Ignite. There's 3,000, 10,000 people in the room, whatever, but then you go take the three months following the streaming of that online would accumulate far more visitors and end users than originally. That was already known. But being able to extend that from the keynote stage out to every session and being able to figure out how to produce that type of an event in a very decentralized way is, I think we've learned a lot through that process.
Ryan Cunningham:
Back to your question about people going to offices and the team working in places, I think there's a lot of reasons why a lot of people really value that type of working whether... There's people on my team who live alone and are really, really craving social interaction with other humans that are ready to come back. But there's also people on my team and self included with young kids in the house and a lot to manage and really craving return to normalcy and in that type of life environment.
Ryan Cunningham:
So I think work from home, I think we've all learned that we can do it and some people have learned that it's even better for them, but I think there's a lot of people who will still value working in a physical location and I hope we'll return to a good chunk of that as well.
Steve Mordue:
Yeah. It does get kind of lonely for a lot of folks especially those social people that need to be around people, need the water cooler or need to go to lunch.
Ryan Cunningham:
Yep.
Steve Mordue:
That's the best part of what they're doing.
Ryan Cunningham:
Yeah.
Steve Mordue:
Let me ask you about... Maybe I'll get a little self-serving here now.
Ryan Cunningham:
Sure.
Steve Mordue:
You're familiar with our RapidStart CRM?
Ryan Cunningham:
Yep.
Steve Mordue:
And I'm just curious about what the team internally thinks about motions like the one we're doing and others are looking at where we've... And I know you'll be a little biased because you're more on the platform side as is Charles. Charles is less concerned about the first party group. They got their own problems to deal with, but we're basically making a business out of building simpler versions of what the first party Teams have built for an audience that isn't prepared for that level of complexity.
Ryan Cunningham:
Yeah.
Steve Mordue:
And we've built it to run on the $10 pass, and we recently made it free. I'm just curious what the talk in the halls is about ISVs like us that are basically building products that are attacking directly. I mean, I'm attacking directly the sales professional for sure and even enterprise for a lot of customers because you've given us enough in the platform that I can build quite a bit for a lot of customers before I'd have to really go to those first party. What's the talk in the halls about that kind of motions?
Ryan Cunningham:
Well, luckily we don't have any halls anymore, Steve. We're all working from home.
Steve Mordue:
That's true.
Ryan Cunningham:
Otherwise we're-
Steve Mordue:
In the video halls.
Ryan Cunningham:
[crosstalk 00:36:36] Steve Mordue in every elevator lobby. Look, I will say a couple things on that. I don't want to speak for Charles, but from a platform perspective and certainly from my perspective too. Yes, our day job is focused on building a platform. Our biggest customer of the first party apps running on that platform still by revenue at least. We have a lot of incentive as a Microsoft shareholder and as a member of the business applications group and seeing the first party apps be successful. In fact, a lot of our effort and our engineering effort goes into helping those first-party apps be successful and stay successful and get modern and get fast and get mobile in addition to or in some cases around building the core platform itself.
Steve Mordue:
James has said not that long ago that make no mistake, those are what pay the rent.
Ryan Cunningham:
Yeah, absolutely. Look, Power Apps is driving an incredible amount of growth from a both a usage and a revenue perspective. But yeah, I mean there's an established greater than a decade business in CRM at scale that customers are driving themselves trusting billions of dollars of business too and paying Microsoft a lot of money for that privilege, right? So we take that very seriously and we are directly incented to protect that business whatever that means.
Ryan Cunningham:
Now, that said to rewind earlier in the conversation, we're a platform company at heart right and it's not just that Steve Mordue can go out there and build a CRM system on the Dataverse and Power Apps platform. I mean, we have multiple Power Apps competitors building on the Azure platform. They're Azure, and that's great as a shareholder and as a software person. The best solution should win and that's never going to be a one-size-fits-all answer for every customer. To your point, there are some customers that are going to be best served by a certain piece of software and Microsoft as a builder of generic things is not going to get into every niche, it's not going to get into every vertical.
Ryan Cunningham:
We want an ecosystem of people to build on the platform and extend things and even build fully standalone things for those niches, because we won't get there ourselves and we know that there are more of them out there where expertise needs to go. For Microsoft to really have a Microsoft product offering at scale, it needs to have a really big business behind. It's a really big business behind it. There's plenty of opportunity in the market at other multiples that is very profitable for software vendors and very advantageous for customers that are businesses that Microsoft will not directly enter.
Ryan Cunningham:
So I think in those worlds if the platform doesn't work for that, then what's the point of having a platform. It needs to work for that and we need to make RapidStart successful just like we need to make the first party Dynamics app successful. I believe those two things are not at odds with each other and they should live in a co-existing world.
Ryan Cunningham:
From a customer perspective even as a platform person, a lot of people will come in and say, "Should I use this off-the-shelf piece of software or should I build it myself in Power Apps?" My first answer to them is always if the off-the-shelf thing does what you needed to do or even does 80% of what you needed to do, it's usually worth buying. And even if the price tag feels more expensive, because what you're buying there is a team of people behind that app who not only put all the effort into making it, but are going to keep putting effort into making it better.
Ryan Cunningham:
And whether that's Steve's team or whether that's Muhammad Alam's team that is almost less relevant. The concept is I'm going to buy a piece of software that people have already figured out a lot of the hard parts for this use case and they're going to keep making it better. Now the ability to extend it is really important in business applications because selling shoes is very different than selling wind turbines even if it all involves selling stuff. [crosstalk 00:40:55]
Steve Mordue:
It's one of the reasons we ended up going free. When I first came up with that idea for RapidStart, we launched it in 2015 and it sat on top of CRM online the single SKU at the time to just really make the whole thing simpler because there was that need for something to be simpler. I had this dream that I was just going to sell that. People would buy it, pay me every month and leave me the hell alone. That was what I had imagined. But everybody, everybody wants to tweak and fiddle and make it unique. We actually look back last year at our revenue with 10 times more revenue on the services of helping customers customize our app that we did on the recurring revenue.
Steve Mordue:
That's the reason we decided, "Well, let's just make the app free and lean into the services as much," because I really didn't want to do that. I didn't want to do that business at all. Now, I'm being you know pulled in or the godfather won't let me out of the services business. But you're right, everybody needs something unique. So we really recast them as accelerators as opposed to here's something you just buy and use. But it's the same even with the first party apps. Nobody installs a first party app and just uses it.
Steve Mordue:
They've all got to be molded to fit the business, and I think that that's the nice thing about the platform whether it's on first party or just on Power Apps is you've got all the tools to... And that's actually one of the challenges we run into, I'm sure you guys do too where they look at some app and they say, "Oh, that's not exactly what I need," and then they move on, without realizing that, you know what, that can be exactly what you need and frankly, with the tools available that we have today, not that expensive, not anything like it used to be.
Ryan Cunningham:
Supposed than what I need and I can make it to work.
Steve Mordue:
Yeah, and a fraction of what it used to cost to do those kind of services.
Ryan Cunningham:
Part of making this stuff easier to adopt is about having apps that are much... At least much closer to what a customer needs out of the box. They don't have to do a bunch of customization upfront. I think something that we have been on the journey from, if you go rewind 10 years in CRM to now is make it less of a giant monolith make individual modules much more ready to consume. We've done a lot of work around that. But even within Power Apps, a lot of people get started by grabbing a template and implementing it and starting to use it fairly stock and then realizing, "Hey, I want to put my logo on it and then I want to change this form and then I want to change the field. And then I want a thing to kick off."
Ryan Cunningham:
Making the customization incremental as opposed to putting a really large tax and price tag before it's useful is one of the tactics we pursue to make it easier to get more people started. But that said, there will always be the need to tailor and customize software in a business application space. I think one of the trends we are seeing is this blurring of lines between... We like to pretend classically that there are ISVs who produce software and put it in the world and then never touch it.
Ryan Cunningham:
Then there are system integrators who do the dirty work of services to make it work. Those lines get really blurry in the modern world where from a classic services provider standpoint when I'm building and customizing on a platform, it's actually much easier to then start to templatize and repeat my solutions so I'm not just doing labor every single time.
Ryan Cunningham:
And to your point from a software maker perspective for customers who want to constantly customize it, it gets more viable to go the other direction depending on what your business model is. We see a lot of people living in that world. We even see customers themselves, energy companies, healthcare companies building stuff, financial services companies building stuff for themselves on the platform and starting to commercialize it to other people in their industry because it's on a platform that's transferable and that's something that classically you didn't see with line of business software.
Ryan Cunningham:
It was built in a vacuum custom and very tailored for one customer and then it sort of lived in that silo for a long time. But the ability to make those assets transferable is a huge advantage in this world.
Steve Mordue:
Back when they really first started pushing the Citizen Developer motion, I think I wrote a post about the end of SI business. This is it. We're all dead now. They won't need us anymore. The sky is falling, Chicken Little. But now as we've seen this thing roll out, because it is less expensive to get deployed, there are people building apps and using apps that would never have considered it before.
Steve Mordue:
So while I would say it's probably true that our average customer SI project has lost a zero in value, there's 10 times as many of them. So it's evened itself out. We've got many more customers available now than when the only way you could become a customer was if you had really deep pockets and a lot of patience. So we just opened up the number of potential customers by 10 times even though the deployment of each has gone down some. I'm not disappointed.
Ryan Cunningham:
And I think that trend is holding. I mean, I think you see even some of the big services companies like the big four and stuff like that actually seeing some very similar trends where they're building real practices on power platform whereas a couple years ago, they didn't see it as something for their business model, maybe even a threat to their business model. Now, they're realizing, "Look, I can drive real revenue out of this just the size and dollar amount and number of projects is a different mix that it was before."
Ryan Cunningham:
In some cases, those tend towards strategic consulting engagements. It becomes, let me think about helping a... For a large global organization to wrap their head around how do I use Citizen Development in my company? How do I keep it secure? How do I monitor it? Where do I let a business unit roll their own thing versus where do I bring in a team of professionals to build and maintain a solution?
Ryan Cunningham:
Even just that decision-making process and the center of excellence and governance practices that go around it, that's a major engagement that a lot of customers need help with right now because they're not organized for that today or resourced for it today. And then you look at getting into each of those individual projects. Certainly today, even in a future where apps are 10 times as easy to build as they are today, if I'm going to go roll out a mission mission-critical solution for managing customer data and critical decisions, I need software-minded people to help me think about how to keep that compliant, about how to build it in a way that humans are going to want to use it.
Ryan Cunningham:
Just because we put a tool like Photoshop out there in the world, does not instantly make everybody a photographer and a digital artist. There's still that mindset and expertise that's going to be really necessary. So for a lot of a lot of services organizations right now, I think they're realizing that there is a lot of value both in the execution of individual apps and projects, but then also in helping customers adapt to this new world where a lot of people can build software and you have to make decisions about who builds what and how you maintain it. [crosstalk 00:48:15]
Steve Mordue:
I think definitely one of the areas that's been blown up completely is the old ROI story because you used to be looking at a significant investment to deploy something of time and money, and the return on that investment was quite some time. That was what was going to limit the growth of any business application platform out there was... And now, that's produced almost nothing.
Steve Mordue:
So literally, Bob can go build something that starts generating revenue or saving money in an afternoon. The ROI, it's not even a question anymore about a half a day of Bob's time to go and streamline this process and save us five hours a day with his four-hour effort.
Ryan Cunningham:
True.
Steve Mordue:
And that didn't exist before. That just did not exist within the dynamics application before platform, before Power Apps, before Canvas apps. It's completely changed the entire game.
Ryan Cunningham:
Yeah.
Steve Mordue:
Before I let you go, what of the things as you look across the landscape right now and maybe the things that are coming up that have been discussed that people are aware of, what excites you the most? What do you think is... Two things. What are you the most excited about? And the other one is what do you think more customers would be excited about if they understood it better or realized that that's the most underutilized high value thing that people are just missing?
Ryan Cunningham:
Sure. Those are big questions. I think there's a lot that I get excited about. For people that know me, it's not hard to get excited.
Steve Mordue:
Yeah. You're excited about that lamp in the background, I know.
Ryan Cunningham:
Exactly. It's a great lamp. It's not. It's a crappy lamp from Ikea. Look, I think for me certainly there's a ton of work in our feature backlog that's really cool and really exciting and there's a lot of work particularly around bringing intelligence to the authoring experience that I'm pretty excited about. To the earlier conversation we're having about make it easier for people to be successful and maybe not have to deal with that formula bar, there's a lot of cool stuff that we're starting to apply.
Ryan Cunningham:
We've brought AI builder to end user apps, but actually bringing that to the maker experience of being just... And not in magical unicorn pixie dust ways, but just in really practical ways suggesting ways for people to do things, suggesting things to do next, making it possible to write logic in natural language as opposed to having to know all the ins and outs of the formula for example. There's some really cool stuff cooking there that I think will start to continue to open up orders of magnitude of humans who can be successful.
Steve Mordue:
Move that bar farther down the path.
Ryan Cunningham:
Absolutely, right? Classically, sometimes we think about those as tools just for true amateurs. But if you go look at even all the productivity that a product like visual studio has brought to professional developers, it's in stuff like Typeahead and linting and all that. It's really about bringing micro intelligence to those micro interactions that a person who's living in this tool for eight hours a day, all day long is going to need to be really productive.
Ryan Cunningham:
So we're really thinking about that both ways. So those things are exciting. I think if you zoom out a little bit though beyond the individual level of feature work, I would say, what's most exciting to me and what I hope is getting more exciting to more customers is less about any one individual feature or product and more about what's possible when you start to combine them at scale.
Ryan Cunningham:
I think that's where, if you look at organizations that have really gone all in on Citizen Development and low code for professionals as well and start to work together, you see this new way of working where you have professionals and amateurs and IT people and business people knowing each other and working side by side in a place where they traditionally were opposed to each other. Or at least just not aware of each other. And that's where you get not just one cool app with one cool feature, but literally thousands of applications inside of organizations that are just creating a crazy amount of value and you start to change you start to change the lives of people in those organizations.
Ryan Cunningham:
Both the people that are able to implement that stuff, but also you just make the jobs better for the people who get to use stuff that was built by their company and was built much faster. That's ultimately super exciting to me is to start to see this making a real change in the way that humans are working and doing it through a mix of apps and bots and automations, and Teams experiences.
Ryan Cunningham:
It's when those things sort of work together in concert that I think they get most exciting. So I'm thrilled to see that happening. I'm really excited about this end-to-end stack of what customers have done with Azure resources through power platform, in Teams and how that has created a meaningful dent and how a company works. I'm super excited about all the work we're doing to make that smoother to actually implement and manage and deploy, but I really hope customers see beyond the one use case, see beyond the one app or see beyond the one product and see what's possible when I start to change the economics of how software is rolled out in my company. And by economics, I mean not just-
Steve Mordue:
It is a discovery process.
Ryan Cunningham:
... who participates. Right, yeah.
Steve Mordue:
It is a discovery process. They stumble upon something. They start using something and if they're successful with it, then they start discovering these other pieces around it that are available around it to extend on it. I don't think the technology itself right now that we have is a blocker to growth. I think the biggest challenge with growth right now probably relies more on the complexity of the licensing side. I mean, there's a lot of customers-
Ryan Cunningham:
I mean, I think there's good parts of it.
Steve Mordue:
... that can't even get started because they don't understand what they even need or how to buy especially in the Power Apps store where they've got some seated Power Apps capabilities, they don't know what word seated even means or that they have it, and then they're seeing all these cool Power Apps things and they can't figure out how do I get from here to there? Why can't I do this and that? I think that probably is a bigger blocker to potential growth than the technology itself.
Ryan Cunningham:
Maybe. I would say certainly-
Steve Mordue:
Have you read the licensing guide?
Ryan Cunningham:
It's my favorite James Joyce story.
Steve Mordue:
I'll bet. Well, most customers haven't and wouldn't.
Ryan Cunningham:
Well, I guess what I would maybe zoom out from that, I would say... You're right. The technology itself can solve a lot of problems for a lot of different people and we have existence proof of that. Getting an organization at scale to discover it to see it in that light and then to have an organizational culture embrace it. Certainly licensing is a part of that, but it's also about who in IT is responsible for it? How do we govern it? Where do we roll it out? Who is footing the bill when I do understand how to pay for it?
Ryan Cunningham:
At the end of the day, licensing is actually very simple which I know is a controversial opinion. You get a measure of it in Office. For extending Office, you pay for Enterprise data sources. There's two ways to pay. You pay per app or you pay unlimited, full stop. That's the license. Now, we do not do ourselves many favors when we have classically rolled that out. And I absolutely take your point that we have made the communication of that complex.
Ryan Cunningham:
And for a lot of customers, this is not a commodity expectation. We're at a point right now where everybody needs an email account and a productivity suite and Word processing and every seller needs a CRM license and those things are not necessarily controversial, it just becomes about what's the best price from the best vendor. Because they're mature products in mature markets.
Ryan Cunningham:
Low code is at a very different state of market maturity. So for a lot of people it's about not just understanding how our pricing is structured, but understanding organizationally for them how do they conceptualize ROI? How does the market offer these products and how do I evaluate that potential expense against the value I'm going to get out of it? I think in addition to making things like the licensing guide easier to read for people who do not have PhDs, I think it's also really about helping the market get more mature and seeing... We really genuinely believe this will become an expectation of organizations.
Ryan Cunningham:
If you go fast forward another couple years, if I can't rapidly innovate internally and I am dependent on a team of professionals to start from scratch every single time that I that I need a problem solved, that's going to be a major competitive disadvantage for organizations. And on the flip side, being able to have every information worker be able to do at least basic tasks extending their software and solving their own problems is increasingly going to be an expectation.
Ryan Cunningham:
We're not there yet from a market maturity standpoint. Not everybody sees it that way, but we've certainly seen enough proof of organizations already evolving to that point that we know that that's coming. So I think being able to get to that place is a journey for a lot of companies. It's then really the next phase for us of bringing the world to where we know it can be.
Steve Mordue:
I mean, you just look at some of the things in the past like the first Obamacare website debacle with all the millions of dollars they spent to basically build a website and then look at what it would have taken for somebody to pop that up on portals today. I mean, there's no compare. I mean, we've actually lost projects in the past because the people thought we didn't understand the scope because we were like 10% of what the other companies... So we clearly misunderstood the scope and they just misunderstood the value of a platform and what that does to a development cost and time cycle and everything.
Ryan Cunningham:
There are government entities that rolled out COVID testing solutions on Power Platform in literally weeks to tens of millions of citizens and had that go off without any major hiccup. You're right. We get back to that pressure test. It's like getting that to go to scale and to help more people see it that way and be able to expect that from their software. That's really the next mountain to climb.
Steve Mordue:
I think the two challenges we've had around licensing are that Power Apps versus Power Apps. We've got these two products that really are our different products that share the same name and that puts some confusion in customers where they think they already have Power Apps.
Ryan Cunningham:
Have it right.
Steve Mordue:
They don't understand why they have to go buy Power Apps or they have Power Apps. And the other one is the passes, the per user or the per app passes. Those are assigned in a different way than all the other licenses they have been using internally for years. It's the only thing that's assigned that way. So it's a different process and they're looking at how do I do this? I've assigned licenses all the time. I don't understand how to do this.
Steve Mordue:
Those are two spots if you could personally take as a favor to me, go clean up the pathways [crosstalk 00:59:39] on those to make that as smooth as possible for people to understand, that would be that would be awesome.
Ryan Cunningham:
And that feedback is well heard across the market. I mean, we are at the pace that we were trying to do some work on the first problem to clarify really Power Apps for Office from our apps for stand-alone. And then separately the per app concept is a really powerful concept and actually a lot of organizations have embraced it. I don't know if I'm allowed to say this. there's more monthly active usage of apps on a per app license today and this has been true for many months than there were on either the older two licensed models, right?
Steve Mordue:
Sure.
Ryan Cunningham:
I mean it hunts for a lot of people when they can realize, "Oh, hey. This is a way for me to apply the value of the platform to a use case without having to go have this broader discussion about committing the entire organization to an unlimited number of apps."
Steve Mordue:
And just a difference of cost
Ryan Cunningham:
It's a different concept for people.
Steve Mordue:
And just a difference of cost. At $40, I can afford to have 10 people use this.
Ryan Cunningham:
Right.
Steve Mordue:
At $10, well I can afford to have 40 people use this. So suddenly, strictly related to cost, you're going to see that usage explode on those lower cost licenses because those are people now using an app that weren't going to be able to use it before. They weren't going to justify the expense for that level, that tier if you will. You start getting into 10 bucks, I mean that's pretty much anybody in the organization you could justify 10 bucks for. Now suddenly, everybody has an app.
Ryan Cunningham:
Yup. We've seen a number of customers already even though this has been in market only about a year. Start there and then very quickly realize, actually we want unlimited [inaudible 01:01:25] people through the transition is a phase as well.
Steve Mordue:
This is something that you take in account as a builder of apps also if you're wanting to try and build for that, you build your apps understanding the licensing structure and you design for it. So listen, Ryan, I appreciate you taking this time out of your, obviously not busy afternoon.
Ryan Cunningham:
[inaudible 01:01:50]
Steve Mordue:
A rare not busy afternoon for you, I'm sure. I'm feeling very lucky to have caught you when I did.
Ryan Cunningham:
Sure.
Steve Mordue:
Any closing thoughts?
Ryan Cunningham:
Hey, keep doing what you're doing, Steve both being a rock in the community and also pushing us on the platform to make it better. I think ultimately we see this as a thing we're doing together and I mean that really genuinely. We don't sit in an ivory tower. [inaudible 01:02:18] When we do, we make plenty of blunders, but I think this thing we are building is bigger than lines of code. It's a mindset and I think the more that the community embraces it, the faster we go. So I really appreciate you and everybody that is hopefully going to listen to this someday and participate.
Steve Mordue:
There'll be thousands listening. There usually are. So don't worry.
Ryan Cunningham:
Yeah, 100%. Thanks for the call, Steve.
Steve Mordue:
All right. Cool, man. Talk to you later.
Ryan Cunningham:
Be well, peace.
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Starting today, you can buy Power Apps Per App Passes for $3 each. The catch? Minimum 200 users... but still.. that is a pretty big deal for mid-sized and above companies. For example, combined with our free RapidStartCRM, that gives you an enterprise grade CRM for 200 users for $600/month!!! In addition to this offer, the Power Apps Per User plan is $12, instead of $40, but that has a 5K user minimum, so really for enterprise only.
Wah, I don't have 200 users! Well, $600 (the minimum) would also be equal to 60 users at the regular price. So any number of users over 60 starts saving money. For example 100 users ends up costing $6/user, 150 users ends up costing $4/user, etc. But, if you have less than 60 users, there is no advantage, so SMB is basically out of luck.
The Power App Per App pass promotion is available through Volume Licensing or CSP. The Power Apps Per User promotion is only available through Volume Licensing. Neither offer is available via Direct at this time.
If purchased via CSP, the offer is good for one year, after that you should expect to go back to the $10 price, unless Microsoft decides to extend this (a possibility). Via Volume Licensing you can keep these prices for up to 5 years!!!
This is just a short post, because I was excited about this. Contact your partner and ask them about it!
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Essentially the Dunning-Kruger effect is one's own perception of their reality. Often displayed as the following image:
For those of you who are listening to this, instead of reading it, I will describe the image. On the vertical axis is confidence level, from low to high. On the horizontal axis is Competence level, from "Know Nothing" to "Guru".
It seems that many people, who know nothing, can have high confidence of their knowledge in spite of that fact that they... well... know nothing. In the Dunning-Kruger model this places these people at the peak of "Mt. Stupid". I am very familiar with that particular peak have spent my early 20's there. Following the peak of Mt. Stupid, is the Valley of Despair, where one realizes that they actually know... well... nothing, and their confidence plummets. From there, they travel the "Slope of Enlightenment" back up, slowly, until they reach the "Plateau of Sustainability", or actual Guru level. This assumes they remain on the "Slope of Enlightenment" long enough.
Almost every other day, I am on the phone with Citizen Developers at various stages of this model. Like all of the low-code platforms, the Power Platform's primary goal is to "enable" Citizen Developers. Unfortunately, all of the Low-Code platforms, including the Power Platform, present themselves in such a way as to give a person who "Knows Nothing" very high "Confidence". Thus, marching them Pied Piper style to the peak of Mt. Stupid. I have spoken to Citizens with this high confidence, aka "Cocky", and after about 30 minutes of conversation. aka "Enlightenment", have unintentionally knocked them off the peak and into that valley. Well... not the really cocky ones.
I have been involved with Business Applications for over 20 years and still feel firmly on the "Slope of Enlightenment". Whenever a platform, in my case Microsoft, adds a slew of new capabilities, that "Plateau of Enlightenment" just moves farther out. The best that the most knowledgeable and experienced of us can hope for, is to remain on the Slope... indefinitely. When a "Citizen Developer" thinks they are as capable as one who has been on the Slope for 5-10 or 20 years, they are clearly straddling the peak of Mt. Stupid. While I am not easily impressed by your Power App, I am professional enough to not laugh out loud at your feeble effort, since I understand, sitting on the Peak, you are quite proud of your accomplishment.
In my experience, this idea will be harder for men than for women, because it requires reading directions. But if you want to bypass the Peak, start at the Valley. Since you would not have gone to the Peak in the first place, the Valley is not one of despair, but rather the beginning of your journey on the Slope. If you want to do this right, and many say they do, but actually don't, then you need to invest the time. Do not fall for the over-confidence building marketing messaging from any low-code platform. Why?
25% is about the percentage of our practice's work that is allocated to fixing things built by Mt. Stupid flag planters. I am reminded of a buddy of mine when I was a teenager. He thought he was a great mechanic, but every time he rebuilt something, like an engine, there was this odd pile of parts leftover. When asked about them he would say something like, "I'm not sure what those are, but they are definitely not needed". As I recall, his vehicles were always on blocks, and I never saw him drive one.
What many Citizens miss are the forks in the road. Some are obvious, and still the wrong one is taken, and many are not so obvious. Where this matters is down that road, when the clear realization that the wrong fork was taken becomes apparent. I'm not sure if any statistics exist, but I would assume the number of efforts that went the wrong way, and were then either abandoned in frustration, or taken all the way back to the fork, is quite high. The biggest thing that Mt. Stupid does not provide, is a clear view into the future. However, after a while on the Slope, the future becomes quite predictable.
The Slope of Enlightenment is vast, and as I said, even those of us with decades on it, are still climbing. So where does a Citizen even start? I can tell you where we start. First, before building anything, we create the data-model. Apps are pretty easy to change, but the data model will eventually expose any wrong forks taken, and these tend to be the most complex to reverse. Second is typically the UI, getting the data onto forms in a usable way... this is harder than it sounds if you take into account user friendliness vs. function. Lastly is automation, which seems to be the thing too many Citizens are way too eager to get to.
If this post sounds like I am bitch-slapping Citizens.... I'm not. I am fully cognizant of the movement, and it is actually not even a new movement. We still spend time unwinding Access databases built by tech savvy, but not business savvy Citizens of those days. I'm just suggesting that scaling Mt. Stupid does not give the same satisfaction as scaling Mt. Everest.
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My inbox blew up with people asking me what "morale" issue James was referring to. Jimbo was paraphrasing an old quote that I used for the title of this post. In fact, Jimmy is not even responsible for naming as far as I know, that merry-go-round is operated by Alysa Taylor's team. I think JP was acknowledging the angst of name changes in a humorous way. So.... relax... morale is fine. But for some, there are legitimate concerns with certain motions other than naming.
Despite James' public insistence that Microsoft wants to be a platform company, his product engineering teams are continuing to crawl up-the-stack. It was not that long ago, that the position expressed by Microsoft was, we will never go vertical, that is for our partners and ISVs. It feels to me like the recently launched "Microsoft Cloud for Healthcare" is pretty darn vertical. I also assume this is the first of more "Industry Clouds" to come. Microsoft's message to ISVs? "There's plenty of opportunity for ISVs here". I'm not convinced yet.
This is most likely a Microsoft reaction to similar motions by Salesforce. I do understand the competitive forces in the marketplace, and reacting to them is necessary. But one of the reasons I moved from a Salesforce Consultant to become a Microsoft Partner 10 years ago, was the "Partner First' ecosystem. "Partner First', or 'Partner Led" have never been part of SFDC's lexicon. At the moment, I am struggling to reconcile Satya's words with some of these motions.
Historically, Microsoft provided the platform, and some relatively generic applications, that were then extended by SIs and ISVs to meet the specific requirements of verticals, including healthcare. It has been the meat of a business application partner's business. It feels to me that these Industry Clouds scrape much of the meat off partners' plates, and onto Microsoft's. It feels like we are left with mostly vegetables... and I never liked vegetables.
None of us can say that Microsoft has not been crystal clear in their guidance to Partners and ISVs in the last few years: Get Vertical! Seeing the huge vertical opportunity, maybe Microsoft just got tired of waiting for us all to come around. So "Partner Led" becomes "Partners Follow", I can't say that I blame them, I'm not a particularly patient person either. Looking at a vast unmet opportunity, and sitting on your hands waiting for partners to see and act on it, would probably drive me to eventually elbow past the stagnant herd also.
I hate to say "I told you so"... but I did. I saw this coming with the initial launch of the first "Industry Accelerators", free data models with "example apps". Again, not enough of us bought into the accelerators, so "Industry Clouds" built by Microsoft on top of them, was an obvious next step. "Example Apps" evolved into finished, supported and SKUed applications from Microsoft.
It's too early to tell what the impact will be from these motions. Clearly if you had built extensive healthcare IP, there will be an impact, you may even find yourself competing with Microsoft in some cases. If you were thinking about building IP for Healthcare, you may have to focus on the vegetables now. For SIs, what you may have charged historically to build out a healthcare solution, will likely be less for extending a pre-built "Industry Cloud" solution.
This motion will be a win for the customers of course, by potentially lowering development costs, and having more direct support from Microsoft for Microsoft-built stuff. But I really feel that Microsoft will be the biggest winner. I have written before that Partners are simultaneously Microsoft's biggest asset, and biggest liability. While opening every partner presentation with the obligatory "Thank You Partners!" slide, there have been distinct moves to reduce their dependency on partners from Microsoft's first stepping into the cloud. "Citizen Developers" for one obvious example.
I'll conclude this post by saying that, no business model is immune from disruption, and that includes Partners.
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The Advisor model was great. Microsoft handled everything, billing, support, collections, etc. All we had to do was bring customers and get paid a commission on the licenses that were bought. Cloud was exploding at that time a rate Microsoft did not seem prepared for. The Advisor model was putting too much of a strain on Microsoft, so CSP was born. CSP sought to put Partners or Distributors in the line of fire, in front of Microsoft. As a CSP, you were now responsible for billing, support and collections.
Microsoft launched CSP in basically two flavors, Direct or Indirect. The Indirect model was were partners would transact though a distributor. But distributors seemed to have been caught flat-footed at launch, and not a single one of them had even a plan to figure this out. Distributors were still reeling from the loss of hardware and CAL sales as the cloud loomed larger. The other flavor was Direct CSP, originally intended for large partners. The problem was that large partners were moving to cloud way too slowly. Desperate to get out from under the burden, and not having the patience to wait for Disti to get their shit together, Microsoft decided to lower the bar to entry for Direct CSP, and a bunch of small partners, including us, rushed in.
The CSP has support responsibility, meaning in the Indirect model, the Distributor was responsible for support, something they were ill-equipped to provide. But, as a small partner we were not really equipped to provide significant support either. So we became both a Direct and an Indirect Partner. My thinking was, that if we had a customer who looked like they would need a lot of support, I would run them though Disti, otherwise we would take them Direct. It seemed like a good plan, but again, Disti was not prepared or capable of anything. Simple things like adding a license was a huge project.
At the urging of Microsoft, we got into some things we were not particularly good at. As a CRM partner, we suddenly found ourselves selling Office 365 and Azure, and we pushed all of that through Disti. It was a mess, where our CRM customers thought we were awesome, our non CRM customers, rightfully thought we were idiots. So I got out of that business by transferring it all to a Gold Office 365 partner. Now we were back where we should have stayed, a CRM-Only partner. As a CRM partner, working with CRM customers, we had little need for support, from either Disti or Microsoft, so we dropped the Indirect relationship and went all Direct. Things were good.
A couple of years ago, I got an email from Microsoft saying that they were adding a new wrinkle to Direct CSP. "Advanced Support" from Microsoft would now be a requirement, at a minimum cost of $15K/yr. I thought for a minute about getting out of the licensing game. This was an obvious move by Microsoft to get rid of partners exactly like us. That $15K was eerily close to our entire license margin! But licenses were still petty expensive, and I thought we would continue to grow that side, so I bit the bullet and paid it (a decision I regret).
As a partner focused deeply on a single product, we really did not need any support from Microsoft. I think we may have opened one ticket, found the support to be no better than standard support, and never opened another ticket. Support was just a tax on our revenue... at least in our case. When the MS rep called about renewal, I said we were going to pass. He told me that we would basically be kicked out of the program. I pressed him on this, "What about our existing customers?", and he conceded that we would be able to maintain our existing customers. I decided that was good enough. I suspected that MS did not have any technical enforcement, and was correct, as we were still able to add new customers.
When Microsoft launched Power Apps at $40/month, and then the $10 Per App pass, we immediately started changing our customers licenses, where we could, to the lower cost licensing. Obviously this lowered our license margin revenue significantly, but it was the right thing to do for the customers. It also lowered our total license revenue to Microsoft.
I got an email from Microsoft the other day, that I am sure was sent to all small Direct CSPs. The next effort to get rid of small partners in the program. Microsoft has decided that the minimum revenue to remain in the program was now $300K/yr... oh and you had to pay the Support tax too. Otherwise you would be off-boarded. Off-boarded from a program they asked me to join. To be honest, since we are now focused on selling our solutions, that run on low cost licenses, there is not much of a license margin opportunity for us in CSP anyway.
For those that don't meet the new requirements, Microsoft is suggesting we go to Indirect with a Distributor. I have no interest in that, Distis are idiots. What I would prefer, is to continue to manage my existing customers, and eventually move them to Microsoft Directly over time as their renewals come up. I have asked what the process is for that, and have not been given an answer.
Microsoft updates the Cloud Reseller Pricelist monthly. Often new SKUs are added, and some SKUs are removed. Once a SKU is removed, it can no longer be sold to new customers, but existing customers of that SKU can continue to add and remove licenses based on that now deprecated SKU. It is not at all clear to me that customers will be able to keep these SKUs in a transition to either Disti or Microsoft, which would now be a new tax on customers, if they are forced to move to the current pricelist in the transition.
We all have them... undesirable customers. It would be nice to just flip a switch and get rid of them, but I made a commitment. In some cases I have agreements in place with terms that I regret, but again, I made a commitment. I can make up new rules for new customers, but I feel bound by the deals that were made with current ones. Maybe if I had as many customers as Microsoft has Partners, I too could be ruthlessly arbitrary... but... I can't.
Basically this is just a "venting" post with no real conclusions, but I am sure there are other partners who are in a similar situation, so I thought I would share my opinions. Feel free to share yours below.
Here are a couple of links of interest:
https://docs.microsoft.com/en-us/partner-center/direct-partner-new-requirements
https://docs.microsoft.com/en-us/partner-center/restricted-direct-bill-capabilities
https://docs.microsoft.com/en-us/partner-center/transition-direct-to-indirect
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I have known Jukka for several years now, and I consider him "the" top blogger when it comes to all things Power Platform. I also write a lot about the Power Platform, but I have a much different style than Jukka. If you could only read one blog to get the latest information on the Power Platform, I would easily recommend his blog over mine. But we both know you can read more than one blog, so you should follow both of us.
It was not hard to pick a great post of Jukka's to read, I simply opened his most recent, since all of his posts are brilliant. I’m reading his own words, unedited, so where you hear “I”, it is actually Jukka. Please enjoy this special episode of “Steve reads Jukka’s Post”.
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I got a call from Bob, the owner of Little Bitty Inc., in Podunk, Nebraska. Bob was managing the finances for his 5-person business in his checkbook, and managing his sales with a Google spreadsheet. He said he had been considering Zoho, but then saw an ad for our RapidStartCRM talking about how it was "Simple-to-Use". I realized at that moment that "Simple-to-Use" is a relative term, and was pretty sure that our app was not "Simple" enough for Bob. Plus he wanted to move his checkbook onto something, and that is not what RapidStartCRM is. My mind flashed across an integrated RapidStartCRM/Business Central scenario for a brief second, and then I said, "Bob... if I were you... I would go with Zoho".
I'm all about RapidStartCRM, or even just Power Apps, being a path forward from spreadsheets, but for Bob... it was going to be too much of a leap. Zoho was going to be good enough for Bob. I actually like Zoho, and for a customer like Bob, I think it is the perfect solution. Zoho is not particularly powerful, nor extendable, but then... neither was Bob.
I got a call from Rich, the IT Manager at Acme Solutions, a 30-person business in Atlanta. Rich had already moved his company to Microsoft 365, and was ready to tackle his sales team's challenges. They were currently using Excel Spreadsheets and SharePoint to manage their pipeline. Rich was also looking at Zoho, but just their CRM capabilities, Acme did not need the finance side. But since Rich had recently moved to Microsoft 365, he thought he would explore Microsoft's options. He did a trial of Dynamics 365 Sales Pro, and while he liked the power and extensibility, compared to Zoho, he concluded that it was simply too complex, and would need to be modified quite a bit to meet their specific requirements. He knew that Zoho could not be modified to meet his exact requirements, but it was cheaper and easier to use. So he had decided to start with Zoho, and see how far it would take them... it was better than spreadsheets. He got a call from a Microsoft rep because he had trialed Sales Pro, and after explaining his concerns, she suggested he check out RapidStartCRM, and so we ended up on the phone.
Knowing he was considering Zoho, I assumed price was important, so I started by pointing out to Rich that RapidStartCRM was free, and ran on a $10 Power Apps Per App license. He informed me that was about half the cost of Zoho's lowest plan, which I opened a browser and confirmed, Zoho's base plan was $18/month. This actually backfired on me as Rich became suspicious that since RapidStartCRM was less, Zoho's CRM must have more. I asked about his requirements and it sounded like 80% of them were covered with RapidStartCRM, out of the box, the same 80% that Zoho also covered. Then we explored that 20% that Zoho could not get to, and even though the requirements were quite specific, none of them were complicated to extend to in RapidStartCRM, which again is a Power App. In fact, we extended the conversation of his requirements, talking about some platform capabilities he was not even aware of, and then he decided those were now critical! I really love the "discovery" aspect of these calls.
I would love to say that RapidStartCRM is the ideal fit for any company, in any situation, but that's simply not the case. It was the perfect fit for our new customer Rich, but not a good fit for Zoho's new customer Bob. I think the key difference is looking out beyond today's need. While there are plenty of simple-to-use apps, including Zoho and RapidStartCRM, it is really about where you can eventually go with them. Microsoft likes the term "No Cliffs", meaning you will never hit a wall with the Power Platform and have to migrate elsewhere. I like that term also, and so do companies that are expecting to grow into bigger companies.
Two things happened that changed the landscape for us. The introduction of the $10 Power Apps Per App Pass (license), and our decision to make our apps free. Where I had been quite used to making the case for more capabilities at a higher cost than the competition, we are now offering more capabilities at a lower cost than the competition. It sure makes selling easy! :)
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Our strategy is obviously not going to work for every ISV. For us, I think it makes sense, for others it could be non-sensical. In this post, I want to further expand on our recent strategy to make our RapidStartCRM Apps free, and how we plan to generate even more revenue than before as a result.
When I first conceived of the idea of RapidStartCRM in 2015, there was nothing else like it in the market. "Dynamics CRM Online" was a complicated product to deploy and get adoption on... and still is. We built a solution that sat on top of it, mostly hiding the complexity. I had joked to James Phillips once, that every time he adds a new feature, we have to go back into our solution and hide it... he was not amused. But this was not my dream. My dream, was that users would just install RapidStartCRM, pay us some cash every month, use it as-is, and leave us alone. I dreamt of thousands of companies just using the solution as we designed and intended for them to. Well, that last part of my dream never came true. Almost every single customer wanted some sort of "tweaks"! They completely ruined my plan of laying off all of my tweakers...and pocketing their salaries.
I spent quite a few years trying to crack the nut of I.P. without services. It's okay, my tweakers were aware, and apparently knew better than me the futility of this effort. At some point you just have to play the hand you're dealt. So we pivoted from trying to minimize services for customers, to instead leaning in on that inevitability. Where I had hoped our revenue mix would be 10% Services and 90% recurring I.P. cash, it ended up the other way around. And of our services revenue for Forceworks, 90% of that was coming from our RapidStartCRM customers. This is also why we recast our apps as "Accelerators", an acknowledgement that no app is perfect for any customer.
Business is great, growth is great, revenue is great, albeit not in the ratios I originally intended it to be... but I got over it. So now what? What could be my next move, to go to the next level? I mentioned in my last post the spark of a new idea, that came as a result of building a new idea, ISV ConnectED. Looking at the WordPress ISV freemium model got me thinking. Some of these WordPress addons have hundreds of thousands of users. I'm sure most of those users are sticking with free, but it does not take a large percentage of them to opt for a "Pro" version or something, to add up to a significant chunk of change. In looking at our Apps, we make 10X in services over the recurring revenue on the apps themselves. If the apps were free, I would be betting that sacrificing the 10%, would easily be made up for in addons and services for much faster growing user base. Decision made!
Just removing the costs of some apps was not going to be enough, the strategy had to be more comprehensive than that. A ton of new free users is useless if you cannot monetize them, even worse than useless actually, as there are still costs. Step one, how to support them. Knowing previously, that most customers were going to reach out for help to get the most out of something they were paying for, we had not worried too much about our documentation. We had documentation, but not at the level that would be needed to support a large number of free users. Why do I care about the free users, particularly the ones who are never gonna buy anything? Because we live in a world of ratings today. If your free apps are crap, or useless without paid extras, or you don't support them at all, your ratings in the marketplaces will plummet. Good ratings are hard to get, you almost have to beg even your happiest customers to go to the time to give them. Free users got nothing but time to go blast bad ratings all day long. It is the single biggest risk in the freemium strategy. Fortunately our apps are great, probably because they were not originally developed to be free.
So reasonable support is important, even for free users, but you can't go broke providing it. It comes from 3 places in our strategy. The first is more comprehensive documentation. The more issues that can be addressed in your documentation, the fewer frustrations a customer will suffer. But a lot of issues can pop up, that are not able to be covered in even the best documentation in advance. The next step for that free customer is a free support forum. There is no SLA in a free support forum, and hopefully over time, customers will be able to get answers to previously asked questions there, or from other users, as well as us checking in.
This is about the best we can offer to a free user, and it should be good enough for many of them. But you have to give them a path forward if that is not enough for them. But that path, at that stage, does not need to be free anymore... but it still can't be too expensive. So we bubble up our RapidADVANCE managed service offerings, a paid program that can provide that next level of support, in a few flavors. But what if that still is not enough? Again, 90% of our business was coming from customers who wanted significant customizations... so this brings them to our Forceworks Support Block model, the model we have used for many years now for current RapidStartCRM customers, or all other non-RapidStartCRM customers, including enterprise customers, and P2P projects. It is basically our SI model.
We are also working on two other primary monetization paths. The first is what we are calling "Simplementations" via Forceworks. This is something that we have been offering for a while for some of our non-public I.P., and it seemed like a natural fit for our RapidStartCRM apps as well. Basically, Simplementations are fixed cost, scope and time engagements for targeted scenarios.
Lastly, paid addons... an area that we will be focusing on heavily in the coming months. Our RapidStartCRM apps, are like platforms on a platform, this was intentional many years ago, but only to streamline our providing services for them. But they are perfectly designed for adding additional "packaged" capabilities quickly and easily. We already have some of these, RapidPROJECT and RapidSERVICE, for example. Again replicating our motion of taking something Microsoft made too complex , and creating a simple version of it. In this case, RapidPROJECT is a subset of PSA capabilities, and RapidSERVICE is a subset of Field Service capabilities. BTW, neither of these require RapidStartCRM as a pre-requisite. But over the years we have built all kinds of things on top of RapidStartCRM in response to customer requirements, and many of those things would have broad appeal, if we packaged them up.
So this is going to be a busy development year for Forceworks. I'll keep you posted on our progress. If you are an ISV, I would really appreciate your joining ISV ConnectED, I may need the gas money for my motorcycle.
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I have certainly been one of the "complainers" about Microsoft's ISV programs, including ISV Connect. Well, you can only complain so much, and then, if you are in a position to, you have to take action. I decided that what ISVs were missing, was a community that was ISV Focused, instead of just being in a subcategory somewhere. The ISV Ecosystem is a big business and Microsoft seems to be grasping how important we are, particularly after a recent study they commissioned on ISVs that got their eyes-popping. Toby Bowers confirmed this in my recent chat. Speaking of Toby, he is now the new leader for ISV Connect, taking over for Guggs who is retiring from Microsoft. So, new blood, new opportunities... seemed like the time was right to launch something to help everything move along.
ISV Connect ED is a membership site, so it's not free. I would love to have done it for free, but then it would not get the love it would need to succeed... and it will require a lot of love and attention. I won't go into a lot of detail here, I wrote a post on it describing what it is, and why I am doing it, here. But I will say, if you are an ISV, I want you to join and participate, otherwise you better steer clear of me when in-person events resume in the future.
Okay, I don't know how bold this seems to you, but it was a pretty big deal to me. I tossed and turned for weeks before committing. As we were building the site for ISV Connect ED, I found us making heavy use of WordPress plugins. Almost every plugin we found had a free version, and then a "Pro" version. For about 90% of the ones we used, we ended up opting for the "Pro" version. This got me thinking about our RapidStartCRM Solutions on AppSource. While our apps have done quite well, I found myself wondering what things would look like if I had 100X the user base. The only way that would happen is either a massive marketing campaign, which would cost a ton, or... make the apps free. Either way the cost is significant. Not only would I be giving up the potential future recurring revenue for the apps, but I would have to stop charging all of our existing customers for them too!
Obviously, my plan was not to go broke, but "free" certainly does not help a bottom line. Looking at the WordPress model, most of the free plugins have basic capabilities. But if you need something more sophisticated, almost all of them offer a "Pro" version. We could certainly do that. Our core RapidStartCRM apps are intended to be simple apps, but over the years we have built some fairly sophisticated I.P. on top of them for certain use cases, like Project Management and Field Service. So we already had our "Pro" addons started. Also, most customers ended up engaging us to do further customizations, and why not, who knows our app better than us? So there's two revenue generating possibilities... would that be enough?
Imagining thousands of customers on the free app... that could bury us in support costs. Again, the WordPress Plugins developers' model came up. Most of them offered free support for their free apps in the form of a User Forum. Not only does this limit the effort, but more often than not, another user answers the questions raised. If you want more than forum help, you can buy it from the developer, or in some cases upgrade to their "Pro" version to get it. Brilliant! We will replicate that motion as well.
I am taking a big risk, but I am not betting the whole farm on this. Our primary revenue source has always been Project Services, often on RapidStartCRM implementations, but about half come from other customers. So trading the potential, and existing recurring revenue from the apps, for what may come with greater scale is not crazy. Or, at least I don't think it is. Well, I hope not, since it is already underway and too late to turn back.
Again, following the WordPress model, where the plugins are not usually protected code. If you have the development skills, you can edit them yourself. So our RapidStartCRM apps are also all completely unlocked and able to be extended by the customer, another partner or... hopefully by our team at Forceworks. I may be opening a Pandora's box here, but I feel confident we will get our share.
So we are making free four existing apps, and one more in the future pipeline:
In our pipeline we have a new "RapidStartCRM B2C" in development for businesses who primarily sell to and engage with consumers.
The worst case scenario, is not really that bad. It is possible that many organizations will use our free apps without ever opting for a "Pro" anything, or needing any help at all. I mean there could potentially be thousands of customers being introduced to Microsoft's Business Applications as a result of our free apps... I guess that's not a bad thing either. I'll be covering our progress with this approach on the blog at ISV Connect ED, so if you want to see how this ends up, well you'll have to join that!
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Toby Bowers: Hello, this is Toby.
Steve Mordue: Toby, it's Steve Mordue. How's it going?
Toby Bowers: Steve Mordue. It's going well. How are you? Long time no see. I have a suspicion on why you're calling. I read one of your recent posts, called Suggestions for Toby. Is it to talk through that?
Steve Mordue: So, before you talk too much, I got to let you know, the record button is on and I'm going to publish whatever the heck we talk about in the next few days on my podcast, if that's all right.
Toby Bowers: Ah, okay. Okay. I've heard about these calls, Steve. Yeah, no. That's fine. That's fine. I've been looking forward to talking to you.
Steve Mordue: All right. Cool. So, news. Guggs is headed out the door, and he did the mic drop and you've picked up the mic.
Toby Bowers: Yep. Yep.
Steve Mordue: Which is a new role for you, but you've been in the periphery of this ISV, but you're now the guy, right? Buck's stopping at your desk, for ISVs and ISV Connect.
Toby Bowers: Yeah, no, absolutely. I'm excited with the opportunity. Yeah. Guggs is retiring for the company, and just with the turn of the fiscal year here at Microsoft, we took the opportunity to sort of reorganize a little bit. But as you said, Steve, I'm not new to the ISV strategy or the ISV Connect program. We've been, myself and my team, have been working really closely with Guggs and his team over the past year. Just to sort of explain where my team fits in. So, I work for Alysa Taylor and the product marketing group. We have all of our field sales enablement for all of our sellers and marketing teams around the world. We do our partner strategy all up, not just for ISV. We do customer success. We're focused on usage and adoption and migration. And we also do community work as well, for both first and third party community. So, ISV has always been a part of my core team charter, but as you said, I'm just sort of picking up the mantle with Guggs, and we'll get more actively involved.
Steve Mordue: Is it a little intimidating?
Toby Bowers: Oh, yeah. No, it is. I mean, obviously this is incredibly critical for us to get right as a company. Such a huge opportunity for us and for this business. I joined the dynamics team about three years ago, and we started talking about this, Steve, because we really didn't have a modern SaaS ISV program, ISV strategy. We were still coming off the old legacy days where, of course, ISVs are critical in this business in driving success with our on-prem business. But we weren't able to sort of effectively translate that into the cloud world. So, really, really important for us to get right. Why it's important for Microsoft is, to be honest, this is just a massive market. I mean, we did some sessions at Inspire recently in fact, this is a $200 billion market. It's a very fragmented market, Steve, as you know, so the better we are in building out an ISV ecosystem and driving those ISV's growth, the more share we can take in this market, and attract ISVs to build on our platform with great solutions that help solidify it in the customer base.
Steve Mordue: Was that kind of an eyeopener for you guys a little bit to see the results of that study you commissioned around ISV? I mean, I know you guys had always kind of, in the back of your mind, assumed there was importance in ISVs, but was that an eye opener for you guys as well?
Toby Bowers: It was. It was. I mean, the fact that over half that addressable market is going to be driven by ISVs and the cloud in the business applications market was bigger than I thought, to be honest. It's also, Steve, it's interesting. It's split pretty evenly across the sort of the medium business space and the enterprise. So, there's equal opportunity across both customer segments, but for us, the real opportunity, Steve is... And I'd love a chance to talk about the opportunity I see for the ISVs, but for us, the opportunity to take share and reach new audiences through ISVs is something we really talk a lot about in our conversations. Acquiring new cloud customers, the fact that ISVs can build vertical and sub vertical solutions and reach BDM audiences that we're just not that great at it, Microsoft, to be honest. Just represents a huge opportunity for us from a customer acquisition perspective. And then, the last thing I'd say, Steve, is we still sort of have this tactical opportunity to continue to help the remaining customers we have on on-prem dynamics products get to the cloud, and ISVs are obviously critical in doing that, in helping them sort of move their IP from the legacy stuff over to cloud. So, yeah, there's a big opportunity for Microsoft in it, but I also feel like there's a big opportunity for ISVs, just choosing us over someone else in the industry based on just the innovation we're building in and the growth that we're seeing in the Dynamics 365 and Power Platform business,
Steve Mordue: Well, they're choosing Microsoft to start or adding Microsoft, if they're already established elsewhere.
Toby Bowers: Yeah.
Steve Mordue: Both of those are good motions. There's a huge ecosystem of ISVs for Salesforce and some of the other applications out there. And I don't expect them to just drop that and come over here. But you reach a point in any business where you're kind of plateauing, right? You've got your market share and you're maintaining and you've got your steady growth, but if you're looking for a new opportunity to create brand new growth, I mean, nothing like jumping into another sandbox.
Toby Bowers: Yeah, absolutely. I mean, I think that's definitely part of it, and it kind of comes back to where we are in our journey with this strategy and this program [ISV Connect], Steve. I think back with the transition from Guggs, we sort of spent about a year in the design mode, and I know we worked with you to bounce ideas off you as a sounding board during that phase, back in the back of the day. And then last year, our fiscal year '20 was really the launch year. And obviously, we launched it at Inspire in July, but then it really didn't become operational for a couple of months. So, the bulk of last year was really helping our existing ISVs onboard and get enrolled in the program, and really the focus that we had on cleaning up app stores, getting everything all nice and certified and enrolled in the program for our existing ecosystem. And we feel pretty good about the result, that we got over 550 ISVs, 1200 apps. We have a good base now, but to your point, now we can sort of transition into going after recruits, right? And not only making our existing ISVs successful, but continuing to build out that ecosystem with new ISVs who are looking at multiple platforms to your point.
Steve Mordue: I've been, I guess, probably the best way to put it would be "optimistically critical". I mean, I am an ISV, so obviously I'm bullish and have high hopes for success of the [ISV Connect] program, but the program has had its challenges. I think it's been passed around a lot. Hopefully, you'll hang around for a while with this thing. That's one of the reasons I was asking about the survey, was that it seemed like for years prior to that, like I say, there's been kind of a, yeah, we know ISVs are important, but it wasn't particularly believable messaging, you know? Because I don't know that a lot of the folks inside Microsoft had a clear picture of what that means. It's was just Salesforce is doing it, so we should be doing it too. But I was thinking that study kind of would have really opened some eyes and poured some gas on this motion.
Toby Bowers: Yeah. I mean, it really has, Steve, and you're right. And look, I'll acknowledge we've had fits and starts with ISV strategies across Microsoft for several years, and I've been there to witness it. I'm a 20 plus year vet here at Microsoft, and I've worked in pretty much every side of the company from sales to marketing out in the field in different countries, and now here in product marketing working on BPOS and Office 365 in the early days, and then Azure in the early days, and now Biz Apps. We've gone through several evolutions that are related to our ISV strategy, and we've changed course and made some missteps, to be honest, here and there. I think my whole goal, again, in sort of stepping in and taking a little bit more responsibilities with this program in particular is to deliver on the value, deliver on the promise we made to partners. Last year when we launched, we talked about things like access to our field sellers in the premium tier, access to our partners, access to our customer base through app stores in the marketplace, access to platform capabilities. We've delivered some of that, but we still have a long way to go to deliver on the full promise. And so, I'm a partner guy. I had lots of partner responsibility in my previous roles at Microsoft, and I just think if we deliver on that promise and we support our partners' growth, we're going to grow. So, that's my number one goal. And we can talk about some of the specifics in it, but I hear you. And I think we need to stay the course. Now that we're in market, this is the year to really mainstream the program across the Microsoft machine and really deliver on the value that we've talked to ISVs.
Steve Mordue: I think one of the challenges with the ISV Connect... well, any of the programs in there is Microsoft is a huge machine, and you've got to get a lot of parts lined up in order for anything to happen, parts that are within your control, other parts that are not in your control. I mean, it's a challenge to get all those things lined up in a groove. And I know that effort has been ongoing. We talked about AppSource as an example of something that Biz Apps doesn't own AppSource. They kind of own their door to it. And so, some things that are kind of in your control, out of your control, some things you can influence, not influence. I guess a lot of it would probably be driven by such as interest in the success of the Biz App side of the business, which is certainly higher than any of its predecessors, right?
Toby Bowers: Yeah, absolutely. We have huge sponsorship, not only in support, not only for business applications like Dynamics and Power Platform from the senior leadership team, Satya and his LT down, but even the ISV strategy within that, Steve. I mean, we get a chance to get in front of that leadership team twice a year. We often talk about this ISV strategy, the ISV Connect program, what we're doing. So, it's well known across the company. And I think to your point around the matrix here at Microsoft, and what I would say is I've been around again for a long time and I've worked in most of these teams that are going to be critical for the success of this program, whether it's Nick Parker coming in on the global partner solution side and Gavriela [Schuster], Casey McGee, or on the engineering side, James Phillips and Charlotte Yarkoni, who actually leads our commerce engineering team, including our marketplaces with Azure marketplace and AppSource. So, we've got high awareness, high prioritization to focus and improve in some of the areas, Steve, that we'll probably talk about, we know we need to focus on and improve. But the last thing I'd say in this vein is when we launched last year... Again, you probably know the way Microsoft works. I mean, we kick off Q1 in July. Everyone goes in a little hole for it for a month, takes a couple of weeks of vacation, comes back out, and we quickly get into planning mode for the fiscal year, to sit down and build the pipeline we need, think about the right plans and investments around the world to be successful. And the difference between this year, this fiscal year and last fiscal year from an ISV Connect perspective is we now have this great stable of ISVs and apps ready to go. So, we had 500 ISVs enrolled in the program on day one, July 1. We have 1200 apps. We've got a great set of premium tier apps that we're now working with our sales teams to align to their account and territory planning process. In fact, just earlier this morning, Steve, I was looking at a spreadsheet and you can imagine not to share sort of all the gory detail, but we have these things called sales plays, which are how we enable and align our sales force to go and talk to customers about our workloads and solutions. And we have six sales plays for business applications. Then, we have an industry focus. We have these industry priority scenarios. We have 13 of those. Then, we have 14 areas, we call them, around the world. These are countries and groups of countries around the world. So, if you think about a big spreadsheet with all of those, what we've done is we've mapped our ISV solutions to each one of those to say, "hey, if you're looking to focus on supply chain in the manufacturing industry in France, here's a set of ISVs that are enrolled in ISV Connect", perhaps have an app in the premium tier that you should align to your account territory planning process, so that you can go and engage with them to build pipeline.
Steve Mordue: Wasn't that previously like the... What was it? The catalog? The CSP? No, what was it?
Toby Bowers: That, yeah. It was the... Well, the OCP catalog is what we used internally.
Steve Mordue: OCP catalog.
Toby Bowers: Yep. There's a Co-Sell Solution Finder. That's more reactive, Steve. If you're talking to a customer and say, "Hey, do you know a partner that has a solution on X," you can bring up that tool and find one. What I'm talking about is more proactive, actual territory planning with the sales teams to sit down with ISVs and do that sort of engagement, to build joint pipeline, identify joint accounts. So, I just bring it up because we didn't have the opportunity to do that last year, because we were just launching the program. So, I'm optimistic, as you say, critically optimistic that that'll make a difference for us this year, at least on the Co-Sell side.
Steve Mordue: When Guggs came in, I was actually pretty excited, because that's really the first time that someone who had been with Microsoft for a long time, had some clout, knew how to work the machine internally came on board, and he was on board for, what? About a year, and then retired. And I thought, "Uh-oh. Now what?" And so, hearing that you took over, I was once again, very excited. I've known you for a long time now. Obviously a completely different personality than Guggs. You are much less of a risk taker, I would say, and much more of a... You're a much more mellow kind of a guy. You seek consensus.
Toby Bowers: Thank you, Steve.
Steve Mordue: I've always thought you seek consensus more than... Certainly Guggs wasn't big on seeking consensus. I think that's going to be critical to your ISV success. I think... And I admit, I'm not blowing smoke up your butt. I think you're the right guy at the right time for this now, just knowing you the way I do. And obviously, a lot of ISVs will be listening to this. So, I don't want to... I've kind of gotten caught in the past of sounding overly optimistic, and then things not stepping up. But I'm feeling as optimistic as I ever have about you stepping into role and being able to really make it work for everybody. We've got some very successful ISV stories out there, but there's a lot of them that are struggling to get there. I think democratizing the process a little bit, because we definitely over-index on the big ISVs, which I get. We need to... But big ISVs didn't start as big. We need to have motions that bring all people, raise all boats.
Toby Bowers: Yep.
Steve Mordue: What are you thinking about, now that you're brand new in role? Although you're not oblivious to what's going on. You've been in the periphery there of this thing fairly deeply for a while. What are you thinking about things you want to try and attack right away that you think you can get some traction on right away? And then, maybe things that you want to focus on a little more long-term, so we can kind of see what we can expect quickly, and then what we can kind of expect down the road?
Toby Bowers: Yeah. Well, I appreciate that your sentiment, Steve. We have known each other for a long time, and I know you're a straight shooter, and you're also just a great champion for the broader partner ecosystem. So, I would just say, just to put everyone at ease, I've been around almost as long as Guggs and have been behind the scenes, like we said, on this for a long time. So, I don't want anyone to feel like I'm going to come in and start cracking around and changing things up. I think to your point around risk taking, this whole design launch mainstream phasing that I talked about, the program is sound. I truly believe we have the right program in place for the long game, with the revenue sharing model, the different points of value that we need to provide to our partners. Like I said, we just need to deliver on that promise now. So, I'm not going to come in and change things drastically. I'm going to take what we have, and do my darnedest to make it successful Steve, because I truly believe it is set up for success if we have the right focus and attention. So, that sort of leads me to the way I work. I am a collaborative guy. I've got a lot of good relationships across the organizations that will be required to make this program successful, whether it's the partner team or the sales team or all the folks out in the field who are closer to where the rubber hits the road. So, I feel pretty confident about the amount of focus and energy, and what I can do to really push it forward from here. As far as short term, long term, to answer your question, Steve, and I loved your blog. I read it. In fact, I listened to it. I was out walking the dog, and I listened to it. So, thank you for reading it out loud. I don't know where you found that picture by the way. That's about a decade old, so thank you. That's very flattering.
Steve Mordue: Send me a new one.
Toby Bowers: Exactly. But there's a couple things. I would say to some of your suggestions around... Let's just take the first one around equalizing. We probably did over-index a bit on the Co-Sell side of things last year with our premium tier, especially, and getting those partners enrolled and engaging with our field around Co-Sell. That's what, to be honest, a lot of the larger partners were most excited about. And there's been a couple of really good examples of success there, Steve, and companies like Seismic. We just had Inspire. We talked about a few different ISVs and sort of success stories, but Seismic is a great example. Sales enablement solution, three clouds, Azure, us, Teams as well. They really got plugged quickly into the Co-Sell motion. And they talked about pipeline growth of 5X in the first 90 days. That's a smaller group of ISVs that are in that premium tier app, and they've just seen a ton of success. Sort of taking a page out of the Azure Co-Sell playbook, and now applying that and extending it to ISV Connect. So, we're going to continue to focus on that. Like I said, we're able to kick off our fiscal year with this set of ISVs. And so, I feel pretty confident about continuing to push on the Co-Sell side. Where we need to focus more, Steve, is to your point on a couple of the other value points that we talked about. First is access to our ecosystem, right? We've got massive partner ecosystem, all shapes and sizes. SIs, local SIs, regional SIs, the big guys, resellers, CSP partners. Today, we've got some partner to partner benefits, kind of matchmaking benefits as part of the program, go to market program. We've got such an opportunity in the future to tap into those channels in a bigger way. You think about incentives or our transacting partners reaching into new markets and geographies around the world. That's going to be an area of focus for me going forward. And then, the other piece around AppSource. You had some great feedback on AppSource, and I know you've been giving us feedback on AppSource, for years.
Steve Mordue: Yeah, since it launched. Before it launched, actually.
Toby Bowers: Yeah, exactly. This is going to be a real short term focus for me, Steve. The fact is we've been on and are on a little bit of a journey with AppSource, but we've got eyeballs in there. It's got a monthly active usage of 4 million users, right? And growing. So, what we've done in the last quarter with AppSource is really worked on some of the plumbing underneath. It was just not where it needed to be when it came to search, discoverability of apps, just block and tackle, basic stuff. So, we worked with the engineering team to really focus on just fixing up that plumbing underneath. This next few months where we're going to focus is the overall user experience. So, the website itself, focusing much more on the solutions themselves, merchandising the right apps, really helping customers who are going there find what they're looking for quickly, not just from a search perspective, but an overall user experience perspective. And that'll happen literally in the next few months. And then, from there, Steve, you know where we're going to go. We're ultimately going to light up transactability of third party IP through AppSource. That'll come together with the ISV Connect program, so that partners can really choose how they transact. But we do feel like for the right apps and the right partners, that'll really light up this big Microsoft install base of customers as a new way to sell and transact their apps. So, that's where we're going.
Steve Mordue: I think that would be particularly critical for the startup ISV, or the one who's coming over from another platform.
Toby Bowers: Yep.
Steve Mordue: Because it's a big enough challenge to build a worthwhile solution, but that's only the beginning as an ISV of getting where you need to get. you've got to build some sort of a licensing construct to protect it, and you've got to build some sort of a billing platform to get paid for it. So, to the degree that you guys can offer some sort of plugin capabilities on those sorts of things, I think that's going to open up for a lot more ISVs to engage, because you've just lowered the bar of entry to really, if you've got a good solution, if you've got good IP, you can jump in here. We'll take care of more of this plumbing for you, because it's definitely, I think, kept some folks on the sidelines or a lot of people have ended up just making apps free, because they don't have a way to protect or sell them, which isn't what the goal was.
Toby Bowers: Yeah, totally, Steve, and look. I'm going to be honest. We got to get better in this space. This is an area that I just see a huge opportunity for us to focus on and improve. We've seen some success there. I talked to Trevor [Nimegeers] at this company called ITRAK 365. It's like a safety management app for waste management. Again, talk about vertical focus. Yeah. But he's getting leads from AppSource. He's going... Canadian based company. He's cracking into New Zealand and winning some deals over there. And just the infrastructure that can enable that geo expansion through a marketplace like that has a lot of promise for a lot of our ISVs. But you mentioned something important as well, which I missed earlier. So, in addition to the marketing benefits, the go to market benefits, the Co-Sell benefits, we're still working really hard with the engineering teams, whether it's Charles [Lamanna] and his team, or the marketplace team on platform capabilities. So, obviously, we've got tools and stuff today with ISV Studio. We've got telemetry. We've got install telemetry today. We'll have usage telemetry tomorrow. We'll have licensed management capabilities tomorrow. That'll flow into transactability. So, a lot of those platform investments that we can make from an engineering perspective ultimately come together to sort of paint a nice picture for ISVs who are looking to tap into that. And again, strong focus and sort of commitment across the engineering teams to do that.
Steve Mordue: And when you say tomorrow, so everybody is aware, you don't literally mean tomorrow.
Toby Bowers: I do not mean Labor Day. That's a very... No, no, I don't. Yeah. I mean, I don't have, and I can't share specific dates, Steve, but we are on this biannual release cycle with James and his team. Obviously, you know our release cycle there with October and April. The commerce and marketplace team is on a biannual cadence as well. So, we just fit into those engineering cycles to continue to champion for what ISVs need to be successful, in that long list of work that those teams will do to just get it higher and higher on the list. And we're really moving in the right direction.
Steve Mordue: And I see a little bit of a parallel with the ISV Connect motion and really the whole Power Platform motion. My last call with Charles Lamanna when I was asking him about what are the big things that they're planning next? He said, "Actually, we're going to focus on making everything we have work better."
Toby Bowers: Yeah.
Steve Mordue: We have all the parts that we need and they're all out there. They're not necessarily wired up as ideally as we'd like, and you can't just keep launching, launching, launching. At some point, you've got to take a look at the pile you've built and make sure that it's organized and sorted and working, well oiled. And I kind of feel that way about ISV Connect. All the parts are there. We don't need any new, necessarily any brand new things, some add-ons here and there. But it's really just making that whole pile of components work like a well oiled machine.
Toby Bowers: Yeah. I think the table's set. We just got to get people eating. Like I said before, I think the program is sound. The elements, the business model. It's a self-fulfilling business model. The more success we have, the more we can invest and grow together. And I do think that we stay the course. It's all about execution and delivering on that promise. Now that said, there are a few things, like we were just talking about that we need to add quickly or fix, to be honest. Things like getting AppSource where it needs to be, some of the benefits. You and I have talked a lot about internal use rights, and that is a benefit. We just need to get that done. I know we've been talking about it for too long. There's a broader Microsoft dialogue going on around ISV and programs and IURs. I'm just going to move forward with the right IUR strategy for ISV Connect, because that's just something we have to deliver on,
Steve Mordue: Just put your head down and crash through.
Toby Bowers: Exactly. Exactly. So, that's a big one.
Steve Mordue: So, I recently started a new venture myself kind of on the side, towards this ISV Connect motion. I don't know if you'd heard anything about it.
Toby Bowers: No, I haven't. What are you doing?
Steve Mordue: ISV Connect ED.
Toby Bowers: Oh, nice. I like the play on words there, my friend. You should be in marketing.
Steve Mordue: Yeah, yeah. Well, I'm adding an ED to the end of it, but essentially, it's... We don't have a good external resource. I mean, you can go to Microsoft, and you can read all about ISV Connect and just read stuff, but there doesn't seem to be a community for ISVs to compare notes and... Not so much, I don't want to create a place for people to go bitch and complain. I want to create a place where people can go and learn what works, what doesn't, how to be successful, and see if we can nurture some stuff around there. So, hopefully you'll be hearing more about that.
Toby Bowers: Well, that sounds intriguing to me, Steve, but yeah, I'd love to learn more. I mentioned one of the other things my team is responsible for is our community strategy. And I know you are an active member of our MVP community, our Partner Advisory Councils, our sort of partner community at large. So I'm all for what you do with that initiative, Steve. I think, to me, community, and I know we've caught up at user groups and things like that. It's just such a great listening mechanism for us. We can do all the research we want, and talk to our field and talk to partners, but that partner to partner community engagement to sort of identify common themes, and then have multiple voices bringing that back to us is just so important for us to be focusing on the right areas.
Steve Mordue: Yeah.
Toby Bowers: And I'm just a huge advocate. I mean, this is... In my career, I spent so much time out in the field with customers and partners, and I just feel it's so important for us to listen at this point. Again, I feel like we've got the right strategy in place, the right program [ISV Connect] in place. We need to listen to what's working and what's not working, and then act quickly that. So, I love it. I love that you're pulling that effort together, and I'd love to stay connected with you on it as far as opportunities to engage or just understand what you're learning.
Steve Mordue: Oh, I'm going to lean on you, buddy. I'm going to lean on you.
Toby Bowers: You can lean on me anytime. In fact, I was going to say that.
Steve Mordue: One of the things that Guggs did, he kind of disbanded the ISV PAC and kind of went to that broader... But I think you definitely lose something when you've got... It's funny. When we go to any of these events, when there's a room with like 20 people in it, everybody's happy to talk. When there's 200 people, nobody says anything.
Toby Bowers: Yeah.
Steve Mordue: It's like the group gets too big, and then who was it? Tony. You remember Tony de Freitas?
Toby Bowers: Yeah, I do.
Steve Mordue: He made a comment on one of my more critical posts recently. And he just said, "Feedback is a gift." Coming from someone who used to be on the inside of Microsoft, I know you guys are desperate for the feedback. I mean, it's all... Give me the feedback, tell us what's working, what's not working. And it doesn't help when nobody says anything or they just complain. Getting that feedback is critical, and that's part of what I'm hoping to try and accomplish here is to help you guys get some of that feedback.
Toby Bowers: Yeah. Absolutely, Steve. I mean, we can't do this in a vacuum. It's a new program. It's a new model for us. And so, feedback is critical, and there's multiple ways to get that feedback. The good news on the PAC is we're getting the band back together, so we're sort of re-establishing as we move into this next horizon. But yeah, in fact, I was going to offer, Steve. I think me coming in now, I would love to do this connection with you maybe in a few months as we sort of round out the calendar year to see what progress we've made, and you can keep me honest and I'd keep you honest. And I would love to engage with this community that you're thinking about building.
Steve Mordue: Well, I hope that... I had Guggs on about once a quarter to just kind of talk about what's up.
Toby Bowers: Okay.
Steve Mordue: I definitely feel like you are a person who is more amenable to the feedback.
Toby Bowers: Yeah, yeah.
Steve Mordue: More interested in hearing it, and will definitely act on it. So, anything else you want to say to folks about you coming in here, and taking the role? I mean, I'm feeling very positive. I think everybody should feel very positive. I think everybody needs to give you a fair chance to take some action, but I'm feeling very confident about it.
Toby Bowers: Well, I appreciate it, Steve. No, I appreciate the call, although it was a bit unexpected. I'd just wrap up with my number one job is to deliver value to our partners. That value will come in the form of growth, plain and simple, because if our partners are successful, we're going to be successful with this. So, that's what I'm going to be maniacally focused on for this next six months. And yeah, I look forward to catching up again soon and hopefully talking about some of the mutual successes that we've had.
Steve Mordue: Sounds good, man. I'll be pinging you soon.
Toby Bowers: All right, Steve. Well, thanks again for the call. I appreciate the opportunity to have a chat.
Steve Mordue: All right. Bye bye.
Toby Bowers: Bye bye.
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First, why should Microsoft even give a shit about ISVs? Certainly prior to sharing in ISV's revenue there did not appear to be much reason, based on how Microsoft had historically engaged with ISVs. I guess we have to thank Salesforce and their successful AppExchange for Microsoft paying any attention at all. For years I have watched various Microsoft people get up and say "ISVs are critically important to us", followed by very little in the way of tangible actions. Obviously, "We have a marketplace too!" should not be the end goal here.
What Salesforce keenly grasped, was that ISVs either generate business they would never have had, or make their platform for the customers they do have, extremely sticky. We know this from our collective efforts to get customers to move away from Salesforce; very often it is some ISV solution they depend on, that is making them stay put. It has gotten easier to be sure, but mostly because of Microsoft's integrations to other Microsoft products being superior. SFDC customers are giving more weight to that now as so many of them have switched to Microsoft 365. On one side of the scale is this fully integrated Microsoft story, and on the other they have the disruption of losing a critical ISV solution for which Microsoft has no ISV comparable. What Microsoft really needs is 10X the number of ISVs they have today!
I don't recall when Salesforce started AppExchange, but I don't think it was long after they launched the company. I also don't recall whether they took a cut of ISV's revenue when they started, but they clearly do now. It would not have mattered, because at the time, they were essentially the only game in town. 800 lb Gorillas, with triple anyone else's market share, can afford to be demanding of ISVs. I have no doubt that SFDC makes a huge amount of revenue from this motion, not only for licenses that they would not have sold otherwise, but also their ISV vig. I have no idea what they invest in their ISV ecosystem, but I am sure it is not small, because building and maintaining it is not cheap. But SFDC recognizes the value. Up until recently, Microsoft apparently invested the change found in the sofas around campus. I applaud James Phillips and Charles Lamanna for seeing they were not going to win the race with SFDC on Microsoft's trajectory at the time, and pivoting into new ground. The "Citizen Application Platform" is an entirely different approach, but "Citizens" are not going to build robust mission critical applications on Dataflex. Microsoft needs customers on the big money, sticky stuff that ISVs have historically created for SFDC.
Guggs apparently realized there was no budget to create this thriving ISV ecosystem that Microsoft would be the primary beneficiary of, and decided ISVs should fund this. Let's think about this for a minute. You have a historically dismal track record for ISVs, you publicly acknowledge that, and step one towards a fix is to ask ISVs for the money to fix it. I had suggested at the PAC meeting where the Revenue Sharing idea was first floated, that maybe they should "prove" success for ISVs first, but I guess they didn't hear me. I am sure that Microsoft has had to spend some of their own money on this effort, as I doubt that the Revenue Sharing income is significant yet, but they need to spend a lot more. And they need to spend it fast and right, otherwise they should suspend the Revenue Sharing for a while until the value for ISVs is there.
When I throw my head back, and let the possibilities swirl around, I can see success for ISVs, and Microsoft. I know I have been a strong Microsoft advocate in the past, and call me a flip-flopper, but I could easily become one again. Even though SFDC does not have it perfect, I still envy their ISVs today. And, even though he is a egomaniacal as they come, Benioff still let ISVs shine, less concerned about brand positioning, than money rolling in the bank. So, what might I suggest to Toby?
Maybe they can't see it. Maybe they don't actually believe that ISVs are critical, or even necessary. Maybe they see us a necessary evil for certain edge case deals. Maybe they see an ISV ecosystem 10X the size it is today as a huge hassle. That would certainly explain things. Or maybe they don't think any of that, and simply don't know what to do to solve the problem. Launching a Revenue Sharing program at this stage, in spite of knowing full well that it was going to piss of the entire ISV ecosystem, does not appear to have been the best first step. If this is going to work, we have to all be smiling the whole way through. No pain, no gain, only works for the gym,
Right now, particularly in Co-Sell, my guess is that 5% of the ISVs are getting 95% of the attention from Microsoft. I understand that's where the quick money is, but that is also short-sighted, scorecard-based thinking. The goal should not make the few large ISVs even larger, it should be to make all ISVs larger. If you want to recruit a lot of ISVs, they need to see that they won't just be given the crumbs left over after the existing large ISVs have had their fill. Kind of like how many organizations and governments have a minority program, where a certain amount of projects must go to a certain population, Microsoft should come up with a similar program for small and start-up ISVs.
I am aware that Toby will not have much influence over what the product teams do, but it impacts ISVs in a big way. The last thing the product teams think about when they create new features is the ISV story... it's more of an afterthought. As a result, many of these features or products are not what I call "ISV Ready" for various reasons. Every product team should have an ISV advocate, from the very first conversation about a new product or feature. I mean there's like 6,000 people in the BAG organization now, surely we can task a few of them with watching out for ISVs.
One of the touchier subjects for ISVs is AppSource. If done right, AppSource could be a primary benefit to ISVs, and draw for new ISVs. I know AppExchange certainly is for SFDC. Unfortunately, AppSource for Bizapps ISVs has become little more than brochure-ware. Poorly built, hard to use, and not promoted nearly enough. I am also aware that AppSource is not "owned" by the Business Applications Group, they only own their own door to it, so again, Toby may have his hands somewhat tied. Supposedly, AppSource has been very effective for Azure, and some of the efforts have been toward trying to copy that success. But the Azure buyer is a completely different person than the BizApps ISV buyer, and AppSource is not giving that buyer what they need. What specifically might I do?
First, I would reverse the process. Right now when you enter AppSource, a significant amount of the page is dedicated to showing you a bunch of "Featured" solutions. The problem is, AppSource has no idea what I might be looking for. The odds that I am looking for a solution, that you happen to be "Featuring" are pretty slim. I'm not even sure how these apps got "Featured". I would delete that whole section. The entire focus on the landing page should be helping me find what "I" am looking for. This is an area where Microsoft could actually do something better than AppExchange. Make this landing page into a "Process" that guides me easily to understand what I want and need first. Only then, show me a list of options, limited to that. Once I land on a solution that looks promising, give me the opportunity to book a time on the ISVs calendar for an in-person demo or conversation, not just a generic contact form. Circling back to the "ISV Ready" conversation, AppSource is not ISV Ready. Test Drive is clumsy and largely ineffective. Trials only really make sense for widgets, and there is no way to expire the trial unless the ISV builds that into it. The promised commerce component is nowhere in sight, and even if it was, the churn challenge will be similar for ISVs as it is for Microsoft when customers just try and deploy something on their own, again other than a widget. More important to ISVs than commerce, would be a universal licensing system that we can just plug into. Licensing schemes end up costing ISVs a lot to build and maintain, and customers end up with a different one for each solution they install. Lastly, drop the dime on promoting it. Stop being the marketplace that is down the street around two corners, and be right up on main street. I have more, but that's a good start.
To offset the shock of the Revenue Sharing program there was a promise of benefits. Most of the benefits seem to be targeting new ISVs, and that's fine, but when you look at the costs of an ISV, and particularly those that Microsoft is in the unique position to help offset, there are some obvious opportunities to create value. One of them is IUR. Historically Internal Use Rights have been a benefit of Competencies. But for an ISV, competencies are not nearly as important as they are for SIs. For a short time there was an ISV Competency, that again seemed to have been put together without talking to any ISVs. It was summarily cancelled without any replacement plan. Either this should be reworked and brought back, or IUR should be a benefit of ISV Connect. It is not reasonable to expect ISVs to have to not only pay Microsoft for development platform, but then also ask for a share of the revenue earned as a result of the platform we had to pay Microsoft to use... Pick one! I am aware that IUR is not free to Microsoft, but I did say Microsoft needs to spend some money on this.
I think I will leave this here, for now. I am aware that I ruffled a few feathers with my last post, and may with this one also, but to be honest, the survival of my business depends on Microsoft getting this right. I see no upside in keeping quiet.
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One of the major factors that brought me to transition my company from a Salesforce Consultant, to a Microsoft Partner in 2011 was the "Partner Ecosystem" story. After almost 10 years with SFDC, during which their relationship with consultants was borderline antagonistic, I was fed up. Microsoft sounded like a breath of fresh air. But their "Partner Ecosystem", particularly for ISVs, has been weighed on the balance... and found wanting.
You would be hard-pressed to find a bigger advocate for Microsoft's ISV ambitions than myself over recent years. Having drank the Koolaid and creating I.P back in 2015, as we were all strongly encouraged to do, I had a vested interest in their effort. Many of my posts started out apologetic for my previous encouragement, but ended up positive and hopeful. But, I am starting to lose hope that Microsoft will get it right.
There is no doubt that at the time I came over in 2011 Microsoft's business applications were complete shit compared to SFDC. This was clearly demonstrated by their market share. I took it on as a personal challenge to seek out anyone at Microsoft who would listen, and press annoyingly for change. Over time, my incessant ranting made its way through the grapevines of Redmond, and I was invited to participate in many things. Multiple Partner Advisory Councils, more private phone calls and in-person meetings with Product Managers and leaders than I can count, and an MVP designation. I can honestly say that today, Microsoft has an undeniably better product than Salesforce on every measure other than market share.
Before I start sounding like some kind of narcissist, claiming to have single-handedly straightened up the leaning tower of Pisa, I was far from alone in this mission. While it is satisfying to see aspect of products or programs that I know I had a direct influence on, many others had similar influence over other critical aspects. Each of us "trouble-makers" have a vested interest in our mutual success.
Almost every aspect of the ISV effort for Business Applications ISVs has been found "wanting". Up until last year, the various aspects of the ISV efforts have been led by lower level soldiers with little authority, no imagination and no understanding of the ISV business. "Hi, I'm Joe, I'm in charge of this important ISV facet, I just transferred from the MS Paint development team where I have been for the last 15 years. How can I help?" Sorry Joe, but you know less than my dog about this business.
After years of watching the revolving door of low-level solders step up to within two feet of their targets, raise their rifles and miss... a General showed up. Steven "Guggs" Guggenheimer, a long-time veteran of Microsoft and self-described "Fixer" was brought in. I first met Guggs at a Partner Advisory Council meeting with about 15 other ISV leaders. He struck me as a no-nonsense guy who planned to get things done. He also struck me as a guy who did not need, or want, our opinions.
Guggs' brainchild was ISV Connect. A program developed mostly in the dark, that basically seeks to take a share of ISV's revenue, in exchange for some benefits. It is not optional, it is "Pay to Play". The program was launched in lightening speed with agreements being sent out to ISVs almost immediately who were expected to sign or leave. The minimum tier is 10% of your revenue, in exchange for some benefits from Microsoft that in my opinion are mostly worthless, at least for existing ISVs. If you opt into, and are accepted into, the 20% tier, there was an additional promise of Co-Sell business, meaning Microsoft's own sellers, would pimp your solutions. At a recent Inspire session Guggs, as well as in a few interviews I have done with him, intimated that some ISVs are happy. I have not met any of these ISVs, and Guggs just announced his eminent retirement. Now what?
The Microsoft ISV landscape has become a risky place to be. In order to continue participating, we now have to find another 10% or 20% of margin. For those with paid resellers in particular, this is a huge challenge. If the program was producing 10% to 20% more business for ISVs that would be one thing, but that is not what I am experiencing, nor any other of the many ISVs I have talked to.
Another risk is Microsoft's continued encroachment into first-party vertical solutions. If you were not lucky enough to be acquired, like Field One, Microsoft has caused problems for several ISVs as they entered their spaces. Project Management and Marketing are a couple of areas that Microsoft has moved to displace existing ISVs. I was also very suspicious of the entire Accelerators program. Their recent announcement of an Asset Leasing Accelerator sounds pretty damn vertical to me.
What is the message we are getting from Microsoft? "Come join our booming ISV ecosystem, where we will take a share of your revenue in exchange for basically nothing, and if you are wildly successful in spite of that, we might just knock you off!" I would like to believe that is not the intent, but as my ex-wife used to tell me, "Actions speak louder than words".
Is there still reason for hope? Maybe for a lucky few, but I am not seeing any for the masses at the moment. Let's see what Guggs' successor can do.
I received an email from Guggs after this post went out that included the following:
"I’m curious about a few things, but one in particular caught my attention. I can’t remember the time I said the ISV Connect program was “widely successful”. I’m sure I have almost always said something along the lines of …..some things have gone well and some things we need to do more work on….but can’t ever remember using those words. I don’t mind you pushing hard on the company or the program, but I would be happier if you didn’t attribute absolute phrases to me unless I had indeed used them….which isn’t really my style."
After digesting this, and thinking back, I agree with Guggs, that he did not ever proclaim that the program was wildly successful for ISVs as I wrote above. I apologize for attributing that sentiment to him.
He also confirmed in the email that Toby Bowers would indeed be taking over his role as leader of the effort. I have known Toby for probably 5 years now, and hope for the best as he walks into what has been a very challenging issue for Microsoft. Toby has a completely different personality than Guggs, and time will tell if that is more effective at driving the program, and easing the discontent among ISVs.
At the end of the day, the buck stops at the leader's desk. To be fair, Guggs came into a pile of shit, and I am aware that a lot of work needed to be, has been, done in the background on his watch. I would like to believe that while ISVs have still not seen the success they should have, Microsoft is closer than before at delivering on that soon. Hopefully Toby can push it over the goal line for us all.
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I have previously explained some of the evolution of what was formerly known as CRM, at least as it relates to Microsoft's offerings.... but I will try once more in super-layman's terms. Up until just a few years ago, Microsoft had a product known as Dynamics CRM. It was a Sales focused solution, primarily aimed at Salesforce.com as the market leading competitor. Originally only available as an on-premise product, meaning it was installed somewhere on machines you owned or controlled, it became available as a SaaS offering in 2011. As a SaaS offering, this meant that it was now running from machines that Microsoft owned and operated, and the application was made available for you to use via a web browser. Not dissimilar to how you use LinkedIn, Facebook or even Salesforce. This is essentially what Cloud means.
Salesforce, which also started as a Sales focused Application, although cloud from the very beginning, started to see opportunities in adjacent markets quite a while ago. They created some new "Clouds", there came the "Sales Cloud", "Service Cloud", "Marketing Cloud" and more recently, the "Commerce Cloud". Clearly redefining what CRM, and Salesforce was, to encompass a much broader spectrum of business solutions. Microsoft followed suit.
Where Salesforce created distinct "Clouds" for their expansion, Microsoft created distinct "Apps". The difference in approaches is not easy to grasp, but fortunately, it is not important to grasp either. Looking at it from the Microsoft side, their Dynamics application had spread out some to include some post-sale capabilities, primarily around servicing activities.
While Dynamics was always highly customizable, it was delivered with a very specific kind of business model in mind. First, it was assumed that you sell things, directly to customers, and most likely those customers were businesses (B2B). It was also assumed that you had some sort of incoming Leads from somewhere, and that your sales process began there. It was assumed that your made contact with these "Leads" to determine their interest, and if interested, you would convert them into "Opportunities, together with an Account and Contact record. While at the Opportunity stage, it was assumed that you would create "Quotes", and in order to create Quotes, it was assumed that you needed a Product Catalog. Once a Quote was accepted, it was assumed that you would create an "Order" and close the Opportunity as "Won". Once the Order was fulfilled, it was assumed that you would want to create an Invoice to get paid. Now that the "thing" has been sold, it was assumed that you would want to offer some kind of post-sale support with Case Management, and of course you would want SLA management for your support staff. Microsoft made a lot of assumptions about how a business would work in their Dynamics CRM offering. In my 20 years in CRM, I never met one that fit.
I am not sure if it was there from day one, or if it came along later, but the XrM capabilities are what made Microsoft's Dynamics CRM a viable product. Dynamics' XrM capabilities were similar to Salesforce's Force.com capabilities. Basically they both gave the ability to customize the offerings... significantly This was a good thing because neither of their offerings fit any customer.
The general public was seeing basically Sales solutions offered by Microsoft, oblivious to the fact that they could be completely customized into something totally unrelated to sales. It was even tougher for Salesforce to shake the "Sales" only stigma, since it was baked into their name. You would have thought that Microsoft could have taken advantage of this opportunity, but until recently, the product was lead by a bunch of idiots, who were so focused on catching up with Salesforce, they missed the clear opportunity to just pass them.
Back to customizability: over the years, customization became a very big business. Working with skilled Partners, customers were taking the products offered by Microsoft and turning them into completely different things, like Member Management solutions for Associations, or Grant Management solutions for Non-Profits, or Franchise Management solutions, etc, The list is endless of what has been done to "CRM" with the XrM customization capabilities.
Several years ago, Microsoft embarked on a journey to separate their Dynamics capabilities, first from each other, and then from their underlying platform. It's a long story, that is still ongoing, and I have written about it several times in the past, so I will cut to the chase here. Dynamics CRM is no more, instead we have several Apps that carry the Dynamics brand. Dynamics 365 for Sales, Dynamics 365 for Service, Dynamics 365 for Marketing, etc. Sounds eerily similar to Salesforce's clouds. In the same time frame of releasing these finished applications, Microsoft also made the underlying platform that they are all built on, available as a separate product. Again, Salesforce was there first, with a "platform only" offering quite a while ago. More on that shortly, but Microsoft also kept building on their apps, adding intelligence and a whole slew of capabilities. Sadly, the original "assumptions" that Microsoft made about how businesses operate, still dominate their offerings, but luckily XrM is still available to make them actually fit.
Microsoft's "Platform-only" offering is called the Power Platform. Think of it as a smorgasbord of ingredients, but there is no finished stew. If you want a finished stew, then you could look at Microsoft's "finished" apps. But in my experience, all of those required significant tweaks to the ingredients to get right for anybody. "Tweak" is probably not the right word... decapitation is probably closer. This is not a knock on Microsoft's first-party apps at all. As aspirational showcases of modern technology, they are pretty awesome. But most customers I run into have neither the time, patience, budget or need for much of that "aspiration". This customer needs to go straight to the Power Platform. In most of the cases I can recall, we spent more time modifying the first-party apps to fit customers needs, than if we had just started from scratch. So, in almost every case, that is what we are doing today.
Microsoft's Business Applications Group is on the odd position today of potentially eating it's own head. When you hear them discuss the Power Platform, it is with great zeal that they talk about its capabilities to solve "small" problems. There is clearly a concern about cannibalization of their first-party apps coming from the platform, either by customers or ISVs.
While they continue to position Power Platform as a solution to small problems, the only reason it could not solve the biggest problems that exist today, would be artificial limitations that Microsoft may place on it, to protect their first-party apps. As we continue to solve bigger customer challenges with the platform approach, I sense a tightening coming from Microsoft.
My co-host on our weekly live show, and good friend, fellow MVP Mark Smith, once publicly proclaimed "Dynamics 365 is Dead". This sent shockwaves through the community at the time, (Somehow I even got blamed for it), but he was only voicing what a lot of us were thinking, the day Microsoft made the decision to open the platform. So is Dynamics 365 Dead? That's a good question... I know for myself, a customer has to have a pretty specific need, that is only met by one of Microsoft's pre-made apps, before I would suggest even looking at them. However, Microsoft continues to invest heavily into capabilities and marketing of their apps. I am sure it would be quite a financial blow to Microsoft's Business Applications Group if everybody dropped their pricey apps, and built their own on the inexpensive platform. But I, for one, am mostly suggesting they at least explore just that.
Interestingly, I seem to recall Microsoft telling their partners a few years ago, that moving to the cloud was going to hurt partners a bit financially in the short term, but it was the future.
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I believe it was at last year's MVP Summit; there was an off-site dinner for the bizapps crew. I saw Charles Lamanna, Corporate VP of the Low Code Application Platform, sitting at a table with an open seat next to him, so I snagged it. Charles is well aware of our RapidStart efforts, and has been a supporter since I first met him when he came on board the bizaaps team. At some point in our conversation, he leaned in a quietly and said they were working on something: "You are going to like it". He was vague on details at the time, but he clearly understands our RapidStart business model, so I got pretty excited.
I had a few "pick my brain" calls with the Microsoft team about the upcoming "per app pass" before it became public. I specifically recall asking, more than once, if they were prepared for "unintended consequences". The problem with "unintended consequences" is that they are not always easy to spot in advance, particularly if you have a filtered view. Microsoft is a technology company, and the Business Applications Group is made up of a lot of technology-minded people. A recurring theme seems to be their inability to view things through a business eye. This is how the Team Member licenses ended up being abused. To a technical thinker the Team Member seemed like a perfect solution to a particular challenge. To the business person on the ether end, it seemed like an excellent opportunity for exploitation.
There is a classic fable that this reminds me of: "A scorpion, which cannot swim, asks a frog to carry it across a river on the frog's back. The frog hesitates, afraid of being stung by the scorpion, but the scorpion argues that if it did that, they would both drown. The frog considers this argument sensible and agrees to transport the scorpion. Midway across the river, the scorpion stings the frog anyway, dooming them both. The dying frog asks the scorpion why it stung the frog despite knowing the consequence, to which the scorpion replied: "I couldn't help it. It's in my nature."
Microsoft often finds itself a Frog, dealing with customer Scorpions.
They will seek ways to exploit it. In our case we have taken full advantage, rebuilding all of our apps the be able to run on any license, but in particular, the $10 App Pass. I don't feel like we are exploiting, after all Charles did say I was going to like it. This kind of felt like tacit permission, even encouragement to head down this path. It's a two-way street, Charles also needed some ISVs to showcase this approach for other ISVs to consider this path as a great way to join the ecosystem.
The risk of cannibalization of the first-party applications was obvious, and not lost on the team. In one of my chats with Charles, I asked about this probability, he said: "I would say we are quite confident on the Microsoft side that the value and the intellectual property and the ongoing services and support and SLAs and integrations that come with the proper Dynamics applications can and will continue to command those prices." But just to be safe, they decided to toss a blanket over a few key entities and restrict them to the first-party apps. At the time there was, and still is, a lot of discussion about API limits across the stack, and the Per App Pass was given a pretty low limit of 1,000 per day. I had not liked the "Restricted Entities" idea from the jump. In that same chat Charles alluded to more Restricted Entities coming, but in a later chat with Charles, he conceded: "restricted entities as a concept are largely antithetical to our common data service, common data model and vision. And they were just like the least bad option to go make sure that we appropriately can license Dynamics apps." I had suggested a different approach in another post: "The real value of the first party apps is in the logic layer, not the data model.". While I'm sure my comment was not the trigger, it is the direction they are now heading.
So the "replacement" scheme for restricted entities is still being formed, but basically the vertical fences between certain entities, will pivot to a horizontal line between the first-party tables, and their proprietary logic. Where restricted entities was a quick and easy solution, this one will take a lot more work for Microsoft to execute. It seems proprietary logic is all over and pretty deeply wired. Will this be better? It's hard to say at this point. Where before we had some entities that could not be used, the other ones, that were not restricted, were being used... along with their OOB logic in many cases. So it seems like instead of pointlessly replicating entities, we will now instead have to create all of our own logic, and possibly our own forms, dashboards etc.. But, it seems completely fair to me. No one is entitled to get a Prime Steak for the price of a burger.
So what will this mean for your $10 app plans? Well, Microsoft giveth and Microsoft taketh away. Eventually, you can have a "no cliffs" scenario. The cliff I am referring to is starting with vanilla CDS and building some apps, and then realizing that the first-party apps have a lot of features that would like. Today, you cannot get from here to there without a migration. Not a "cliff" exactly, but definitely a hassle. This path will be cleared "in the fullness of time", where a simple license swap will be all that is required. Today, you can install the first-party schema on your vanilla CDS, it is available here on Github. As of now, even with this schema installed, you do not have a direct upgrade path, but the migration should be easier going from an OOB entity to an OOB entity, than mapping your custom one over. When the path is "cleared" will using this approach today just start working for upgrade later? Good question.
Depending on your use case, it is completely viable. We have developed many very sophisticated solutions on CDS with the $10 Per App Passes, even without utilizing all that is available to that pass. Mostly starting with one of our RapidStart accelerators, we have built Project Management applications, Field Service applications, Referral Management solutions, each of which has become an accelerator on their own. What will you miss out on? For many customers, they won't miss out on anything, again depending on your needs. Like Charles said, there is a lot of value in the first-party applications for those that need it.
We started with the premise that many customers just want something simple to use at the lowest possible cost. So we built our accelerators with the $10 pass in mind. You can start with a vanilla CDS, and many do. But many customers already have Dynamics 365, and a significant number of their users are making use of those high-value proprietary features. But not necessarily all of their users, particularly in larger organizations. A significant part of the work we are seeing today is taking certain use cases, building a specific app for those users, and dropping them down to $10 passes, sharing the same data as the first-party users. This tends to be an addictive motion. Is this cannibalization of high cost licenses? Yes, but I would argue that if a user can do their job with a $10 license instead of a $95 license, that makes the customer happier and less likely to consider a change in platforms.
Unintended consequences are not always a bad thing.
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As many of you know, I have had a love/hate relationship with Microsoft's AppSource. Apparently I must be a masochist, because I have still not given up... on the potential anyway. Anyone else would have, and many others have, given up, but I keep falling for the rhetoric. I am in frequent contact with the team behind it, and I keep pushing as hard as I can for improvement. At this point, I pre-date any of the current team's involvement with AppSource, since I was involved with it before it even launched a few years ago. Maybe that's why I just can't let it go, I have way too much invested. I still get excited when the revolving door spins and a new leader takes over, hoping I can accomplish some incremental change, before the door spins again, and the conversation starts back at square one.
AppSource is more than just Power Platform and Dynamics 365 related. It has a few other doors for Microsoft 365 (formerly Office 365) apps, and Azure apps. But the impetus for the Business Applications door was frankly Salesforce's AppExchange. Basically Salesforce was kicking Microsoft's ass by leading with ISV solutions making their product look highly specific to industry customers. This was not new, this has been a Salesforce strategy for a long time. I can remember sitting through many demos, that included a lot of third-party I.P., where it was not clear where Salesforce stopped and the third-party began. But it didn't matter to customers, all they saw was a targeted, relevant solution. In the meantime, the Microsoft seller in the following demo showed the generic CRM solution, and talked about the ability to customize. Game, Set, Match to Salesforce. This was not lost on James Phillips, leader of the Business Applications Group for Microsoft.
The internet is full of online marketplaces, for all kinds of things. AppExchange of course, but also Amazon, Target, etc., almost everybody has an online marketplace these days. The online marketplace technology road is well-traveled at this point, the focus is now on UI, customer conversations, cross-sell, upsell, etc. For some reason, Microsoft decided to re-invent the wheel and ignore well established norms. AppSource is an example of a poor user experience, with no excuse for it. In spite of the obvious importance, and huge competitive advantage that Salesforce made out of their Marketplace, Microsoft has just not put in the effort. Why? I have no clue, but the revolving door has not helped. Still today, I do not see the level of commitment that I think there should be, not just with AppSource, but with ISV in general. But I can't help but continue to believe that eventually, someone will have the full brightness of the lightbulb go off over their head and become the hero to all.
In spite of a clear lack of light at the end of the tunnel, I have pressed onward. It may well prove in hindsight some day soon, that it was a complete waste of energy, but for now I am cursed to be an eternal optimist. So we have doubled down on AppSource. Our RapidStartCRM App was one of the very first apps in AppSource. I would love to say that it was based on the success of that AppSource effort, that I was compelled to create more, but that would be disingenuous (fancy word for "Big Fat Lie"). If pressed for a reason to continue, I would say that I still feel there are unmet needs out there for I.P., regardless of AppSource. I still feel compelled to build I.P., even if the success of that hinges on everything other than AppSource. At this point, we'll also put it in AppSource, with zero expectations, but why not.
We currently have five apps in AppSource, all under our "RapidStart" app brand. These were all built by my team at Forceworks Global. Four of these are horizontal, targeting the concept that Dynamics 365 is simply more complicated than it needs to be, and always has been. It's no wonder the adoption of any CRM solutions is so low.
We launched our first application, the Original RapidStartCRM in 2015, targeting SMB who was struggling mightily with the first party applications. Our churn rate was near zero, so we knew we were onto something. Microsoft noticed also and made a couple of moves in our direction. The first effort was "Business Edition" targeting SMB. I was annoyed, but not for long. Microsoft's appetite for SMB comes and goes, and it went out the door before Business Edition even launched. There was one survivor of that effort however, Dynamics 365 Marketing, which was originally going to be an SMB solution.
More recently Microsoft took another stab at SMB with "Sales Professional", an effort that is still ongoing. Again, I was annoyed, particularly when they would ask me for feedback on their SMB app. But again, since Microsoft does not understand the SMB customer, they built a complicated SMB app. Their SMB appetite will wane again soon, as it does perennially.
One of my favorite opportunities, is when a vertical customer wants us to customize our simple horizontal application. This was what led to our first vertical version: "RapidStartCRM for Homebuilders". The key challenge to building vertical industry applications, is being able to get the domain knowledge of that vertical. It's even better when you can obtain the domain knowledge, while being paid to apply it to your I.P..
Last year we recast our apps as "Accelerators". The idea that any app is going to work perfectly for any business out-of-the-box, is not realistic. In almost every case there was a "customizations" effort, sometimes small, other times quite large. I wanted to make sure that customers understood that our app meeting their needs exactly without any effort, was not realistic, so "Accelerator" seemed a better characterization.
We have three other apps. RapidStartCRM Referral, is our app for referral model businesses, which are different than businesses who sell products or services. The three apps I mentioned so far are really offered as standalone applications. We also built two applications intended to be Addons to either our applications, or any other applications built on the Common Data Service. Our How2 by RapidStart is a simple application that we offer at no cost, that basically brings your internal video training content into whatever Model Driven Application you might be using. Lastly, we built RapidStart Project, after having deployed PSA enough times to know that for most customers' needs, it too is a monster.
We have four more applications in our development pipeline, that I will talk about after we launch them.
Another facet of AppSource is being able to create Consulting Services Offers. Again, I was engaged with the team long before that concept launched, and we had one of the first consulting offers in the marketplace. This has also failed to meet expectations from a marketplace, and we have tried multiple types of offers and strategies. As of this writing, we have a total of eight consulting offers, both free and paid. So far the only ones that seem to generate any interest are, of course, the free ones. I would be very interested to hear of any partner who offered a paid consulting offer that a customer took them up on via AppSource. I can't decide of this is a doomed motion or not, because again, AppSource sucks at getting the right message in front of the right customer. Not wanting to rely on AppSource, we have our paid offers on our website also, so we'll see how that goes.
So that about covers it for now. For anyone who thought my ISV opinions may have been "theoretical", you can now see that they are actually the result of continuous disappointment.
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Alysa Taylor:
Hello?
Steve Mordue:
Alysa. Steve Mordue. How are you?
Alysa Taylor:
I'm doing well, Steve, how are you?
Steve Mordue:
Well, you know why I'm calling, right?
Alysa Taylor:
I have a hunch.
Steve Mordue:
Yes, yes. I've got the record button on and I just wanted to see if you had a few minutes to talk about just things. It's been a while since we caught up.
Alysa Taylor:
Yeah, absolutely. Would love to spend some time and just chat. It has been a little while.
Steve Mordue:
So we just came off Business Applications Summit the first pivot over to a virtual conference. And at least from the rumors I hear the attendance was off the charts compared to an in person conference.
Alysa Taylor:
It was off the charts. It was actually our first Microsoft virtual, we classify events and this is a tier one event, so it was our first one that we executed as a first party tier one event in a virtual capacity. So we were both nervous and excited. We had over 50,000 people registered. So it really was... And it's a very different format. We condensed two and a half days into a half day. But I would agree, we were very pleased with both the online turnout. And then I think, from what I heard from the community, the format worked well. It was a nice mix, we did a prerecorded keynote, then we had live sessions that were moderated with subject matter experts. And then we were able to do some networking and fun interstitial type activities in between the programming.
Steve Mordue:
You know, I would have to think that if I were Microsoft, having done in person events for so long and the expense of doing those and the coordination of putting those together, because it's a production when you guys do those. And then looking at the number of attendees there were able to make it because of schedule or cost because of getting approval by their employers and versus now suddenly a virtual event at no cost. I mean, there was no limits to anybody being able to get into that. And while we might lose some of that in person networking amongst one another, from Microsoft's standpoint getting the information out to as broad an audience as possible seems like this is a better way to do it.
Alysa Taylor:
You know, my team and I have talked a lot about that and I think in the post COVID-19 world, because we're learning so much about virtual events, I think we'll end up, and no timeline on this, but we'll end up probably in the future in some kind of a hybrid type scenario. Because I do think there is always that benefit of face to face, being able to network, shake people's hands, see old friends. So I think that in person will never completely go away, but I think we're learning how to do virtual events that will compliment the in person. And so I think, and again, this isn't an official statement, but I think there'll be a world of probably smaller, more intimate events. And then the big scale events will be virtual because at the end of the day we've had over 150,000 views of our content from Microsoft Business Application Summit, compared to we do 7,000 to 10,000 in person. So it's a very different scale.
Steve Mordue:
Yeah. It really is. When you think about the ability to touch just so many people that way and the expense. I think that, obviously, we all got thrown into this virtual event motion when we weren't quite ready for it and our tools weren't quite built for it but ready or not, here we come. And I was, I can't remember the earlier virtual event that you guys did that I... Oh, I think it was the launch maybe?
Alysa Taylor:
Yes, we always do the virtual launch event. That we've been doing for a long time.
Steve Mordue:
And that was pretty good, but then you still thinking about as a large scale event, which we've historically done in person, how does that translate in a way digitally, virtually that it feels as valuable to the people? Not withstanding the fact that we've now got 10 times as many people that can see what's there, but that the event feels as much like a live in person event. And I think the tools are getting... Obviously you guys are tweaking the tools for just that kind of experience, like you said, with some of the networking and we're kind of figuring it out, but as we get this stuff figured out, and these tools for virtual events are just 100% rock solid and exactly the way everybody would want. And I don't know, it seems like the future of live events across, not just Microsoft, but industry-wide, is going to be tough.
Alysa Taylor:
Well I think the thing that we're learning is how to do programming to your point. Because when we did the virtual launch event, it's our engineering leads and our product marketers doing content and then demos. Content, then demos. And I think what we learned with the Microsoft Business Applications Summit is that how much that programming matters, the back and forth, being able to do moderated forums, because it keeps people engaged. And we do it in much shorter segments. Like the virtual launch event is two hours. We were doing 35 minutes segments in the Business Application Summit. And yes, so to your point, I think doing the right programming allows us to have virtual events that are engaging. And then we get the benefit of being able to scale to such a degree that we can't do in person.
Steve Mordue:
Yeah. Obviously time zones will be a challenge for anything like that because you're going to have people doing multiple versions of their session at different time slots to be able to capture everybody. And that's a trick. I think one of the things, some of the feedback I heard from some of the folks was that they thought the sessions times might've been a little short because oftentimes the presenters were pressed right up to the time limit with their content and there wasn't much opportunity for questions. In those live events we're just peppering the person with questions throughout the whole thing. So that would be an interesting one to...
Alysa Taylor:
We got that feedback as well. And I think that's right. I think that's good that we spend a little bit more time and we're learning as we go. And I sort of said that, so I think that is one thing you will see us is more Q&A time. I think the presentation time was probably the right amount of content, but then allowing for more Q&A is important.
Steve Mordue:
Yeah, I thought it was nice in the new, whatever the platform you guys were displaying all that in, that, typically at a live event, I'll walk into a session and five minutes into it I might decide, "You know what? This isn't what I thought." And I want to bounce out and go down the hall to another one. And the virtual equivalent of that to be able to drop out of one and see below it, "Here's the other ones that are going on right now." And just click a button and bounce from one to another, I felt like we're getting closer to that kind of experience with the tooling and stuff now too, which is handy.
Alysa Taylor:
Good. I'm glad you had that experience. That's great to hear.
Steve Mordue:
Yeah. And of course they're all being recorded and available immediately or as soon as possible, is just huge. Because then you don't feel... Like I can remember at live events feeling like there were three different things I wanted to see, but I could only see one, and since they weren't necessarily all recorded, you just had to miss some content. But now, of course, they can all be recorded by default and you have no excuse to miss anything today. So I think it's pretty cool. Looking forward to see where that goes.
Steve Mordue:
So what are some of the exciting things in your mind? Because you look at this through a different lens than some of the other folks, because you look at it through that marketing lens. And so you would see things differently than maybe Googs or Phillips as interesting or important. What are some of the things you think we should all be really paying attention to?
Alysa Taylor:
Well, I think there's probably two things and I think James and I would say the same probably on both, which is, I think we've continued to bring some pretty remarkable innovation to the portfolio. And when you see things, products like Dynamics 365 Customer Insights, that has been one that's just been phenomenal to see the customer adoption on this. And I don't know if you saw like Chipotle was a big customer, wall-to-wall sales floor shop that is adopting Customer Insights. We'll announce here Walgreens is doing the same.
Alysa Taylor:
So the customer data platform and being able to have a 360 degree view of the customer, even in times of crisis as people are moving to digital selling and remote service, knowing your customers is even more important. And so it's been very exciting to see the innovation that's been built over the course of the last couple of years in market and seeing the customer adoption on that. And then I think the broader vision of how Dynamics 365 in the Power platform fits into the Microsoft Cloud.
Alysa Taylor:
You see very large customers like Coca Cola that are moving their entire IT and cloud infrastructure to the Microsoft Cloud. That's inclusive of Dynamics 365 and the Power platform and doing some pretty cool things with it. Power platform, just even in the recent environment, we released a set of crisis response templates that have just gone like wildfire throughout healthcare organizations, first responders, organizations needing to be able to get in touch with employees, with volunteers, with those that are on the front lines. So you see the direct impact that it can have and it's pretty incredible and pretty inspiring at the same time.
Steve Mordue:
I mean, I think we're all pretty amazed at what citizen developer has been able to do when given some tools that could actually do things with, which they never had before and I'm continuously seeing citizens building apps to solve problems that they have in their department or their area that there never would have been budget approved for a partner SI to come in and build something like that, or go buy an ISB solution, all these problems that have gone unsolved forever, it seems like suddenly are getting solved and they're getting solved quickly and easily without great expense.
Steve Mordue:
Problems that never would have been solved. They just had no other way they were going to get solved before this. That's been phenomenal to see the change of the platform, frankly, just in the last couple of years, that huge pivot towards that citizen has just opened up so much. You're talking about Coca-Cola. I mean, that's a lot of what's driving that there I'm sure is department heads, line of business people, seeing something that's accessible and fiddling around over a weekend and creating a solution to a problem they've had for years.
Alysa Taylor:
Absolutely. And we have the Unilever executive team in to meet with [Sati 00:12:04] and his directs. And they have done this whole movement to empower their frontline workers with the Power platform to give them the tools to solve problems. And we always say the value of the Power platform is putting tools in the hands of those closest to the problem. And Unilever is just an incredible story of creating a digital factory of the future that is completely from bottoms up, it's from frontline factory workers that are giving input, using Power Apps, Power Automate, Power BI to automate manual tasks that would take them way too long to do, to have insights and analytics to the health of the supply chain and the factory line, having a digital command center that they could access through a power app.
Alysa Taylor:
So you see all of this. And then the great thing about the Unilever story is they've been really working to empower their frontline workers with these tools. And then as COVID-19 happened, they actually just took that same rapid innovation model and use it to do things like pivot to being able to scale up production and ventilators because they had, if you think about their IT their traditional IT and developer workforce is everyone. It's not just limited to one department or one set of individuals.
Steve Mordue:
Yeah. That's still a challenge for Power Apps. I know in big organizations, we're frequently running up against the wall known as IT that is resistant to almost anything in a lot of organizations. Sometimes they're very intransigent to get them to think about new things. You know, the, oh, it's escaping me now, the name of the enterprise management tool that you guys released for templates... At any rate-
Alysa Taylor:
You talking about EMS?
Steve Mordue:
No, the stuff that was released by the team to help enterprise manage Power App growth in their organization.
Alysa Taylor:
Oh, yes. Yes. So yeah, within Power apps, absolutely. And that you saw that Toyota is a great example of that. They actually use that enterprise management, so enabled their organization, all of their employees, to train them, enable them with Power Apps as a technology, but then they have within the IT department, to make sure they can do things like handle confidential data sharing, they used a set of control mechanisms with Power Automate and Power Apps. And so this gives the IT department that final sort of go, no, go on what gets published. But you still have the empowerment of the citizen developers across the organization.
Steve Mordue:
Center of Excellence.
Alysa Taylor:
Yes.
Steve Mordue:
That's the term I was thinking of. So, Center of Excellence. Yeah, I think that was key to really having this thing takeoff because before the Center of Excellence, I know that there was some concern with IT about, "People are going to go crazy out there with our data. We don't know what's going on." And that Center of Excellence toolkit really should allay a lot of those concerns. It seems like it has. And we still have a couple of challenges in the market that I know I hear a lot of partners and I struggle with around licensing.
Steve Mordue:
And I know licensing is a necessary thing, but man, does it ever get challenging. And it seems like, I guess, it's just the downside of having lots of innovation is every new thing that comes out we need to figure out, "Okay, now how're we going to license this?" And we end up with lots and lots and lots of licensing conversations with customers trying to figure things out. It's one of those things, they sit back and say, "Microsoft needs to solve that." But then when you think about it, it's not an easy problem to solve having lots of different models of licensing.
Alysa Taylor:
Well, we have lots of products. I will say, our design principle is on simplicity. And I think we have, if you look at what we've done with Power Apps in particular, we reconstructed the licensing model to be on a per app per user. It used to be, if you remember, based on feature, right? What was canvas versus model driven application development, which is incredibly hard for an organization to figure out. And so we've really worked to try and simplify the licensing, but at the end of the day, we have a lot of products.
Alysa Taylor:
In licensing, I always tell our internal teams this, licensing, we go for the 80-20 rule, we designed for 80% of the scenarios and there's always going to be the 20%, and we actually strive to do 90-10, can we hit 90% of the core scenarios? But there's always going to be very unique scenarios that we can't solve for, which is why we do different custom type deals. But our licensing, our principles are simplicity, customer centric and designed for as much scale as possible.
Steve Mordue:
Yeah. I've started to take the position with other partners that are complaining about the old days when we only had like three licenses to sell, and now there's maybe 100 different or more SKUs out there, that this is just a new part of your practice. This is something that you need to be proficient in and competent in, just like anything else that you're doing, and that is how to help a customer navigate the licensing. To make sure they're not over licensed or under licensed, that they're using licenses the right way. It's just a whole new motion that we didn't have to worry about before that you're just going to need to learn and understand. Have somebody on your staff that understands the licensing or can reach out and get answers because it's part of the business now, it's just part of the business model. I think the worst thing that happens is a partner just gets lazy. And frankly, we saw this even with Microsoft seller, just go in and sell the enterprise plan to everybody.
Alysa Taylor:
[crosstalk 00:18:19] Yeah, when I started three years ago, we sold two things. That was it. We sold the customer engagement plan and the finance and operations plan. We'd two things that we... There was maybe six standalone SKUs under those two things, but everyone just sold the plan. And so yeah, going from two to a number significantly higher than that, I do have empathy. We've ramped and changed a lot in three years, but I think we are at a place right now where we think we have the right model for how we bring new products in and we're trying to drive for consistency now. So we don't have a unique pricing, I had this meeting with my team yesterday, we don't want to have, three different types of pricing models for the insights line. We want to have one. And so we're trying to now strive for consistency across the different product lines. But yeah, you're right, going from two to 100 is a leap.
Steve Mordue:
Yeah. And then ditching the plan, I think, was great because not just Microsoft sellers, but you know, partners and SIs, it didn't require any thinking about what kind of license the customer needs, just put everybody on the plan. But that wasn't in the customer's best interest. They're paying for all this functionality that this particular user doesn't need. And just because somebody didn't want to go to the effort of figuring out, "You know? That user could probably get by with some lesser license or some other license." Or something like that. And it's forcing us to have to do more work to figure it out. But I think the winner at the end of the day is the customer. They're just not overpaying. Overpaying doesn't help any of us because if they're over purchasing, then they end up churning because they don't see the value. So we want to put them on the right SKU that gives them the right level of value and then they won't churn. So I think it's definitely important.
Alysa Taylor:
Yeah I mean, that such a huge thing. When I say the principles are simplicity, customer centricity and scale, having a plan where you're... I don't know, Steve, if you've ever met a human being that's a marketer, a salesperson, a customer service person, a field service person, all in one, but I haven't yet, that'd be a superhuman, I think. But that's how we sold. We sold a per user license with five different job descriptions against it.
Steve Mordue:
Yeah, yeah, yeah. And it's interesting because it's also changed the landscape of the partner community, because as you guys launch new products, these are new skillsets.
Alysa Taylor:
Right.
Steve Mordue:
And almost each one of these is deep enough that, with the exception of maybe the largest partners out there, you're just not going to find one that has the skill set across all of these different things. AI on the insight side and development of Power Apps, the canvas apps and flow. There's just so many different pieces that we really, as partners, are having to look at how we build our organizations differently. "I need a Power Automate expert. I need an expert in this. I need an expert in that and the other thing." Whereas before, everybody was an expert in everything. Now there's just too much.
Alysa Taylor:
Right. Yeah. Now it's got to be deeper. Deeper levels of expertise. Absolutely.
Steve Mordue:
So one of the things that's not... It's not negative, I'm not going to go negative on you, but one of the things that has concerned me and I still see confusion in the marketplace is about Power Apps. What I call Power Apps versus Power Apps.
Alysa Taylor:
Oh, interesting. Say more.
Steve Mordue:
Well Power Apps started out of the Office 365 side with canvas, mostly on SharePoint, embedded in the Office 365 licensing, all these enterprise customers using Power Apps. And then Power Apps also became a name used for something that technically was completely different, right? Model driven Power Apps. And there still is confusion, consistent confusion, among partners also, but mainly among customers, about the difference between these two things that have the same name. I know we've talked about converging them, and there is some convergence going on, but not at the license level, right? That Office 365, that customer who thinks they have Power Apps licensing because they have Office 365, they can't build a model driven app on CDS, that's a different Power Apps license. And how do you think we can make that story clearer to end customers that there's two things called Power Apps, essentially?
Alysa Taylor:
Well, I think we're a little early on this podcast because we'll provide some clarity in July to the market. But what I would say is today, what is seeded in Office is exactly what you're talking about. Which is Power Apps the maker, but it does not have the common data service underneath it. And so it's effectively the head of Power Apps without the CDS back engine on that. And so you have a lot of people that are using Power Apps, but they're their data source is SharePoint list. We'll release in July what we are doing to make that a more seamless story. And I think you'll be pretty excited. But we're just a little early for me to talk about it.
Steve Mordue:
Understood. Well, good to hear there's some thinking about it.
Alysa Taylor:
So it's coming. And it's coming very soon.
Steve Mordue:
Obviously I come from the CRM world, so I'm a CDS guy and I think model driven, but I don't have anything against, or any problem with, canvas apps on SharePoint list. I think there's tons of scenarios where that makes perfect sense, but there's tons of scenarios where the customer would be infinitely better off having built that on top of the common data service than on top of SharePoint. And right now I think there's a lot of customers out there that think they're using Power Apps.
Steve Mordue:
I mean they don't have any reason to think that they're not using all of Power Apps when they're just building on top of SharePoint list and kind of making some things much more difficult or much less effective than they could be, and not realizing that, "Hey, there's a whole other side here that is way more powerful, depending on what it is you're trying to do that you should be looking at." And I continuously find myself having that customer conversation. "Well, we already have Power Apps. We already know all about Power Apps." And then pulling up a demo of a model driven app. And they're like, "What's that?" "That's Power App." So looking forward to the clarity. [crosstalk 00:24:58] Looking forward to the clarity in July.
Alysa Taylor:
Well, and it's not negative. Know that your feedback and the MVP community, our partner community, the feedback that you guys give us is what allows us to be able to learn and adjust, and that's what we're doing. And so I think you'll be pleased in July.
Steve Mordue:
So one of the other customer segments that we've focused on for years, and is still an important segment to us is that SMB customer. And I go back and forth from feeling like Microsoft is very concerned about that customer to Microsoft is not very concerned about that customer. Almost weekly I see motions that seem like they're helping and then motions that we've got such a revolving door with some of the folks that have looked at SMB. How do you feel about that SMB customer? And how we should be attacking that customer base?
Alysa Taylor:
Well, it's an incredibly important customer base for us. And I think that we have a model in which we have a workforce, in my mind they're sort of two discrete workforces that work with our SMB customers. So we have a digital sales team that allows for both inbound and outbound triaging of those customers. And then, as you know Steve, we spend a lot of time making sure that our partner workforce has the right incentives, offers, skills to be able to service that community as well. And so I think those are the two facets in which we deploy against our SMB community.
Alysa Taylor:
And we've seen some really phenomenal customer wins that are in the SMB space. And so we want to make sure we've got the technology and the right resources for that customer base. But there is a very, very high commitment through our partner channel and through our telesales team to service that customer segment base. And I think in our world we say SMB, but there's managed and unmanaged really. Because there are some very, very large customers that we would classify historically as SMB, which I've always had a little bit of heartburn about because they're [inaudible 00:27:16] they're a big business, they're just not managed under our management.
Steve Mordue:
Well you got a whole rack of levers.
Alysa Taylor:
I'm going to have to wrap here in a second. I have, speaking customers, a customer meeting that I need to attend to.
Steve Mordue:
Perfect. Perfect. All right. Well, I appreciate the time and look forward to catching up with you again soon. And maybe seeing you again in person some point in the future. Who knows when that'll be.
Alysa Taylor:
Yeah. We don't know when, but definitely. So thank you, Steve. Thank you for everything.
Steve Mordue:
Yeah, thank you very much for the call. Bye.
Alysa Taylor:
Same. Bye.
Listed in: Technology
Listed in: Technology
Dynamics 365, borne out of it's predecessor, Dynamics CRM Online, is a software marvel. I'm talking specifically in this post about the "CRM" side of Dynamics 365. For a midsized to large business, D365 has all of the tools you would need to transform your entire operation. XrM was a blessing and a curse. In layperson's terms, XrM was the capability to customize almost any of the significant out-of-the-box capabilities to meet organization specific needs in a highly targeted and relevant way. XrM was also the path utilized to "Extend" D365 to solve other problems not contemplated by the out-of-the-box capabilities. It is a powerful combination that can be brought to bear on almost any business problem.
Over the years, many Dynamics 365 partners became very proficient with XrM. As a result, D365 became a solution to "anything", not just Sales or Service related issues. When your only tool is a hammer, every problem looks like a nail. A customer has a business issue, not related to any of the out-of-the-box capabilities, no problem, we can solve it with XrM! And so it begins, provision an instance, hide most of the out-of-the-box capabilities, and start building custom capabilities. Or, maybe to save some time, we'll re-purpose some of the OOB capabilities, and contort them to fit the requirements, sorta. It's one thing to modify the Opportunity capabilities to better fit a customer's specific Opportunity requirements, even if modified heavily, it's another thing to re-purpose the Opportunity process to solve for Asset Tracking. As a result there are a lot of "bastard" deployments in the wild.
Many well-intentioned partners, offered D365, planning on extensive use of XrM, as a solution to many customers' non-sales or service related problems. Could it solve those problems? Yes! But never as easily, or quickly or cost efficiently as anticipated. Trying to build a custom solution within D365 to a unique problem, is like doing laps in a crowded pool. Your route from start to finish will end up being far from a straight line. For some customers the cure was worse than the problem. All partners have experienced the customer who eventually pulled the plug on the effort. Wouldn't it be nice if there was a way to get the XrM capabilities in an empty pool?
Over the past couple of years Microsoft has been rolling out Power Apps, now part of the Power Platform. You may have seen it pop up in your Office 365 environments, you may have even played with it. That is really one face of Power Apps. Microsoft, in their infinite wisdom decided to use the same "Power Apps" name for another, completely different, solution. I personally put this at the top of my Dumb Decisions list... but that's another story. The Power Apps you might have seen or used in Office 365 are what are called "Canvas" Power Apps. If you look at a SharePoint list online, for example, you may have seen the Create Power App button, which if clicked, will automatically create a "Canvas" Power App from your list. As a result, a significant number of customers feel they are familiar with Power Apps, I know because I talk to them all the time, but they are only familiar with half of Power Apps, oblivious to the other face of Power Apps.
What a shitty product name, or rather qualifier of a product name. Even when I try and explain it to customers, they are confused, because of what they think they already know. Microsoft really botched this one. I know that the plan was that these two completely different things would eventually converge, but giving them both the same name in the meantime was a huge mistake. Customers are thoroughly confused. It's not like Microsoft is afraid to change names, they do it unnecessarily all the time. As I am writing this, they are announcing a name change for "Office 365", a well-known and understood product, to "Microsoft 365", a name that was already in use for something completely different. For a really smart company, they can be quite stupid sometimes.
Model-Driven Power Apps are the XrM capabilities, in an empty pool. What I would give to go back in time to those customers who pulled the plug on D365. This was the product they actually needed at the time. But... it did not exist, so there's that... maybe I would have just suggested they wait a couple of years. What we have available today is an empty pool, with a low-to-pro code development platform sitting on top of it. We no longer have to waste time and money emptying the pool, or dodging big floats. Time to Value has been slashed. Development costs have been slashed. Time to ROI has been slashed. There's just a hell of a lot of slashing going on.
If you are one of those customers, who went down the D365 path and wasted a lot of time and effort, only end up with nothing, I am aware that suggesting you to take a look at something else is a big ask. But, if you still have the problem, Microsoft may have caught up with your needs with Power Apps. Umm.. the other Power Apps.
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Listed in: Technology
Listed in: Technology
I work with a lot of businesses of all sizes. From my first-hand experience, the smaller the business, the leaner they operate. That is not a result of smaller profit percentage, many have very high margins. The biggest difference is that from the smaller business owner's perch, they can see better. There is not much that is missed in a small a business. As businesses grow, layers are introduced that start to obscure visibility. Undetected leaks start to form... leaks that can be hidden by high margins.
At the opposite end of the scale are large businesses. While their margins may be smaller, their volume is huge, and of course their costs are also huge. Well beyond the scale that a single person can have any visibility; with layers upon layers, there are leaks all over the place. We are working with a Fortune 500 customer right now that discovered a $250K/month leak that had been unnoticed for quite a while. The solution was not complicated, we are plugging the hole with a Power App at a total cost of about $15K. Of course since this was a big ass company, it took 4 months to approve the expense, and about 90 days more so far, to mobilize their side. This leak could have been plugged in two weeks, but instead another $1.5m will have leaked out first. Such is the ineptitude of large business, this could never happen in a smaller business.
Sitting in the middle, between small and large businesses, are the midsized businesses. While a $250k/month leak will not go unnoticed for a second, the midsized business has enough layers to have many leaks. Where are these leaks? Usually some faulty, or inefficient business process. What kind of leaks? Time not captured properly, customers not billed properly, vendors not paid properly, inventory not managed properly, inefficient project management or production line management... leaks are potentially all over. Every business has leaks, some are significant enough to warrant immediate attention, and others are just considered a "cost of business", absorbed by margin. But if margins compress, every leak will start looking pretty important.
Depending on the leak, you may need to use a different set of tools, but many of these leaks will be occurring in your business processes. Microsoft's Power Platform is the tool to use for those. Unlike Salesforce.com or even Dynamics 365, both of which require significant time and cost to implement, the Power Platform can solve many business process issues in days. Built on top of the Common Data Service, the Power Platform includes a suite of tools including Power Apps, Power Automate, Power BI and Power Virtual Agents. Each of these tools are low-code options that can be deployed quickly, and at a low cost, to plug leaks.
If you would like to learn how you can plug leaks with the Power Platform, we offer a free briefing to get you up-to-speed. Go to Appsource.com and search "forceworks".
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Looking from the balcony of my downtown apartment, my view is dominated by office buildings. They are full of financial services firms, law firms... professional services firms of all kinds. Most of these office spaces consist of executive offices, conference rooms, kitchens and cubicle farms. With the exception of decor choices, they are all very similar. Recent events have lead many of these firms to voluntarily, yet reluctantly, allow many of the people who work in these spaces to work from home... "temporarily". It does seem like an unnecessary risk to pack all of those people in elevators a few times a day, just so they can sit in their cubes. In many places this has already been mandated, and the list of those places will continue to grow. I see a couple of eventual outcomes from this. First, many companies who believed that virtual workers was not an option for their business, will realize that they were wrong. Over time, they will adapt to remote workers and become efficient out of necessity. In the meantime, they will continue making expensive office lease payments for unused space, shining a bright light on that recurring cost. When current events pass, I foresee many companies will continue with the remote worker concept. Now is probably not a good time to invest in Class-A Office Space.
For those companies who had previously transitioned to cloud based productivity and business solutions, this move to a remote workforce will be much simpler. But for those companies with on-premise infrastructure, there will be challenges. Even those who had VPN solutions in-place, for occasional remote access, will find their systems woefully inadequate for full time use by the majority of their people. In addition, their IT staff will be overwhelmed by the new demands. I expect there to be shortages of VPN related hardware and equipment as companies frantically try to upfit to meet these new requirements. In addition, security and compliance requirements are not going to be waived. This will be particularly acute for those whose on-premise systems are actually on their premises. What happens when their physical access to their server rooms becomes limited? Their peers who previously made the transition to cloud are going to look as smart, as they are going to look stupid. There will be some Monday-morning quarterbacking going on. The credibility of IT will be in question, as their past reluctance to move to the cloud, will suddenly become a huge issue for their business. In some cases, some may be unable to even work properly and compete, in a time when it is the most important to be able to do so.
We are already seeing the wave. Every customer who had been talking to us about moving to the cloud, is now wanting to execute on that immediately. Some out of necessity because of reasons I explained above, and others who are seeing this as a good time to make a disruptive move, like migrations, and be prepared when current events pass. In addition to the move to a remote workforce, few businesses will avoid a general slowdown. For those who had been hesitant to move to the cloud while their businesses were operating at full capacity, some are seeing this as as good a time as there has ever been, and hopefully ever will be again, to make that kind of transition. All cloud providers and their dependent service companies are going to be very busy for a while. Capacity is going to be an issue. Not for the cloud services, they were built for future scale and are licking their chops at what is about to happen. But the capacity of the supporting companies, who do the actual migrations and implementations for end customers to utilize these cloud services, will be strained. The backlog is growing and is about to become very long.
I have been talking to IT about cloud for almost two decades now. In the early days their fears were quite legitimate. But today, I find a few common reasons for not wanting to make the move. Number one is unspoken: job preservation. Many in IT have no concept of the cloud, had they moved earlier they could have been cloud experts, but they didn't, and now there are many cloud experts. They could rightly lose their job in a move to the cloud and be replaced by a "cloud expert". They missed that window. This "Number One" reason, has lead to many other supporting excuses. Compliance, Security, etc., all of which had been overcome for quite a while now. Cost is another one. If they have not realized their full ROI on previous hardware and software expenses, there's a financially legit reason. Of course it ignores the benefits of cloud over on-premise, and focuses solely on capturing their investment in outdated technology, something that I don't think is even possible. I don't really feel bad for these people. they intentionally held their organizations back for their own selfish reasons... they should have been fired. However, there are many IT pros that have been proponents of a move to the cloud, but were over-ruled by management or bean-counters. Now they, as well as I, get to say "We told you so!"
My first thought is that it will never be to late, but I could be wrong. The situation is fluid and changing rapidly, what comes after mandating that your workforce has to work from home? Maybe padlocks on the doors, maybe shutting power to unoccupied floors. where your servers may sit. Who knows? Am I being alarmist or opportunist? Maybe, but it does not mean I'm wrong. I'm just making an observation based on observed activity of our own. Regardless, moving to the cloud was a good idea before this, so it still is, and possibly a hugely good idea now. Microsoft and it's partners are in a unique position given today's issues, based on decisions that had been made before this situation was even contemplated. The phrase "Right place - right time" feels appropriate. Over recent years the partners who specialize in Office 365, have gotten migration down to a pretty painless process. The partners who specialize in Azure, move on-premise servers to VMs in their sleep. The partners like us, who specialize in Business Applications like Dynamics 365, have also done our share of migrations. We even offer a free On-premise to Online Migration Briefing to explain the process. Go to appsource.com and search "forceworks".
I am sure that there will be some that may feel that my pointing all this out, at a time of tragedy for many, is insensitive. But the reality is that business must continue, or what will be left on the other side?
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In a nutshell, if you bought Team Member licenses after October 1st of 2018, this applies to you immediately. If you have older Team Member licenses, I'm sure you will have to replace those on an upcoming renewal. Microsoft has released, as part of early access, three new apps: Customer Service Team Member, Sales Team Member and Project Resource Hub. Microsoft first announced last week in an email to Admins that as of April 1st (yes, this upcoming April) your Team Member licensed users will only be able to access these apps, and no other apps, including any custom apps. They since updated the announcement this week, that for existing instances that would be impacted by this change, you will get a 90 day grace period. These changes mean that "some" of the restrictions will no longer be enforced just with paper, but rather technically, meaning you can't ignore it and just keep chugging any more.
For those of you who never paid any attention to the paper limitations of the Team Member licenses, these apps are the real-life manifestation of those limits. A Team Member licensed user, can do whatever they are able to do within one of these apps, as delivered, without the fear of being out of compliance. That's good news for those who are concerned with keeping in compliance. However, it will be a shock for those who have been using Team Member as a full access rights level license. The invisible lines will rise to 20 foot concrete walls on 04/01, or 6/30 for existing. But, the concrete is porous, because these apps are also customizable. Does that mean you could potentially customize these apps to take you right back out of bounds? At the moment, it does. But this is just the first phase of the full enforcement plan, so you would be doing so at your own risk... again.
Microsoft started with the low-hanging fruit, because you have to start somewhere. They figured out how to technically limit the apps available by license. So your Team Member licensed users will only see these new apps.... they will no longer see the first-party, or any custom apps. Theoretically, this should help keep them "in bounds". They also figured out how to technically limit the maximum number of entities that an app can have. Jukka recently pointed out, that since a right of Team Member is "Read" access to everything, does not the 15 entity limit for these apps obstruct that right? I think if I were Microsoft I would say the answer is "no". You pick the 15, and they can be from anything. So they still have rights to "read" everything... just not all at once.
For the sneaky people, this "handicapped", but did not fully eliminate the issue... since these apps are customizable, I can still modify one of these apps to put me out of bounds. I expect the next phase, now that Microsoft has realized that "paper" is not worth the paper it's printed on, will be to add the layer that will technically limit the privileges to match those of the license. That is going to be a much bigger undertaking. How about another idea?
The Team Member license was necessary to gain market share at the time, but ended up costing Microsoft a lot of potential revenue. Of course, that was potential revenue they would have never captured anyway without the team member license.... so it's a catch-22. Launching it with Technical enforcement from the jump would have prevented the problem, but there was no time for that then, we're in a feature race with the rest of the world! However, since the time Team Member was launched, we have some new options today, namely Power Apps.
I have several customers asking me about switching to Power Apps instead of Team Member, particularly the $10 App Passes, since the cost is similar. This is a thought, but it is certainly not a direct swap, there are several caveats. Whereas the Team member Apps will have a limit of 15 entities, a Power App has no such limit. However a Power Apps cannot use "Restricted" entities without triggering a full price license, and Team member does not have a concept of "Restricted entities". You can freely "create" new Account records in a Power App, but that is not allowed with the Team member license. These are a few of the differences to understand, and there are more. What they have in common, is that they can both access the same CDS via an app, their "rights" differ, but it is definitely an option worth exploring.
I have been pretty consistent in my lack of empathy for the knowing violators, I hate cheaters. However, I am concerned about the unknowing violators, those who were oblivious to Microsoft's invisible lines. I foresee many of these customers not even getting this messaging now, making no preparations at all, and on June 30th they smash into the 20 foot wall. WTF?
I am aware of a few ISVs who have also taken advantage of the Team Member licenses. I have been an advocate for ISVs to think about building their solutions on the least expensive license that is "necessary". Some have instead built on the least expensive license that is "available". After 04/01 or 06/30, Team Members will not even be able to access these ISV apps. I actually see a couple of them collapsing as a result. Do I have empathy for them? Nope, they knew what they were doing... but again, their customers didn't.
A hand-full of ISVs and some customers will be lost as a result of this motion. The economics of compliance will outweigh their current benefits of the platform. Many of these people will be looking at a roughly 8X license cost increase to continue doing what they have been doing. Without taking advantage of much more of the platform's capabilities, they will probably migrate away. That will be a rude awakening. When they have been using enterprise capabilities, for less than $10 a month, their low-cost alternatives are going to look pretty weak. But the "free-ride" is coming to an end, ready or not.
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Let's quickly discuss the Vanilla approach as it is the safest, which I will explain why later. If you log into the Power Platform Admin Center you will be presented with a list of Environments that you have in place. If you have Dynamics 365, any of those environments will also be listed, otherwise these will all be what I call "Vanilla" environments. Clicking on the + New button, will start you on a path of creating yet another Vanilla Environment. If all you have is Power Apps licensing, then all of your environments will be Vanilla.
A Vanilla CDS Environment will contain a basic data model, including Contacts, Accounts and few other items. It is meant to be extended by you to meet your needs for a Power App you want to create. It is a perfect solution for moving a Speadsheet based process into a "real" app. Or for possibly replacing some basic point solutions. But what if you also have Dynamics 365, and want to build a specific limited purpose app using the data that resides in that Environment?
Dynamics 365 CRM apps are basically just great big Power Apps. You could build your own app, to do something particular for a certain set of users, and it would appear in the App list, right next to Enterprise Sales for example. Why might you consider this? Let's take an example of a part of your business that uses Dynamics 365. Let's say this department uses the Contacts and Accounts entities, but it also uses a few custom entities that you created for some specific purpose. One reason to consider building a Power App is that you can create a highly targeted application just for those users, that includes only what they need, and nothing more. Another reason is that you could potentially reduce your licensing costs... significantly.
When you build a Power App on top of a Dynamics 365 environment, you have access to all of the entities in that environment, including of course any custom ones you created. If you were to pull into your app Contacts and Accounts and your custom entities, you are potentially creating an app that could run on a $10 App Pass instead of a full user license. But if you also decided to pull in the Case entity, for example, you would see a message that this entity is restricted. You can still use it, and it may still make sense to create a targeted app for some purpose, but you will not be able to use the lower cost licenses for these users.
Some of the entities that are in a Dynamics 365 environment are "Restricted", there is a list of them here. Why are they restricted? Microsoft has given you the ability to build a Model-Driven Power App, ostensibly, to build simple apps. However, there is no limit on how complex your app can become, it is only limited by your knowledge and ability. With a much lower cost, many are taking a hard look at how they are using the Dynamics 365 apps, and some are opting to just build their own "Sales" app for example. Not only can they eliminate all of the features they are not using with a skinnier app, but they could potentially reduce their license costs, as long as you avoid the Restricted entity trapdoors.
Microsoft announced in October, and Charles Lamanna confirmed publicly on my podcast in September, that more entities will be tagged as restricted. But as of today, we still don't know which ones. Meaning we have been building within the boundaries, but at some point the boundary will be moved. That will not be a good day, if something that we used, suddenly gets tagged as "restricted".
Microsoft needs to protect their first-party app revenue, this is understood and reasonable. If I had P&L responsibility for one of the first-party apps, I would be concerned about Power Apps cannibalizing some of my users. But restricting access to a few random entities is a bad way to approach that. Previously there was a rule that you could not "replicate the functionality" of the first-party apps, but they removed that rule so Power Apps would not die a quick death. So, while I can't use a restricted entity in my app without triggering a higher license cost, I am free to build my own custom entity, right next to the restricted one and use that. So is this the perfect solution? Well, that depends on the trajectory of the customer. If at some point in the future they want to move to the full first-party apps, and have been using a custom entity for some OOB feature, they will have to migrate data. Or, if they have a mix of users, some on first-party and some on a Power App, this would also be problematic. So the restricting of entities does not protect the first-party apps, it just creates future frustration for customers.
As I was writing this post, a fellow long-time MVP floated the same idea I was planning to write here. Basically the value of the first-party apps is not in the data model, as I said I am free to replicate that, and it is not even hard to do. Protecting an app by creating a potential "pain in the ass" scenario in the future is not a good idea, as most customers will not realize that until later. The real value of the first party apps is in the logic layer, not the data model. In particular where Microsoft has made some proprietary logic part of their app. Also, app specific features like plugins, or behind the scenes processes like Lead qualification, or SLA management. These are things that are not only valuable, but more difficult to replicate. If I were able to use a restricted entity, like Case for example, I would have no reason to create my own. If at some point that customer wanted to move up to the full Customer Service app, it would be a simple license swapping process, instead they may consider staying put, if the hassle is too high. This would be the opposite of what Microsoft's first-party teams would like to see happen. I have customers in that very predicament right now.
Restricting entities was a down-and-dirty, lazy way to solve this problem. Hopefully Microsoft will come up with a better approach soon.
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I recently attended the least "technical", technical event I have ever been to. As part of Microsoft's larger "ISV Connect" effort to create excitement for ISVs, they had extended what had previously been a smaller F&O ISV focused event to encompass all of Dynamics 365 and the Power Platform. I missed the follow-up email suggesting that I send my technical people, and instead went myself.
It seems that this majority F&O crowd, did send their technical people, who apparently all live under rocks. Many of the sessions were about things like "What is CDS?" Content I had already seen 100 times. What I found interesting, was that this far into the game, so many people still did not understand what we have all been talking about for the last two+ years.
I have seen the Power Platform slides many times, but these had been updated to include "Power Virtual Agents" in the mix. To be honest, I don't think Power Virtual Agents should sit at the same level as Power Apps, Power Automate and Power BI. It feels like the dwarf on the basketball team. If I were in charge, I would probably have renamed "Dynamics 365 Customer Insights" to "Power Insights" and given it the upper level. As a standalone product, similar to Power Apps, Power Automate and Power BI, Dynamics 365 Customer Insights does not even require Dynamics 365. Ironically, I had predicted a while back that "Dynamics 365" would eventually become the brand name for Microsoft's "finished" apps that run on the Power Platform, which is the reason I was given for this naming. But it is not that dissimilar a level of "finished" than Power BI, and we don't call that Dynamics 365 BI.
With my ISV hat on, I have become suspicious of the GA tag. Microsoft should really clarify that a feature or product is "GA for SIs and Customers", but not ready yet for ISVs. What's the difference? Well, as an ISV, who is drinking the AppSource Koolaid, I have to look at it differently. In an ideal world, my customer can go to AppSource, click a button to install my solution, and just use it. For the most part, this turnkey dream only works for Model-Driven apps today.
In one of the session Q&As, I asked one of the Microsoft ISV leaders about the possibility of an "ISV Ready" tag. He said "Good Idea!", which I have heard many times with no subsequent action. But he was actually all over the idea, including creating a slide for his closing session about the "ISV Ready" tag, I had previously caught him in the hallway and suggested the ISV Ready tag should not be applied by the product teams, but rather by a volunteer committee of actual ISVs.... because we actually know when something is "Ready" for us.
Well, since Microsoft seems to be running with the idea, I guess we will eventually find out what they think it means. I also think it will vary from ISV to ISV. Many ISVs have an intentional services component that comes behind their IP, to perform various tasks and configurations. For me, I want turnkey. I don't want to have to get on the phone with every customer, or create some complicated instructions, for them to be able to use my solutions. It's more than just being "Solution Aware", although that is obviously part of it. I mean Power Automate is now "Solution Aware", but is not "ISV Ready" in my opinion. I recently installed Microsoft's own Center of Excellence Starter Kit solution on an instance, and then spent half a day manually connecting all of the included Flows to make it light up. I can't expect a customer to do that, as soon as it does not work as advertised, they'll just delete my solution.
I get that Microsoft is going to build things that solve issues for customers first, and I am not suggesting that they hold off on GAing things until they are ISV Ready. But don't think that feature is truly done, and move on the next shiny object, until it is ISV Ready. This assumes of course that Microsoft is sincere in their desire to grown a thriving ISV ecosystem like SFDC. At the moment, I believe they are sincere, but as my ex wife used to say to me, "Actions speak louder than words".
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At some point in talking with a customer about how awesome you and your team are, and hearing about what they are hoping to accomplish, they will ask "So how do we engage with you?" They will have to ask, because we all have our own ways of working with customers. I have tried them all, and don't like most of them. Each one that is in common use today has it's "fatal flaw", maybe for you, maybe for the customer, or sometimes both. Let's review a couple for fun.
Most customers think that this is the model they want. How can they get budget approval without a fixed cost? This is particularly acute with Government or Large Enterprise customers. You could answer with a range... it could be as low as $x, or as high as 2 x $x. Which number do they go to management and ask for? In our business, the fixed-scope will not survive the first kick-off phone call anyway. Since the time you developed the requirements, Microsoft launched three more applicable features. Fixed Scope-Fixed Price is the most antagonistic model there ever was. It literally turns the engagement into a battleground from the jump. It does not work for either side, so we'll toss that one in the toilet.
The idea here is to abstract away the actual effort required, and price things according to what their value is to the customer. This one is completely partner-centric, basically charging normal costs for normal things, but hammering the customer for the shit they really want. This model assumes that customers are morons... this one ends badly.
This one seems pretty safe for the partner, although upside is limited. No scope, no price, we just put our heads down and start working. At some point we look up to a customer who is saying "What the fuck have you been doing?", "Oh, you know, just bopping along." No structure, goals, plan, or timeframe. This one usually comes to an abrupt end, with no finished work.
Several years ago we went to a "Blocks of Time" model. Customers could purchase blocks of time in increments of 10, 20, 40 or 80 hours. These were pre-paid, so it eliminated any chasing money on our part. It was a blended rate that covered anything they wanted to do, and unused time expired after six months. It was similar to a regular T&M model, but was promoted as more of a modified Agile approach. What I did not like about it was the lack of accountability, on both sides. 40 hours is basically one week of one person, but with six months to use the time, nobody was in any particular hurry. It would not be unusual for a customer to go quiet for weeks, and then come back all fired up to resume. In the meantime, we re-assigned people, forgot where we were on their project, and it was just not as efficient as it could be. The upside was the most the customer could buy was 80 hours at a time, which meant we both had the opportunity to end the engagement whenever a block was consumed. It was a pretty good model, but I saw room to improve it.
I liked the idea of "blocks", but it was lacking the urgency and accountability on both sides to actually get shit built... quickly. Time is the killer... endless projects that meander around are not good for anybody. I originally started thinking about time-boxing the blocks, getting away from the six months and tightening that up... a lot. I ended up with this idea that I'm call "PowerSprints" (Neil Benson is shaking his head at this moment).
Basically, a PowerSprint is one week of effort by a team. I have small, medium and large PowerSprints, while each is one week in duration, their size will determine the velocity as they have progressively larger teams. An engagement starts with a required PowerSprint Zero (5 Man-days). I stopped providing free consulting, under the guise of "Pre-Sales", years ago. We use this week to perform any analysis, setup environments, pre-requisites, etc, and conclude with an initial backlog for the first PowerSprint. We will also create a high level schedule of time and sprint sizes, which can vary from week to week depending on what needs to be done. This schedule will be a range of "Best Case" with up to a 100% contingency, in case all hell breaks loose.
We will mutually agree with the client on which week a PowerSprint will begin. They need to be ready for continuous communication and daily deliverables, and we need to be ready to execute. The PowerSprint begins on a Monday morning, and is continuous effort and deliverables until Friday afternoon... and it's done. What got done? As much of the prioritized backlog as possible based on the team size. This is what you call "Not Fucking around".
A small project may only require one Small PowerSprint... but it's done in one week. A large project may require several successive sprints, and potentially some off weeks to all catch our breath.
What do I like about this model? Well, as long as everybody is on-board, focused and ready... this is a "Shit gets done fast" model. What are the possible drawbacks? There are a couple of risks. On our side we have to have a team in place, focused and ready. A Team typically consists of a B/A who can also do configuration, an Architect, an Account Manager, a Developer and a Q/A person. The make-up of the team is flexible depending on the sprint backlog, as long as it adds up to the same man-days. For the customer, the risk is that they think they are ready to hold up their end, and then are unable to for some reason. Once a PowerSprint starts, it does not wait for anybody, and ends on Friday, ready or not that PowerSprint was consumed. If the customer is unable to engage, they will get our interpretation of the backlog.
So we are starting to use this model, and having good results, I would love to hear others' opinions.
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In every organization, that is of a size to have an actual IT Department, Shadow IT exists. If you work or run one of these departments, and think there is no Shadow IT in your organization... you are wrong. There are tens of thousands of pay-by-credit-card online services available, to solve just about the same number of problems that people in your organization are struggling with. When you said "No" to Sally, and her 5-person department, for some kind of a solution they could use to track their projects, Sally signed up for "Billy-Bobs Project Whiz", a SaaS service, that she put on her credit card and adds to her expense reimbursement request.
Clearly the "Democratization of IT" is bringing it's challenges to IT. There have been many studies over the years about the potential impact of Shadow IT, I pulled a few interesting tidbits from this Forbes one from late last year, where they surveyed 350 Enterprise Execs.
"60% of organizations don't include Shadow IT in their threat assessments." I'll call this the "putting your head in the sand" approach.
Yet "46% say Shadow IT makes it impossible to protect their data." So we are aware... we just choose to ignore it.
When asked who should be responsible for a security issue from unsanctioned apps, 87% said the users themselves! So Sally unknowingly connects "Billy Bob's Project Whiz" to sensitive data, that is then exposed and brings the whole company to a stop... but it's Sally who is responsible? 68% said it was the IT Department's responsibly for software that they are not even aware of, not causing a problem! Another 64% said it was Billy Bob's responsibility!
Less than half of the Execs believed they were even aware of the extent of Shadow IT. My guess is, that the ones who claimed they were aware, don't know the depth of it.
There are more scary facts in that study, as well as the many other studies out there.
Up until now, the typical tactics used by IT to curtail Shadow IT have been lockdown measures, including elaborate data access policies, Zero-Trust policies, encryption, etc. Basically removing access to the most valuable resources from the people who need access. How are Line-of-business owners supposed to advance their organizational goals, without access to the very data they need to accomplish that? Obviously you can't just open up your data stores to every "Billy Bob" SaaS service... but your users need it.
If it's going to happen anyway, is it better to just embrace it, and attempt to govern this Shadow activity? This would require a significant change in IT's thinking. "Hey Sally, I know I said 'no' to your request last year, but I assume you have solved your issue another way, can I take a peek at that please?" Certainly you could review "Billy Bob's" app, and maybe realize that Sally, not being a knowledgeable person, could have checked a box to encrypt all data, or similar things. Maybe you could even get satisfied that "Billy Bob's" App does not present a threat. What's next? Find every app like that in use your organization? How could you even do that? And checking them all would become a year-long project. For the ones that don't pass your review, how would you stop them from using it anyway... I mean they already went around you. Asking "Nicely"? That's not a trait of IT.
Most of the Shadow IT Apps in your organization will be some kind of point solutions to solve specific business challenges for your users. Many of these "Apps" will be brought in by the department to replace spreadsheet based systems that are just not cutting it for them anymore. Maybe you could track your users' Excel usage... if it suddenly goes down, you may have a new Shadow App in your org. Here's the problem, if you keep saying "No" to requests for help, they are going to solve their problem another way. But if you start saying "Yes", you now have a full-time job of vetting and monitoring all these "Billy Bob" apps.
Ok, I am aware that as a Microsoft Partner, I have my bias, but that does not mean that they haven't created a path for you to solve this problem. The Power Platform, which includes Power Apps, Power Automate, Power BI and Power Virtual Agents, was purposely designed to be used by your line-of-business users to build applications, using no/low code, to solve many of the problems they are going outside for. But are you just trading one problem for another? Again, saying "No" means Power Platform is just one more place your users can go with a credit card and sign up for on their own. Or you could bring it into your organization yourself and give them access to it. Why? Well now it is running in your environments that you control, and access to all of it is via Active Directory. The ultimate in security is their login page to your Microsoft account. So does the Power Platform solve your Shadow IT problem? Hell no.
Microsoft made a recent decision to turn on the ability for your users to create their own apps "by default". I guess they thought you would get in the way. Yes, if you have Office 365, your users can start building apps, and many may have already. Sure, you have a master kill switch, but that would just drive them back outside. Based on Microsoft information, users are building thousands of apps right now on the Power Platform... because they can. Using connectors, these users can be sending your data outside of your organization right now. So the Power Platform alone does not solve your problem, it could even be making it worse! How can you figure out the extent? I guess you could hit the kill switch and see how many screams you hear. Is there a better way?
Fully cognizant of the potential of the Power Platform to transform an organization, but at the same time drive IT nuts, Microsoft developed an alternative to the kill switch they desperately hope you won't push. Since pushing it will drive your users back into the shadows, maybe a CoE is worth a look. Microsoft developed a CoE "starter kit". From the document:
"The Center of Excellence (CoE) starter kit is a collection of components and tools that are designed to help get started with developing a strategy for adopting and supporting the Power Platform, with a focus on Power Apps and Power Automate."
So this toolkit can help solve some of the biggest challenges, visibility for one. Basically you would create your own Power App, install their components on it, connect to their APIs and voilà, you now have visibility of all of the apps in your organization, as well as who is building them. A light on the shadows.
Okay, there is no box actually, but some of the things that are part of the CoE toolkit are: Environment and Environment Security management, Data Loss Prevention (DLP) policy management, as well as Data integration and Gateway management. Compare that to the control you have over Shadow IT today. Is the toolkit a magic bullet to cure all ills? No, it is a part of a more comprehensive plan. Again from the document:
"The kit does not represent the entire Center of Excellence, because managing a CoE requires more than the tools alone; the Center of Excellence also requires people, communication, defined requirements and processes. The tools provided here are just a means to get to the end goal, but the Center of Excellence itself must be thoughtfully designed by each organization based on their needs and preferences."
So there is more to do.
Bringing Shadow IT into the light alone is a huge benefit for IT, but actually embracing the Power Platform and fostering and nurturing it's "governed and controlled" use, has had significant proven benefits for Enterprise organizations. Here I will provide a few highlights and links to case studies.
There are a ton of other stories about how IT, partnered with their users, has become the hero in their organizations.
Well, the first thing you should know, is that the CoE tools that are "provided" by Microsoft, are not "supported" by Microsoft. They have enough on their plate. So it is pretty much a DIY project. My company Forceworks, is offering a free CoE Briefing to learn more, you can sign up for that at forceworks.com/coe.
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Many ISVs believe that their managed solutions are safe. Having taken great pains to ensure that their managed solution never gets in the wrong hands, by requiring that their own teams install it for example. Thanks to some utilities in free open source solutions like XrmToolBox for example, managed solutions are not even close to safe. Using a tool in the XrmToolBox called "Manage Solution" for example, I can login to any instance I have access to, and view a list of both managed and unmanaged solutions. The good news is I can only download to disk a copy of unmanaged solutions. However I can copy a managed solution into an unmanaged one, and then of course download a copy. So getting an unmanaged copy, of your managed solution that is installed on an instance I have access to, would take me about 30 seconds. I can now install your unmanaged solution on another instance, and poof, I have absconded with your I.P.. I can even take Microsoft's own Managed Solutions.
Many ISVs feel that Plugins are safe. Well, using the "Assembly Recovery Tool" (also in XrmToolBox), I can download any dlls, managed or unmanaged. Pop open a freely available decompiler, and poof, I now have your Plugin I.P.
Forget about it, these run client side and I can scrape your I.P. right from my browser.
Using a few freely available tools, an unscrupulous party can rip off and reverse engineer anything we have today. It happens. Sometimes it is a creepy, but savvy customer who just wants to get out of paying us for our solutions. Tinker here, tweak there and boom, they have it for free. Worse yet is unscrupulous parties that will take your I.P., re-brand it as their own, and resell it. At least I have been told by Microsoft that if we see that in AppSource, they will remove it.
Shifting necessary code off of your solution to your Azure is one scenario. At least on "your" Azure you can turn it off or on. If your solution has to reach outside, to get some bit of code or information to make it run, you at least have created a minor barrier. Code obfuscation is another technique that can help, but that is also not 100%.
The only defense you have, in my opinion, is marketing. You have to build a brand and a reputation, that sane people will value over some low-cost knockoff. This is easier sad than done. It has taken us almost five years to establish a brand (RapidStartCRM) and a reputation, and still I hear people confusing us with knockoffs with similar names. There is of course, nothing illegal about liking someone's idea, and creating your own variation of it. But it still sucks to the one who did it first.
Let's face it. Most I.P could be reverse engineered even if I could not get your code. Just using it and understanding what it does is enough for a smart person to go create their own version. While their at it, they may as well go ahead and improve on your idea. In our solutions we have forgone the potentially very expensive, and not very effective anyway, I.P. protection efforts. We are able to track usage, and let customers know when they are out of compliance. This works with the 95% of customers who are honest. To me it was not worth the investment to attempt to thwart the %5. In retail, they call it "shrinkage". Obviously if you have extremely valuable, or highly proprietary I.P. you may look at it differently.
I have used this analogy for many things about Microsoft, and ISV solutions are no different. When you think you have identified an idea, a window opens. Shortly after you go through it, others will follow. In a relatively short amount of time, that same window starts to close. Either too many people went through it and there are no margins left, or Microsoft patched the hole you found and your solution is no longer needed. Today, windows close as fast as they open. If you are going to be in the ISV game, you need to move very fast with ideas, and always been thinking about what you will do next.
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One thing that most everyone can agree on, is that licensing for the Power Platform is complicated. It was complicated enough when it was just user-based licensing to determine what license a user needed, for whatever it was they needed to do. Now we have "Capacity-based" licensing. The simpler examples are things like storage, where when you run out, you add some storage "capacity". But capacity-based licensing is spreading it's wings.
Addons are a model you will continue hearing more about from Microsoft Business Applications Group. In a way, it is moving from pure user-based licensing to more of a consumption model... sorta. We currently have five items so far that are offered as "Capacity Addons" for the Power Platform:
These $10 "licenses" I have been talking about, are the "App Passes".
App Passes are not the same as User Licenses. First, they are assigned to an App; or more specifically to an Azure AD Group, more on this later. This makes sense as they are designed for accessing a particular App as opposed to just anything. Using App Passes is a three-step process: 1) Purchase, 2) Allocate, and 3) Consume. This sounds easier than it is, depending on what you want to do.
To purchase App Passes Microsoft refers you to the licensing guide. According the guide, you can purchase these passes through all of the normal channels, so the same place you buy your licenses today should have them. While Microsoft refers to the Per App plan as a means for users to "Get Started" . I am sure many users will never go beyond them. I'll discuss what you can do with these passes in a moment.
This can get a little tricky. Once you have passes available and allocated to your environment, you can allocate them to users by simply sharing a "Canvas" App with other users. While Canvas apps certainly have their place, the real goal is to use these passes with a model-driven app, in my opinion. So how do you do that? First, you have to create an AAD group, then you would assign the "PowerApps Per App Baseline access" to the group, you can get that here. After that, add your users to the group. Are we done? Not yet. The next step is to generate a Canvas app from the CDS environment that you plan to use the passes with. You can use the automated app generator for this, as I don't think you will use this canvas app for anything later, here's how. Now assign the security role to the group who will use the Model-Driven app. Then share the Canvas app with the group, and finally share the Model-driven app with the same group and assign the security role for that. Wow! They are not making this $10 pass easy to use. Stay tuned for Jukka's much more detailed step-by-step that I will suggest that he write.
You will need to indicate for which apps you want to allow Per App Passes to be assignable. Here's how to do that.
This will depend on how you plan to use apps in general. Instead of "Per App", you could opt for "Per User" License. Per User Licenses are assigned in the traditional way, and have the advantage of being able to use any Power Apps that are created, instead of being tied to a single one. However, that will cost you $30 more per user ($40 total). An "App" in the Per App plan can include a Single Model-Driven application, plus a single Canvas App, plus a single Portal. (You can use as many embedded Canvas Apps as you want in your Model driven app.) Power Automate is also available within the context of the App. So you can build a pretty robust business application within this framework, particularly of you spend some time up front on architecture. Once you have done the work up front on the AAD group etc, adding passes and users should be a pretty simple process, so it's more of a one-time effort. Saving $30/user/month may not be that significant if you only have a small number of users, but it could quickly add up for larger teams.
BTW, Microsoft has told me that they plan on making this process easier for Model-Driven Apps. Details to come.
While Microsoft advocates the Per App plan as a way to "Get Started" with Power Apps, we have seen some customers solve some pretty advanced business problems with a single Model-Driven app. Add the ability use a Canvas app and a Portal to that, and you can build a complete business solution for a small to midsized business, or a department in a large enterprise. I wrote a post a while back on Architecting for Power Apps here.
Let me know how this "Per App" approach works out for you!
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So I had a last minute change of plans, and headed over to Ignite for the first few days. Wow! It was the Power Platform show. If you have not been looking at the Power Platform yet, that train has left the station. Now you will have to run to catch up, but you better do just that. BAG is pouring the lion's share of their investment into all things "Power". There is no "catching your breath", more things announced at Ignite, while we are still digesting the last things. The least interesting announcement was the official name change of Microsoft Flow to Power Automate... or as I like to call it, "Powerate" or "Pautomate", we'll see which one I can make stick... just to annoy Alysa. For now, let's look at a couple of the real things that James announced in his post.
Finally we have accessible bots. Accessible because they are code-less. Yes, get used to hearing that term. Up until now, we have had the bot framework, but that was over the heads of too many. The new Power Virtual Agents provides an easy interface for creating simple to complex bots without a single line of code. It is in preview, so you can play with it today. Get ready for bots to take over the world now that anybody can build them. Hmm, maybe this is not a good thing...
This one will be interesting, and probably mostly Enterprise focused. Basically not everything out there has an API. Yes, believe it or not, there are many legacy applications in the wild that the only way to interact with them is via the UI. Mostly desktop, but even some web-based applications have no API. So there is this potential siloed data store, and we can't have that in the CDS age. Microsoft has introduced UI Flows, their name for their RPA solution built on Selenium. Seems like it should have been called "Power UI Flows", but it will probably change a few times anyway. It is interesting to see how far Microsoft has come, now building on top of open-source software, that was once called a "Cancer" by former CEO Steve Ballmer.
Clearly, Microsoft wants to "own" your desktop real estate. You can't "own" it with a Power App alone, but you could own it with Teams... if it allowed you to do everything you needed from within it. So the Teams integration continues to see love from Microsoft. I have been on several enterprise calls lately where Microsoft was demoing Power Apps. I was caught off-guard when they launched Teams, and worked with the Power App entirely from there. As Power Platform SIs and ISVs we need to be taking note of this shift. I think it may quickly become "the way" people engage with our apps.
Her's another one that probably should have been called "Power AI", and may have some name changes also. Here we go again, code-less AI, utilizing pre-built templates that Microsoft has created. I have had a few discussions on my "Steve has a Chat" series with Microsoft leaders about the challenge of getting AI off the ground. Everybody wants it, but it was a lot of work to deploy. Well, heavy-duty AI is still going to be a lot of work to deploy, but you can have some simple, yet high value, AI in an hour now, with these templates. It's all about creating the addiction.
I sat in on a couple of sessions by Microsoft people. Sessions that I had seen previously at UG Summit. It is interesting how they slant the narrative for a different audience. At UG Summit, which is primarily end-users, it was all about "You don't need a developer to do any of this", at Ignite which has a huge developer crowd, the same slide was presented as "The Citizen can't do shit without developers". I'll keep watching this dance play out, but I'm sure I'm not the only one comparing notes.
Lately, there seems to have been some angst created in Enterprise IT departments with how Microsoft is pushing Power Platform directly to the end-users closest to the business. There were a lot of sessions and focus on this at Ignite. Clearly, Microsoft knows that if they gave IT a switch to turn things on, they would never do it. So let's pivot the conversation, and they had several large IT organizations up talking about how their businesses have changed for the better by fostering this motion, instead of fighting it. In one session I saw, Ryan Cunningham had the best possible answer to the question of new "Shadow IT": a single slide showing the Office 365 Login screen. Controlled by Azure Active Directory, "Shadows" are not really possible. Mic drop!
One minor item, that got almost lost in the buzz, was the space added to the name "PowerApps", it is now officially "Power Apps". It may seem insignificant, but it is another "alignment" for the future of "Power". I have it on good authority that we will see more "Power things" in the future. I can't wait!
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Before thinking about where to start, you should have clear idea of where you want to end up. Depending on the problem you are trying to solve, some choices will become obvious. If you are just looking to be notified when a new file is uploaded to a SharePoint folder? Microsoft Flow is probably all you need. Not much "Architecting" required. For this post, I want to talk about bigger things you may want to do, like building a robust sales application for your team for example, or any other function for that matter. Sure, for my Sales example, the Dynamics 365 Enterprise Sales application is one option to consider, but again, here I will go for the Platform approach.
Canvas apps are great for point solutions, Power BI doesn't do anything without data and Microsoft Flow is great for connecting existing things, but for most customers we recommend starting with a model-driven app on CDS. It's not the app that is the foundation, it's the Common Data Service (CDS). CDS is the heart of all things to come, and allows for everything you start to do now, to have a full future later.
The model-driven app you will be provided with by default is fairly scant. It does include Accounts and Contacts as a common starting point for most business applications, although for a B2C scenario you may not even need Accounts. It is a nice "rolodex" at this point, but way more powerful in it's potential. From here you can "model" your data and processes that are required to solve your initial needs. To shorten this process significantly you may want to look at our RapidStart Accelerator Applications on AppSource. Regardless of your starting point, you will likely need some further development by yourself or a Microsoft Partner who specializes in Business Applications. The good news is, the effort required is significantly less than it has ever been before.
As you work on your model-driven CDS environment, you may see a need for more than one use case. Maybe your sales department needs something, but you also want something for the warehouse, or whatever. By the way I am just using "Sales" as an easy-to-grasp concept, but the app(s) could be for any business need. You have a decision to make with potential monetary consequences. Do you build two separate apps, or one and control access with security roles?
Microsoft is launching a per/app/user license that is only $10, and it would be awesome to utilize just that. If your users are pretty segregated, and few or none of them would have need to access both apps, you are fine. But if many of them need to access both, it will cost $10 X 2 apps. If many have to access 3 apps, it would be $30 for them. This maxes out at $40 for that 4th app as you would buy the unlimited app licenses at that point for $40/user. Still a bargain compared to past costs and other platforms.
As I said you could consider building a single app for all the different users needs and controlling who sees what, with security roles. It is more complex way to approach it, and could get unwieldy if you have many unrelated use cases, so you would have to weigh the costs of doing it that way vs. effort to make it that way. Again, this would only apply to users who wear multiple hats.
Let's say you now have a nice model-driven business application. Notice I did not say "basic", that's because it can actually be as complex and advanced as you need it to be over time. Are you done? Not even close. Now is when some of those other tools come into play on top of the foundation you have built. You have several options to go to next, one that is already covered in your $10 is a Canvas App, but this canvas app will take advantage of the CDS database you already built your model-driven app on, so all of that data is available. Also, Microsoft Flow, Power BI and Portals can be bolted on as well. So let's take a look at what these can add to your ultimate application to change the world, or at least your organization's world.
Canvas Apps are Task-Specific. The name Canvas comes from the design surface that you build them on, it looks a lot like PowerPoint. It is primarily a mobile application for those types of tasks that would be logically done on a mobile device. For example, adding a barcode scanner and tracking inventory in a warehouse, or a Check-in/Check-out app for corporate laptops. If this does not relate to your CDS environment, you would probably just make that Canvas App freestanding, but I'm keeping in the lanes of business applications here. Remember that the Model-Driven app you already built has full mobile capabilities also, so you will want to explore that before you complicate things with yet another app to maintain, but for the right scenarios, Canvas is awesome.
Let's say your organization has some other app they are using for other things. Let's also say that it could be advantageous to have your new app talk to that app. Maybe it would be nice to pass some data back and forth when certain things happen. Microsoft Flow is your bridge to over 250 other apps and growing. Microsoft Flow sits between your new model-driven app and any of those 250+, and can pass things back and forth based on triggers or conditions. It sounds more complicated than it is. Trust me, it's not. Not long ago, to accomplish this would have required a significant development project, all gone now.
Power BI is Microsoft's industry leading Business Intelligence tool. Of course you have charts and dashboards in your model-driven app, but if you really need to go deep, or mash several sources up, Power BI is the tool for that. Of course it's primary source in your case is... you guessed it... your CDS. You can create advanced visualizations in Power BI to share with anyone, and you can even embed them into your existing app's dashboard. Is it easy? Well, it's not as easy as Flow, but you don't have to be a rocket scientist either. Another option to consider is a new offering called AI Builder. This is more of a "citizen" level tool-set that is actually quite easy to use. Not as powerful as Power BI, but it can handle a lot of AI needs. Again, sitting on your CDS.
Things are going quite well, and you realize there would be some efficiencies gained from having customers, vendors or partners do somethings themselves. You don't really a want to give them access to your application, but some highly filtered level of access would be real handy. This is one example where Portals come into play. A web based representation of your business application, tailored for your audience, so they can interact with you touch-free. The scenarios are limitless, but take for example a case management solution. A place where your customers could create and review cases you are working on with them in your business application. A way they can be engaged with what is going on 24/7, without having to call you for an update. All running on top of the same CDS you started with.
Let's say you are in one of the industries that Microsoft has built accelerators for, and there are several and more to come. But, for example, let's say you are in the Banking business. Your path just got shorter. Microsoft offers pre-built data models at no cost to help you get to where you need to easier. Our RapidStartCRM for Banking Accelerator is actually built on top of Microsoft's Banking Accelerator giving you...umm... double acceleration! Between these two, you may already be done before you started!
There are other ways to approach it, but this I my recommended path that eliminates any backing up and restarting later. Regardless of where you want to get to, Microsoft has made it exponentially easier today. Start with a model-driven app on CDS, and the sky is the limit. If you want to explore how you can move a spreadsheet based process for example, onto a platform, listen to my recent podcast with a large customer who just did exactly that.
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There is an interesting anomaly in our business, that can ultimately lead to disaster; the seeds are planted as soon as you hire a Microsoft Partner. I don't think customers think about the end at the beginning. Why would they? They have no idea just how bound to that partner they will become over time.
You will ultimately be working with a person who is architecting your solution to meet your described requirements. Assuming they know what they are doing, they still have multiple ways to go about it. "Best Practices" is a bullshit term, don't get lured by it. While there are many ways to architect something wrong, there are also many ways to architect it right. It will boil down to that person's opinions based on their knowledge and past experiences. But even the most knowledgeable and experienced people will architect things differently from each other. They are all right!
It's not intentional. Eventually, all complex deployments become houses of cards. It's just how it is. Removing any card. without knowing what it may be holding up, can crash everything down. This is why most partners being brought in to replace another, suggest starting many things over from scratch. It would just take too much time in forensics to figure out what the prior partner had done and why, ("What does this card do?"). This is regardless of whether it was done well or poorly. I'm sure some partner will jump on the comments and say they are smart enough to figure out anything. These are the ones that usually come back later and say "Upon further review, the last partner did not know what they were doing, and we need to start over"... convenient.
The big customization effort is complete! Let's have our own people take over from here. This is a natural and logical desire. But you better plan on keeping your partner around, and happy, because there will be issues and fires. There always are. They tend to pop up before you can even get clear of your partner. The bigger the deployment, the more dependent you are on the partner who built it, they are only ones who know where the skeletons are buried. The only bigger risk is having one of your employees build it.
There is a lot of conversation today about "Citizen Developers". They will also build houses of cards, but will likely do it poorly, without the deep knowledge and experience, and then suddenly they leave your company. Admittedly, when we are called into these scenarios, starting over is often the only option.
All platforms go through continuous updates, Microsoft Business Applications included. These can not only bring new features, but occasionally can deprecate features you are using. As a customer with your own business concerns, you will likely not be up-to-speed on these, and will instead discover them one day when things stop working. That would be a fire, and you better have a brigade at the ready. Better yet, if you have maintained a good relationship with your partner, they will give you a heads up, and be there to make sure things continue to go smoothly.
This is not a Microsoft Business Applications phenomena, this is the same for all platforms that allow for broad customization. The same was true when we were Salesforce.com partners. It's also not new. The same was true for that Access Database solution Joe built for you ten years ago, and then he was hit by a bus and died. Damn Joe!
Eventually your partner will have you by your underwear band. Whether they give you a wedgie will have a lot to do with who they are, and how your have engaged with them. The cost of changing them will be very high, and last a very long time. Choose wisely.
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If you answered "all of the above", you get a gold star, but you're no closer to clarity.
There are three primary camps for PowerApps as I see it. There are campers that come from the productivity side of the lake, where Office 365 and SharePoint live. We also have campers from the Dynamics 365 side of the lake, busily extending the Dynamics 365 applications with their own canvas and model-driven apps. Lastly, we have the Platform side of this apparently three-sided lake, using both canvas and model-driven paths to build apps from scratch on CDS. While these campers can hear the sounds of other campers across the lake, they seem to have little understanding of what the other campers are doing over there, even though they are each called "Camp PowerApp". I want to go a little deeper into the two of these camps that are part of Business Applications that I am familiar with. Someone else can speak to those productivity campers.
I think the biggest confusion, for those of us in one or both of the Business Applications camps, are the distinction between items 4 and 5 from the quiz. "Building custom applications in Dynamics 365" vs. "Building custom applications directly on the Common Data Service". But Steve, aren't those both on CDS? Yes they are, but they got there via two distinct pathways, from opposite sides of the lake. They are not the same thing and different rules and licenses apply to each.
Let's face it, Model-Driven PowerApps are just XrM renamed. Everything you ever did with XrM in the past is now called PowerApps. Along the way a few more things happened, like the separation of the first-party apps from each other, and the introduction of the ability to make new role specific "PowerApps" by mashing up parts of the other first-party apps into your own concoction. Dynamics 365 brings all of the power and advanced capabilities you could want, including A.I., MR, and all the other acronyms. This is the deep end of the pool!
The separation of the Apps from the underlying platform was of less importance to this camp, but actually spawned a whole new camp.
These campers could care less about Dynamics 365. They are building their own custom apps directly on the same platform that sits under Dynamics 365. Are they masochists or anarchists? I guess a little of both. The "Platform" is actually the old XrM framework sitting on top of a database that is now called the Common Data Service (CDS). It is but a hollow shell of Dynamics 365, containing very little in the way of usable items, yet everything that is required to build as powerful an application as Dynamics 365. This is the deep end of the pool.
If you were reading/listening closely, you heard me refer to both of these camps as the "Deep ends of the Pool". Extending the complex out-of-the-box functionality in the first-party apps requires significant skill and knowledge. But building functional, powerful and comprehensive applications on the platform also requires significant skill and knowledge. The shallow water in the middle is where "Citizen Developers" swim, creating their cute little widgets.
When it comes to the rules, there is clear separation, but for many it still seems fuzzy. Some common examples:
"You can't use a Restricted Entity in a PowerApp!" This is incorrect, a clearer way to phrase this would be "If you are building a PowerApp on top of Dynamics 365, and you include in your PowerApp a restricted entity (for example the Incident entity), the user of your PowerApp will require a license that includes that entity (i.e Dynamics 365 for Customer Service)." This does not mean that you cannot build the app! Also, Restricted Entities have nothing to do with Platform Campers. There are no restricted entities in CDS without Dynamics 365.
Similarly, with Team Member and it's restrictions. Team Member licenses are a type of Dynamics 365 license. Again, Team Member has nothing to do with the Platform Campers, only the Dynamics 365 campers need to be concerned with Team Member.
"You cannot replicate the functionality of the first-party apps in PowerApps." This was previously true, and relevant only to the Platform Campers, but is no longer the case. For Microsoft to succeed with their Platform aspirations, it was clear they needed to eliminate any artificial restrictions, and they did.
The recent announcement about the Platform License changes that I discussed in my last post, referenced this blog post by Charles Lamanna. Note that this post, and these licenses refer to "standalone" (aka Platform), and have nothing to do with Dynamics 365. This post and these licenses are for the Platform Campers only. You cannot use a Per App License with Dynamics 365, Dynamics 365 has it's own licenses. Similarly, the retirement of the bundled Plan licenses for Dynamics 365 has nothing to do with Platform Campers.
The line between these two camps is very clear, yet at the same time, not very obvious. There is way too much "assuming" and lazy interpreting going on, leading to way too much misinformation, leading to way too much confusion. One way to help would be, if you don't know that what you are saying is correct... don't spit it out to the world as a fact. There is an old saying, "Better to be silent and thought a fool, than to speak up and remove all doubt".
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Follow me here as there are a lot of "ifs", but many organizations will meet them.
Depending on your answers to the above "Ifs", you may well be able to move to the upcoming PowerApps Per App Plan model for $10/user/month. My math says that from $115, down to $10, is a 92% savings. Is this even realistic?
The same way it would be possible for certain people to get by fine with Notepad instead of Word... unused features. As a partner who has been involved with hundreds of deployments, I can safely say that the number of customers who use every feature of the first-party apps they are paying for is... zero. I feel quite confident that number does not change for customers using even half of the available features. Of course no two customers are alike, and the mix of features they actually do use varies significantly, but they are all paying for all of the features. Obviously my 92% scenario assumes you are currently paying the highest price ($115), and that you could ultimately be satisfied with a single PowerApp at $10. Not everyone will, and many are also paying less than $115.
Not exactly. It is not quite as easy as buying a $10 license and cancelling the others. Even if you meet the parameters I outlined, or are willing to give up a few things to do so, there is still some refactoring and a migration to be done. This too will vary significantly from customer to customer. If you are able to save some money, or a lot of money, you will have to spend some money to get there, so the ROI may be deferred. For example, let's say you fit the profile perfectly. You have 150 users and are paying (let's be more conservative here), $95/user/month for the Enterprise Sales App. Assuming your actual needs could be met with a custom built PowerApp, you could potentially save $12,750/month. Of course you need to have the PowerApp built which will cost you something (you may want to explore our RapidStartCRM accelerators in AppSource, and RapidLABS services for a fast and low-cost way to do this). I don't want this to sound like a slam dunk, for some customers the cost to do something like this may actually exceed all of the development costs they have invested so far. There are a lot of factors in this equation.
By now you may be thinking, this sounds great... for an organization with simple needs. What you will forgo in this Per App Plan are the "pre-built" capabilities of the First-Party applications. But... they are PowerApps too. With enough development funds and time, you could practically replicate them entirely, but that would be silly. Instead, you would just build exactly what you need, no more and no less. We have a customer with thousands of users, where everything but Account and Contact was custom built (Account and Contact already exist in PowerApps). In their case, the customization solution (which includes a single app) could be installed directly on a CDS instance with no changes at all, then just migrate their data, and they would be in the exact same place. There are some massive deployments out there, that with little effort could go this route.
In fact, for many of my customers, the Per App Plan offers more than what they are even utilizing today. An "App" in the Per App Plan can include a Web App (aka Model-Drive App) like most customers are already using today, but that "App" can also include a Mobile App (aka Canvas App), which less of them are using, and a Web Portal which very few of them are using. The Outlook App is also available and works the same way.
I would guess that depends on how many of their existing customers, walk through this door that Microsoft created to gain new customers. In my example above, trading $14,250/month for $1,500/month may be an unintended consequence of Microsoft's new model. Make no mistake, this will not be a viable option for everybody. Again, the first-party apps bring a plethora of advanced capabilities that many customers depend on, that would not be practical to rebuild. But it will be interesting to see just how many, are using enough of the out-of-the-box advanced features. The difference in cost sets a pretty high bar for Microsoft's first-party apps. Microsoft will need about 10 net new PowerApps Per App users to make up for each D365 Plan user who makes this switch, but clearly their expectation is that the PowerApps Per App Plan model will blow up to a point where they don't really care. And why wouldn't it? This is more potential business application "power" for $10 than any other company even comes close to, and at $10 moves it into the category of: "Affordable to Anyone".
Once again, Mark Smith's (@nz365guy) looming prediction that "Dynamics 365 is Dead", shows more life. While there will continue to be a place for Dynamics 365 Customer Engagement Apps for the foreseeable future, it's no longer the "take it or leave it" product it once was. PowerApps has created a highly viable alternative for many customers... new or existing.
If you're interested in exploring this, Forceworks is offering a free Assessment, to help you see if you can take advantage.
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The Unified Interface is awesome, a vast improvement over the previous Web Client. Yet a significant number of organizations are still using the Web Client. Microsoft needs you to get off your ass and move. In fact they recently created an Online Community dedicated to this single purpose. In my informal survey of customers who are still on the Web Client I am aware of the following three reasons: Obliviousness, Fear or Money.
There are a reasonable number of customers who deployed Dynamics 365 without a partner. Many of them bought the licenses and then went underground on their own, disconnected from whatever may be happening on the surface. Many other customers were deployed by a non-Dynamics partner who likewise is not up-to-speed with changes in the product. There are also customers, as well as partners, who engaged offshore resources or freelancers, most of which are also out-of-the-loop of current information. So in addition to many other things this large customer group is unaware of, the looming deprecation of the Web Client they use every day, is yet another.
This group of customers is aware of changes coming to the platform, but lives in fear that their deployment, which they liken to a Rube Goldberg machine, will break if they dare touch it. This group will always wait until the very last minute, which is ironically the scariest and riskiest thing they could possibly do. Their fear is often a result of a lack of confidence in either their own, or their partner's knowledge and understanding of the platform. In other words, they're ignorant.
Is there a free service that will update you to the Unified Interface? Not that I am aware of. Is it a simple project? That depends, for some users it could be, but for most it will require more effort. Is it frustrating that you subscribed to this product, paid some partner to help you initially configure and customize it for your needs, have been happily using it for a long time, and now out-of-the-blue you have no choice but to spend some money to keep using it? Yes, I would assume that is frustrating. More so if you have no budget for things like this.
Does this upcoming unavoidable "Effort/Expense" present a possible silver-lining opportunity for customers? Maybe. As a Partner, I often look at changes like this as a good reason to look at what a customer is doing today, vs. what they were doing when we first put this thing together. Hindsight is always 20:20. If we have to crack this thing open anyway, let's go ahead and address some of those issues we discovered after launch, that we never got around to taking care of. At least if the customer has to spend some money for a required change, they can get a little upside out of it. But is there even more upside potential today?
What if I told you, that while you were at it, you could potentially reduce your license costs by 92%! Is this even possible? You will have to wait for my next post to find out.
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Microsoft's new "Business Applications ISV Connect Program" hopes to be a comprehensive program for ISV success, yet it's most often referred to by partners as the "Revenue Sharing Program", due to its prickliest aspect. But sharing 10% or 20% of your revenue with Microsoft is not the only thing you need to understand. In fact, that's probably the simplest thing to understand.
I recently wrote a post highlighting Microsoft's plan to eliminate IUR benefits. In that post I said that I did not think they would back down... and they backed down the next day. I have been assured that this was not to make me look like an idiot. When I first wrote about the new ISV program, I also said I did not think Guggs would back down, and it looks like he is going to prove me right. So I have a 50% accuracy rate on back down predictions!
Between now and October, ISVs will need to agree to the compulsory ISV Addendum in order to continue to offer solutions (apps) that are built on, connected to, or extend Microsoft's Business Applications platform including Dynamics 365 and PowerApps, and where there is a revenue opportunity, Microsoft Flow. Microsoft Business Central and Power BI are exempt, for the time being.
It's not enough to just review the Addendum, as it references other documents, including the ISV Program Policies, as well as the Publisher Agreement. I am not a fan of spreading terms across multiple documents. The Addendum is 9 pages and the Policies are only another 5 pages, with a lot of duplication between them. Why was this not a single document? This is so they can change the policies whenever they need to, without having to get you to re-sign anything. Classic lawyer games.
The Publisher Agreement is an additional 47 pages, but my quick scan of it seems less related to the specifics of the Bizapps ISV Connect Program. So while everyone seems to be focused on a single aspect of this program, let's take a look at some of the other terms of these agreements. I am not a lawyer, but I do know how to read, and I'll share my "Business Owner" interpretation.
Tiers are per app, and while the "Standard Tier" (10%) is compulsory, the "Premium Tier" (20%) is optional... for both sides. While there appear to be some specific requirements, Microsoft has maintained the discretion to accept or deny your Premium Tier request arbitrarily. I expect that this will cause some drama, but I see the rationale. The primary additional benefit of the Premium Tier is the activation of Co-Sell. This means Microsoft's own internal sales teams out there hawking your app, and being spiffed for doing so. Obviously salespeople, and hours in the day are both finite resources that Microsoft would rather not waste on "crappy" apps. But who judges "crapiness"? I would assume that any ISV solution that generates the sale or activation of Microsoft product licenses will pass muster, regardless of its intrinsic value, but what else? What about an app that reduces the need for additional Microsoft licenses?
If you determine that you are not getting value for an app from the co-marketing and co-selling motions of the Premium Tier, you can "Down-Tier" that app back to the Standard Tier. It is not clear what percentage you will pay for any deals closed for that app while it was previously in the Premium Tier. Nor is it clear what you will pay for prior deals after you "up-tier" an app. There also does not appear to be any language preventing you from have having two versions of your app, one on each tier, possibly at different prices... I'll let that settle into your brain.
The definition of a "Business Application", that falls within this agreement is quite comprehensive. It also includes so-called "free" apps, that connect to paid services you offer, so no Trojan Horses.
Some math is required to figure out how much you're supposed to pay Microsoft, regardless of the tier. Basically, the total amount of your customer bill, less taxes and "non-recurring" services you perform, and your cost of any CSP licenses you may have included. So this includes your license margin also, if you sell Microsoft licenses as a part of your solution. It really feels and sounds like Microsoft does not think ISVs need to make any margin on Microsoft licenses, and while most don't... some do. It also appears to me to include any and all recurring revenue, like for example monthly or annual support plans, or any sort of managed service type offerings related to your solution. So as an ISV, if I offer a monthly support plan to the customer, I have to pay the fee, but if a reseller of my app offers the same monthly support plan, no fee would apply.
The agreement includes this line: "you are solely responsible for End Customer credit decisions and Total Solution Value will not be reduced for uncollectible accounts." So you will still have to pay Microsoft, even if your customer stiffs you. I have no idea how this is supposed to work in the future when a customer purchases directly via Microsoft's AppSource Marketplace with a credit card.
The agreement also includes this line: "You will accurately report each Paid Eligible Sale to Microsoft within 30 days of a Paid Eligible Sale occurring". Self-reporting always works! Of course Microsoft has the right to audit you, at their expense, and go back 3 years. Interestingly, their audit not only covers fees that may be due to them, but also appears to include your violation of any applicable laws? If they discover anything, you will foot the audit bill.
I think Microsoft is going to lose many Connect ISVs right out of the gate. Remember the "Connect" pattern is the one where you already have your own service, and you offer an app to connect it to D365. For example, let's say you offer some deep industry bench-marking service for the princely sum of $10,000 per month. Users typically gain access to your high-value data directly on your secure web portal. As a convenience, you decide to make a small free app, available to your paying customers, that will push your service's resulting "Account Score" field over to Account records in your customers' D365 instances. Guess what? You owe Microsoft $1,000/month for each customer that uses it.
The technical definition of a "Business Application", as I read it, would also include third-party published "Connectors", based on what they do, and I am not seeing an exemption for them. So as soon as I wire up the CDS connector to some third-party's connector, is that third-party on the hook for a fee? Or, will they create an exception for connectors? If so, then won't all savvy Connect pattern ISVs just publish connectors instead?
For any customers that you may have invested heavily in marketing and selling your solution to, possibly involving significant costs for travel, wining and dining, and ultimately heavily discounting your product to land their "Logo" account, all without any assistance from Microsoft... there is some good news. You have about a year to either raise your prices or decide to absorb the new fees. I assume many ISVs have some sort of term, and the fee will start being due if your customer has to renew between now and next July also. If you have a month-to-month auto-renewing agreement, it looks like you have until about the first of next July. Hopefully, not many ISVs had multi-year agreements with their customers.
If you sold 100 licences of your product to a customer, and Microsoft began invoicing you for their fee, and later the customer reduced their license count to 50, you better move fast. Your Microsoft fees will not be reduced for any current invoices, or any invoices that were to be sent to you within 30 days. If you somehow mess up and forget to let Microsoft know about the reduction for a while, no credits will be issued to you. In fact, it appears that no credits will ever be issued to you, regardless of... anything.
I found interesting in Guggs' Inspire session, his referring to "access to Microsoft's platform" as a program "benefit". Guggs says he does not like the term "Tax", and I agree... based on this, "Tariff" seems better. This "benefit" had not come up in my past conversations with them for my post about the various benefits ISVs can expect. It looks like the catch-all for anyone trying to avoid the new program. Basically, part of what you are paying Microsoft for, is their permission to play in their playground, that they built, expand and maintain.
Microsoft reserves the right to change any of the rules at anytime. So regardless of how much you may have invested to go "all-in" on D365/Power Platform, if you fail to meet some new or changed future requirement... you're out.
While I am optimistic about the concept, some of the execution so far feels ham-fisted. The agreements, as you would expect, are pretty one-sided. Establishing a "here's the rules" approach for new ISVs is one thing, simultaneously enforcing a "take it or leave it" approach with long-standing ISVs feels pretty arrogant, even when wrapped in a "for the good of us all" message. While some ISVs may leave, most probably have too much invested and really can't leave, even if they wanted to. Clearly Microsoft's focus is on large ISVs for enterprise customers, as they were the ISVs that were engaged to help craft this. For all other ISVs, time will tell if this is a shift forward or backward.
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In this episode of "Steve has a Chat", I was able to catch Muhammad Alam before he headed out for Inspire. Muhammad is the General Manager of the Dynamics 365 Finance and Operations (F&O) team, and recently Microsoft Business Central was added to his list of responsibilities. He has been with Microsoft since 2005, so he knows where the bodies are buried.
We covered a lot of ground, including these burning questions:
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The vaunted "Microsoft Partner Network"! Wow, that sends chills down the spines of all other software companies! "Oh no! Here comes a Microsoft Gold Partner! We might as well just pack it in, we don't stand a chance", said Salesforce or SAP never. The ones who are the most impressed by Microsoft "Gold" partners, have always been Microsoft Silver partners. The Microsoft Partner Network (MPN) is a legacy construct, designed for an era that has passed. In fact, I think the entire MPN today is constipated!
It seems that many folks read my post and tweets as a rallying cry, but if you re-read it now, knowing that it was not, it will sound quite different to you. This is not the first time I have landed on the bank opposite of the screaming hordes. The recently introduced ISV revenue-sharing model was another brouhaha that most seemed to have assumed that I, as an ISV, would have had a tantrum over. Instead, I was all for the changes. The fact that I have written some rather scathing reviews of things that I thought were dumb moves by Microsoft, does not mean that I think Microsoft is dumb. I am not "that guy", but I have met "that guy". I run into them at every event, and they frequently comment on my posts. They can clearly see the conspiracies that I am obviously missing. Like, how at every event Microsoft has these kids in purple shirts standing around with tablets... appearing like they are giving you directions... but what are they really doing?
Microsoft is not good at giving news that they feel will be poorly received. With the exception of Guggs, who seems eager to stick his face into a fire, the rest would rather hide. But just because Microsoft is staffed by chickens, doesn't mean they're always wrong. In fact, over recent years, it would seem that are right way more often than they are wrong. But even though things are publicly looking great for Microsoft right now, there are leaks in the ship. None that will sink it, but if not addressed, they will cause issues in the near future. MPN is leaking like a sieve. Within MPN are a lot of things, beyond just training and competencies. Your MPN membership controls everything about your relationship with Microsoft, or lack thereof.
As far as partners without a competency are concerned, competencies are a shitty way to grade partners. First of all, they are not required. You could well be a highly capable firm with many professionals, selling a butt-load of licenses, but unless you opted to pay the fee, you are not Microsoft competent. Conversely, up until recently, any firm with a handful of people and few deals, could opt to pay the fee and voilà, they're a Microsoft Gold Partner! So basically competencies as they existed, were pretty much a sham. BTW, I am saying that as a current Gold partner, not one of those petty and envious Silver ones. A lot of noise was made recently about the required increases in certified individuals and revenue to maintain a competency, but in reality Gold didn't mean shit anymore, and Silver never did. Microsoft's entire competencies strategy needs an overhaul, pulling the IUR benefits out of it, just stopped some bleeding from a program that was not working... for anybody.
We're all familiar with the 80:20 rule; 80% of the value that Microsoft accrues from their Partner Network, probably comes from less than 20% of the Partners in that network. Those who are calling for revolt, creating petitions, and threatening to leave the channel are in the 80%. So, on the unauthorized behalf of Microsoft let me say... "Please Leave!". How much more nimble and focused could Microsoft be, if they lopped off the 80% deadwood in their channel? How much time and money could they save, by instead of catering to partners who ain't doing shit, just hitting the delete button? To put this into context, I thought I had heard recently that there were like 600,000 Microsoft Partners Worldwide. Even if that number is way off, how many partners does Microsoft actually need to accomplish their "new" goals? I mean, 20% is still 120,000 partners!
Satya Nadella himself proclaimed "Microsoft has always been a partner led company and will always be a partner led company". Hmm... it seems like he should have left some wiggle room there. I can easily see a Microsoft without partners, or at least with a fraction of them. Microsoft itself suffers from Pavlovian conditioning, opening every partner presentation with the obligatory "Thank You Partners!" slide, and then going though a whole deck on how developers are no longer required. Many partners, and all LSPs are basically order takers for Microsoft, while at the same time Microsoft continues to expand it's direct sales capabilities at an unprecedented rate. "Reselling" licenses is a pointless relic in the SaaS world.
I had something great for this heading, but I feel like I am starting to sound like a raving lunatic already, so I will save it for a future post.
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In recent months, partners have seen a continuous barrage of changes that are catching most off-guard. Many have described some of these changes as types of "Partner Taxes". For example:
Add to these, recent changes to the Competency Requirements, tripling the number of certified individuals. It all has a lot of partners wondering... WTF! Let's break it down.
What most of these things will have as a common result, is a reduction in the number of partners. Fewer Direct CSP Partners, fewer Gold Partners, fewer Silver Partners, fewer ISV Partners... fewer partners across the board. It seems that Microsoft is struggling with how to achieve a new goal: dramatically increase the "Quality" of partners in their channel. One part of reaching that goal, is reducing the "Quantity".
Ask 20 partners what defines a "Quality Partner", and you'll get 20 answers. But none of them matter, because the definition of a "Quality Partner" is determined by Microsoft, and always has been. Over the years, Microsoft's own definition has evolved, along with changes in technologies. A "Quality Partner" ten years ago, may well be an irrelevant partner to Microsoft today. Irrelevant partners aren't removed from the program, they're just ignored.
This is not on Microsoft, this result sits squarely on the shoulders of the partner who did not evolve. Over the years Microsoft has increased the number of their partners significantly, but today they actually see many of them as irrelevant, serving only to boost numbers on brag slides. So why not just remove them from the program? Re-read the first paragraph if you don't already realize that's what's happening.
So what is a "Quality Partner" to Microsoft... today anyway. This will vary significantly from one internal group to another, but it does seem that there are some common themes. The first is that they are usually big. Big partners sell big deals, small partners sell small deals, simple. There are exceptions, small partners that somehow sell big deals, or small partners that sell big logos. Microsoft's only interest in small partners is whether they have the potential to become big partners... soon... and most do not.
This is not Microsoft's fault, they are not a charity organization. With success on Wall Street, comes extreme pressure to increase that success, this is all new to Microsoft, but clearly small partners won't cut it. Big is not the only metric, in addition to that, the partners have to be selling the right things, like Azure. If you are not selling Azure today, your relevance to Microsoft is significantly diminished. Again, Microsoft's Azure Powered Cloud is the force-multiplier on their stock value, and there will be no re-trenching.
So, if big Azure selling partners are the holy grail, are all others irrelevant? Not "irrelevant", just "less relevant". Out of Microsoft's 120,000+/- employees, a percentage of them do not have Azure as their highest priority. Although, if you followed the string connected to whatever their priority is, it often eventually leads to Azure, down the road or behind the scenes. If you look at the intentional "culling" efforts underway, it is fairly clear that Big Azure partners are immune.
If you are not a big Azure selling partner, and you are not able to become one, what is your next best option to remaining or becoming relevant to Microsoft today? You better follow the bouncing balls. Today, it is not important "how" good you are, what is important is "what" you are good at. On my side of the Microsoft house (Business Applications), you better be good at verticals, and migrating customers off of competing solutions. And, if you're not racing towards the Power Platform, you're racing towards irrelevancy. Whatever part of Microsoft's business you're in, you better be listening to their signals. Your agreement with the directions they take is not relevant.
Let's look at what I think the effects will be of some of these recent motions:
If you thought, with the dramatic and rapid evolution of Microsoft from near irrelevance, to the most valuable company in the world, that your life as a partner would remain unaffected... well then you're just a moron. Like Microsoft, you also have to let go of the past. All the old "favors" you racked up, have no value today. The cronies that protected you, are all gone. All of your storied history with Microsoft... pfft!
What have you done for Microsoft lately? That is all that matters, and frankly, all that should matter. Microsoft is "Culling the Herd", which by definition means "Literally, to separate or remove (and usually kill) inferior animals out of a herd so as to reduce numbers or remove undesirable traits from the group as a whole."
To me, this sounds like exactly what's happening...
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We had a cabinet for employee records, another one for customer records, and others for tax records, financial records, payroll records, marketing records, sales records, active projects records, closed project records, old Elvis Presley records... let's just say lots of cabinets.
If I wanted to get an accurate picture of a particular client relationship, my secretary, Doris, would go to about five different file cabinets and copy pieces of paper and staple them all together and hand it to me.
Then one day, software showed up and we started keeping records in folders on hard drives. Of course we did not trust software so we still kept records the old way also. ironically, technology actually added to our workload. My, how far we have come.
Now we have multiple applications for every aspect of our business, and most of our data today is stored electronically in various databases. There is only one file cabinet left for those items that for some reason we still feel we need a hard copy. We have applications for everything: project management, ERP, Payroll, CRM, Business productivity, website CMS, email, document management, etc, all neatly storing their respective data in various databases and electronic folders.
But something else has changed to; now if I want to get an accurate picture of a particular client relationship, I have to do it myself, because Doris has been deprecated :-(. No problem, I am now a technology whiz. I'll just pop open my CRM and click on the client name. Ah, there it is, all of my info on Acme Corporation. There's my list of contacts, all of my marketing letters, all of my communications... wait a minute, where is the info on that project we are doing? Oh yeah, that's right, I need to login to our Project Management System for that... there it is. I wonder how much we have billed this client so far on this project?... umm, where is that information... ah-ha, it's in our ERP, let me login to that. Where is it.... hmm, looking...looking... ah there it is, they misspelled the client name. Wait a minute, this still shows the CEO as Bob, but Bob left last year. CRM shows Bill is the CEO. I am starting to miss Doris.
All this technology, and I still have the same problem as before. All these data repositories are the same as the old file cabinets... separate. Suddenly the door busts open and here's this dude in a blue cape screaming "I AM INTEGRATION MAN !". Seriously dude... a cape? "Sorry" he says, and takes off the cape, and sits down and says what I need is to be able to integrate all these silos of data. "Let them talk to each other" he says and I picture my Project Management application hollering over to my ERP system and saying, "Hey ERP!, Bob is out and Bill is in at Acme... get with the program". And ERP says, "oops, sorry, I'll change it so our data matches and I'll also let CRM know when he gets back from the gym".
I kick back in my chair and imagine all of my silos of data talking to each other, comparing notes, becoming "one" really, and gossiping about the old metal file cabinet, "those handles are so 70's". I open my eyes and look up to see "Integration Man" putting his cape back on and walking out the door... he turns slightly and I see emblazoned across the back of his cape... "Forceworks".
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I don't know about you, but when I hear the word "Done", I assume something has completed. When I am "done" with a meal at a restaurant, they take my plate away, bring me my check, and the wonderful relationship I developed with my server comes to an abrupt conclusion. When the service manager at the car dealership leaves a message on my voicemail that my car is "done", I go down there and get it, and our relationship has concluded, hopefully forever, even though he seemed like a really nice guy. "Done" means something different in the software deployment world.
With Agile methodologies, big projects are broken down into smaller parts. Fellow MVP Neil Benson can fill in all the details around this for you, and will probably correct everything I write here. For this post I just want to say, that for each of these smaller parts, there is typically a concept of "Definition of Done". Some people call this "Exit Criteria", which sounds equally terminal. Regardless, if your project gets broken down into 100 parts, you will get to "Done" 100 times. Kind of like when you complete your appetizer, and they take that plate away and put another one in front of you, except it would be a 100 course meal.
It is not uncommon for a development team to feel they have met the "Definition of Done", only to find that the customer did not understand the definition in the first place. "What do you mean Done? What about xyz...?" It is not that hard to come up with a definition of done that your team understands, it is exponentially harder to come up with one that your customer understands. Their advance agreement is not a reliable signal that they actually understand what they are agreeing to. Why would a customer agree to something they don't understand? Often, it is because they don't want to appear like they don't know what you are talking about. They are content to understand what you mean, after you get there, and then renegotiate if necessary.
One of the key advantages to your development team is creating several points along the path where they can plant a flag and say "This thing is done". It should protect both sides from misunderstandings, or at least limit the damage to either party when there are misunderstandings. If we waited until the end of a year-long implementation to say "Done", all of those misunderstandings will be a wave that will wash over everyone involved. Another fellow MVP Gus Gonzales recently did a podcast outlining these very issues using a real world case... case as in law suit.
When engaging an implementation partner, it is quite common to have your discussions conclude with a "Statement of Work". A typical statement of work will attempt to define the deliverables and the costs associated with delivering them. It may have been created pursuant to a list of requirements from the customer, or several pre-sales phone calls or meetings. The lazy SOW says, "We will deliver all of the requirements from your list, which is attached, for $X dollars." A customer who signs off on that is an idiot, and the project is already doomed. A better SOW does not even reference the customer's list, but rather replaces it and covers each aspect, broken into chunks with a "definition of done" for each chunk. But, I would never give a customer one of these either. In fact, we don't give customers SOWs at all.
I think SOWs were always a shitty way to create a contractual relationship, but never more so than today. All SOWs are ultimately agreed to at a "point in time". Back in the day, that point remained fairly static throughout the life of the engagement. Not so anymore, not even close. A month after that SOW was memorialized, new features were released that the SOW did not contemplate. Now what, do we continue down the path, or maybe look at whether any of these new features make more sense for one of more aspects of this SOW we are both bound by? If they do, do we both mutually agree to change the scope. Does that change in scope require a change in cost? Are we going to argue over that because you think I have you over a barrel? Am I going to be a dick about that because I actually do have you over a barrel? If we ultimately agree, what are we going to do next month when it happens again? It is little wonder that so many of these relationships turn out sour in the end, or worse, in litigation.
Several years ago, I got fed up with the broken SOW process. While I never put my foot on a customer's neck, they frequently assumed I was, because I could. My Dad once told me that, "Leverage always exists, there is no such thing as neutral... who has it at the time, may not be clear". I can certainly recall being on the phone back in the day with customer making all kinds of demands, assuming he had some leverage, when in fact he did not. It is not a good place for the customer to be, and I did not like it either as you may have gathered from my last post.
I decided that we were going to take a business risk, by no longer responding with SOWs... or fixed cost agreements. They create an antagonistic relationship from the jump. Our "risk" was whether customers would go along with the idea. We did not invent this idea, but at the time, it was pretty novel in our space, and still is. We developed a two-page agreement, where customers could pre-purchase blocks of time, the larger the block, the lower the rate. What could be done with this "time"? Anything the customer wanted. We also simplified the tiered rate structure into a single blended rate. The whole concept could be digested in about 3 minutes, without the legal department having to look for "gotchas". Many other partners told me that no customer, particularly large ones, would ever move forward on this basis. They were wrong. Since we launched it, we have helped hundreds of customers, including multiple Fortune 500 customers, and the freaking United States Navy. In fact, there as been virtually no resistance at all.
I still had many partners not believing that customers would engage this way, being unable to imagine their customers going along. I have also talked to some who said they tried, and had limited success. Compared to our 100% success rate, I decided that this was a sales problem for these partners. I know their customers would go for it, if they presented it the right way. The key point is that every customer who ever did an SOW or "Fixed-price" agreement was not happy with that model either. That trend is getting worse, which can easily be seen by searching for example "Accenture Lawsuit". Not to pick on Accenture, their current woes are just fresh in my mind, but SOWs and Fixed-price agreements are ending in litigation at an alarming rate today.
How about instead of going down a path with a high possibility of failure, you instead try something that minimizes the risk to everyone. In our case, the maximum size block a customer can buy at one time is 80 Hours. Why? This means that every week or two, we both get to reassess our relationship. While leverage may still exist, it is more equalized. If you are not happy with us, then you can go another direction, the block was consumed, and we owe each other nothing. On the other hand, if you are a raging asshole, once the block has been consumed, I can say adios. But another thing I have noticed in this arrangement is there is seldom a need for the customer to become a raging asshole. In fact, I don't recall off-hand ever saying Adios to one.
This concept dovetails nicely into Agile frameworks also. You can't get much more "Agile" than being able to redirect all energies in a new direction when new features are launched or other realizations are made by the customer along the way. No change-orders to argue over, no hard feelings, the river of effort just flows down whatever tributaries the customer wants it to.
"Steve, you seem to be glossing over a huge aspect for partners. Where we make the big money is when we come in way under cost, in your scenario this windfall would not exist!" First, I would say that you need to subtract from your windfalls on the winners, all of your losses on loser projects, and come back to me. If you ever chatted to a gambling addict, all they talk about are the times they won. But, if your winners do vastly outnumber your losers in dollars, then you would be right. This model assumes that your customer will actually get an hour for every hour they purchased. Which, by the way, is a other huge selling point! We obviously generate a margin on each hour sold, but there are no opportunities for a huge windfall with this model. Conversely, it is also impossible to end up upside-down on a project. Since customers pre-pay for the blocks, we also have no account receivable department and zero collection effort.
I think so, if the profitability of your business is dependent on windfalls from winners to offset losses from losers, then moving to this model will help you at least sleep. You can also move from having a few key customers who will sing your praises, to have every customer doing so. This certainly makes getting more customers a lot easier. When your prospect asks for a reference, it feels good to be able to respond with: "Sure, how about every customer we have?".
I get that this approach is not for all partners, though I am not sure why. I also get that not all customers will go along, but I have yet to run into one. I am happy to discuss with any partner how we make this work, or any customer who wants to explore it as well.
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I was talking to one of our customer-facing people a few months ago, who was working on one of our larger customer projects. I asked him how things were going. He started to go into the customer's asks, and the hours that had been utilized to fulfill those asks. I interrupted and said, "No, I mean, is the customer happy?" He hesitated, then replied, "I think so". My brain started churning, "you think so"? Do we know? I came to the realization that I always know when a customer is not happy, because they don't hesitate to let me know. But they never let me know that they are actually happy... unless I ask them.
Occasionally, my wife will ask me how something like her new hair style looks. My reflexive response is "Fine", which leads to her stomping off and mumbling, "I know what fine means". Apparently, I do not know what "Fine" means. It seems that it actually means that I am indifferent, which was not her desired response. Whenever I am on the phone with a current customer, I always ask how things are going, and they frequently say, "Fine". Until recently, I took that as a satisfactory response. But actually "Satisfactory", is not a very satisfactory response to that question. "Fine" does not equal "I love you guys!" I think it means they are indifferent to the job you are doing for them, neither dissatisfied enough to get rid of you, nor thrilled to be working with you either. It is a "Neutral" response.
When you put your car in neutral and rev your engine, you go neither forward nor backward. Neutral kinda sucks. While you can know for sure if a customer is not happy with you, you can only intuit whether they are thrilled. But what if your intuition is wrong, and they are only "Fine" with you. Are they going to tell their colleagues about you? Are they going to go to bat for you to stay on the project as it grows or evolves? Or are they going to say, "Eh, they're fine"? Yes, neutral sucks. So how do you get out of neutral?
Years ago we were brought in by another partner in a P2P scenario to assist with Dynamics 365. I remember some call with me and the partner where he was wondering if the customer was satisfied with things. I said, "Well, we can give them a call and ask?". He replied, "Hell no, don't ever do that!". I said, "Why Not?", and he said, "What if they're not happy?". Obviously I love to hear that my customers are very happy with us, but the value I receive from that is a smile. The real value is received when they are not happy. I don't like hearing it, but hiding from it is worse. At least knowing, I can take action. If the first time I hear that they are unhappy, is when they take the step of reaching out to me, it could be too late.
The Net Promoter Score idea was brilliant. It sums up the health of your relationship with one single question: "How likely is it that you would recommend our company/product/service to a friend or colleague?". Respondents are asked to rate that question on a scale of 0-10, 10 being most likely. It is simple, and easy for them to provide, unlike a full Customer Satisfaction Survey.
From the web:"Those who respond with a score of 9 to 10 are called Promoters, and are considered likely to exhibit value-creating behaviors, such as buying more, remaining customers for longer, and making more positive referrals to other potential customers. Those who respond with a score of 0 to 6 are labeled Detractors, and they are believed to be less likely to exhibit the value-creating behaviors. Responses of 7 and 8 are labeled Passives, and their behavior falls between Promoters and Detractors. The Net Promoter Score is calculated by subtracting the percentage of customers who are Detractors from the percentage of customers who are Promoters. For purposes of calculating a Net Promoter Score, Passives count toward the total number of respondents, thus decreasing the percentage of detractors and promoters and pushing the net score toward 0."
I think the most common use for NPS is sending it to customers after they received your product or service, and generating a Score from the aggregate results. I am less concerned about the aggregate score, I am more interested in the individual result. I am also not wanting to wait until the end of the engagement to get it. We instituted a program where we ask regularly, sometimes even weekly, during an engagement. It can be automated. Basically I want to take the temperature of the relationship continuously. Once a week, I may ask a customer for a single button press, so it is not a hassle for them to give it. This is part of the beauty of a single question.
How has this impacted our hiring practices? This seems like a left field topic, but actually it is not. We share the customer score with the team member in charge of the project. What do I consider an appropriate response from a team member for a low score? Well, it does not include things like, "It's not my fault", or "The customer is an asshole", or "It's okay, I'm billing the crap out of them". No, I want people who are on the verge of tears when they hear their performance was scored low by a customer. Their tendencies are fairly easy to spot in an interview.
You can no longer build a sustainable business on the "Burnt Bridge" model. Cloud has moved us all into having to think longer term. The old days of trying to get as much revenue as possible, as quickly as possible, are pretty much gone. The new game is revenue generation over time. How much time? It may take years to generate the same revenue from a customer that it took months to obtain in the past. Needless to say, if you are not keeping them happy, you may not been engaged with them for very long. Your best customers are your existing customers, and the best of those are the ones that are happy with you. So you need to be asking, "Are you happy?".
If you are a customer, and your partner has not implemented a similar program of regularly asking if you are happy, you are not out-of-luck. You can probably get a similar result by pro-actively telling them on a regular basis. It might also be a good check for yourself. You can set a reminder in your calendar every week to send an email and tell them, "On a scale of zero to ten, my happiness level with you today is...". Not only will this usually snap the partner into focus, but it will be a reminder to you of whether you actually are happy with them, or not.
I would not expect any of the Global Systems Integrators (GSI) to take this path, nor would they likely respond to your initiated "Happiness Notifications". Frankly, GSIs mostly suck when it comes to customer satisfaction. They seem to operate more on a "How hard can we screw you, before you sue us" model. There are plenty of examples in the news today, so I won't go into that any further.
Moving to a model, for which the most critical metric is customer happiness, even over revenue, is not easy. If actually requires you to take a leap of faith. Faith that if your customers are really happy with you, that will result in more revenue over time. I also am not blind to the fact that some customers cannot be made happy, they simply will not allow it. Since my goal is revenue over a long period of time, when I encounter these customers, and I know they will not allow themselves to be happy, I will refer them to another partner... maybe a GSI:). Since I can't reach my goals with that customer, I am happy to let them do the battling they crave with someone else.
What are you doing to protect your future revenue? Let me know in the comments.
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The first spreadsheet software I actually used was called 1-2-3 from Lotus, back around 1985. I created all sorts of spreadsheets, Shortly after, I switched up to Lotus Symphony, which was basically spreadsheet software with a programming language. With Symphony, I built a complex job-costing system for my business at the time. It was really my first experience as a "Citizen Developer". Needless to say, Microsoft eventually launched Excel, and crushed all of the other spreadsheet applications out of existence. For good reason... it was better.
Microsoft launched another product in 1992 called "Access". It was a relational database product, and also was not the first. Some users of Excel started looking to Access as a way to build business applications. Access was "accessible", and many "normal" users built things on it. While the term "Citizen Developer" may seem recent, the concept has actually been around for a very long time. Although the tools may have changed quite a bit since then, the fundamental concepts are still pretty much the same today with the Power Platform's underlying Common Data Service (CDS)... a relational database.
Before I put you completely to sleep, let's jump ahead about 3 decades, to today. While the popularity of Access has waned, Excel is still very much alive. If I had to guess the percentage of businesses that use Excel.. I would put it at... 100%. It is simple-to-use, requiring almost no training at all for creating basics lists of information, and basic calculations of those items. Excel's use in organizations is ubiquitous and prolific. It is the "go-to" tool for many users, for almost anything. In fact, in enterprise organizations, I would not be surprised if the number of active spreadsheets in use is in the tens of thousands. Even small businesses often have hundreds of spreadsheets. Spreadsheets have become... an infestation.
It sneaks ups slowly. A business or department is formed, and there is an immediate need to capture some data. Who cares what it is, there is some shit we need to keep track of now, and the reflex is to whip up a quick spreadsheet to throw it on so it won't get lost. Makes total sense. Maybe we got a contact page on our website throwing off 5 leads a day, probably going to someone's email box. Let's put them on a spreadsheet and save it as "web site leads", and then we'll just add to it as they come in. Forget about web leads, it could be anything, but this is an easy example.
So having these leads on a spreadsheet is good... we won't lose them, but we need to act on them. Next step, send a copy to our two salespeople. Today, you could actually just share it with the two salespeople, but copies are still most often the default. So now have someone updating the spreadsheet daily with new leads, and sending it to both salespeople. The salespeople are getting a daily new copy of this spreadsheet, but they have been taking actions on the last one(s). So they create a spreadsheet of their own to track their activities, and just add to it when they get the daily update. The Sales Manager wants to keep track of what is going on, so she asks the two salespeople to send her their updates daily. She then creates a spreadsheet to consolidate the two she receives. So how many spreadsheets do he have now? To be fair, a lot of this could be simplified using a shared spreadsheet, but still a spreadsheet is being used as a database.
Excel was not designed to be a database, but rather a data analysis tool. The number of capabilities in Excel are staggering, yet 95% of users only use 5% of the capability. But Excel actually looks like a database table... columns for attributes and rows for records... sounds pretty similar. But used as a database, Excel gets unwieldy quickly. Imagine the scenario I described above growing over time to 50 leads a day coming in, and 20 salespeople. In enterprise businesses, I have seen similar scenarios with thousands of people trying to coordinate a business process with Excel. Excel was never intended to do that.
I often see spreadsheets that do not use any of the calculating functions. A tab is created for each thing, like a tab for each Customer for example. On each tab are areas for the customer name, description, etc. Maybe even a running list of Phone Calls or other activities. Basically using a Spreadsheet as a quasi-CRM. I can't say this is stupid; CRM systems have become quite complex and expensive, where spreadsheets are more or less free!
When are you torturing Excel too much? I don't need to tell you, if you have read this far your Excel-based system is already breaking down. Sally, looking at the wrong spreadsheet, calls a customer to introduce herself, only to find out that Bob called them yesterday. Bill added a note that someone needs to send Acme a price list, and nobody ever did. Joe adds a new Lead to his own copy, without realizing that Mary was already working on it. The fracture points are various and numerous. When did it start? Actually, when the second person was added to the process, the seeds were planted for it's eventual implosion. But CRM is so expensive!
It's funny some of the rationalizations customers come up with to avoid a cost. I often hear stories of massive inefficiencies costing customers thousands of dollars, followed by, "Is there a way 5 users could share a license"... to save $160! I get it... you are moving from a shit system, but it's free. But is it free? Have you taken into account anything other than a free system vs a system with a cost? SMBs really struggle with this one, focusing 100% on the possible additional cost. Easily able to ignore the costs they are currently incurring like wasted time and lost opportunities, and in a worst-case lost customers.
Microsoft gave you the tool to create this mess, and thankfully, they also created the tools to get you out of it. You need a "Business Application" to replace your spreadsheet(s), we both know that. If you are using Excel, you probably already have other Microsoft products, like Outlook etc, or maybe even Office 365, so it makes sense to look to the same company for a solution to your Excelplosion. The main thing is, that you don't want to find yourself down the road with the same problem. Microsoft has a couple of ways to avoid that happening, Dynamics 365 or PowerApps. Let's unpack them briefly.
This is Microsoft's world-class, enterprise-grade Business Application family. If you are an enterprise, it may already be in use elsewhere in your organization. It competes head-to-head with Salesforce.com, and is a very powerful platform for solving the most complex business processes. If you have sophisticated applications in place already and are looking to move to the next level, this is something to consider. But, moving from an Excel-based system, you could not possibly have been solving enterprise-grade problems, so it could feel like a pretty big hammer. It is a big hammer, and if you are reading this post, you should ignore it completely. Trying to go from 50 Miles per hour, straight to 500 Miles per hour, will snap everyone's neck, and you will be in an even worse place.
Now we're talking. This is exactly where you need to be going next. It is the most logical step forward from an Excel-based system. It is also significantly less expensive than Dynamics 365, and it's "Citizen Developer" friendly. My choice for moving customers off of spreadsheets is what are called "Model-Driven PowerApps", they are like Dynamics 365's little brother. They sit on the same relational database (Common Data Service) as the monster applications, but without all of the tentacles of complexity. If your needs eventually become really huge, you can easily activate the monster without having to move anything.
If you ever worked with Microsoft Access before, PowerApps is kind of like the new version of that, but at the same time, nothing like that. The similarities are that a person with some basic technical skills can build a usable application on top of a relational database. While Access was not specifically designed for non-developers, PowerApps has enabling "Citizen Developers" as a core goal. If you don't have a comfort with basic "techy" stuff, or you don't have the time to mess with it, a partner that specializes in PowerApps can help you get there. Shameless plug: my company, Forceworks is a PowerApps partner, but the army of PowerApps partners is growing fast.
As part of our mission to move Excel-based systems to PowerApps, we created an accelerator to help customers get there faster and save some money. We call it RapidStartCRM, and you can learn more about it at https://rapidstartcrm.com.
So I think that about covers it, or at least starts the conversation. It's time to stop torturing Excel, and torturing your team... you have officially run out of excuses.
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I previously wrote about the Common Data Service here, but let's have a quick primer for this conversation. The Common Data Service (CDS) is basically a database that runs under your applications. You can have many applications running on a single CDS, all sharing the underlying data. That is pretty cool. What are these applications? Well, the list is growing, but includes things like Dynamics 365 Customer Engagement Applications, as well as Custom built PowerApps applications. Also, some other apps managed to get stood up on CDS, like Microsoft Forms Pro for example. Via connectors, you can also consume data from over 250 other sources into your CDS environment.
We have what could appear to be an irony here. For the last several years, we partners have been on a mission to eliminate data silos. All of these multiple applications in use with our customers, that not only create similar data in different places, but usually don't talk to each other. There's been a whole lot of copying and pasting going on, which is not only a pain in the ass, but is inherently error-prone. It is not uncommon for an employee to have five applications open to do their jobs, and that's just silly.
Part of our mission to date with Dynamics 365 has been to consolidate as many of these disparate applications into a single place. A noble goal to be sure, and a message that has resonated strongly with many customers, who suddenly found themselves sitting on a house of cards. The idea of a "Common" Data Service seems to solve all of that. But Microsoft recently announced some licensing changes, and one of the changes was that you can have as many CDS environments, as you have storage capacity to support. Wait a minute. Are we now promoting silos again?
Think about a restaurant that promotes the "Best Burger in the World"... I want that. You go to get "it" and it's available in 20 variations. So wait a minute, is it the best burger, or the 20 best burgers? You ask the cook which one is the "Best burger", and he says, "it depends on what you like on it, but the beef patty, that they all come with is the best grade beef available". I ask if I can have all of the 20 variations of toppings on one burger... he frowns. But how awesome would that be? One awesome patty, with everything on top of it! Why would I want more than one? Well... maybe because peanut butter and barbecue sauce, while I like them both, don't taste good together? So let's see how I relate this scenario to CDS.
So CDS has been out long enough now for many of us to wrap our heads around it, at least enough to be able to explain it to customers. Now, many of us are actively deploying solutions built on CDS, and we are starting to see the scenarios forming. Scenarios that we had not necessarily contemplated before. For example, I am now being asked questions, that never were questions before like, "For this other department, should we add them to our existing CDS environment, or create a new one?" My knee-jerk response, having been a trained silo-buster, was "add them to the existing environment, or course". But is that always the correct answer? And it if was, then why is Microsoft offering them as many CDS environments as they want?
Back in the old days, if you wanted two different departments working in Dynamics 365, that did not share any data, you might have used Business Units. Or, sometimes a second production instance was used, but that had a cost. Today, you can have as many environments as your storage will support, so does that change the thought process? Today, my position on this is based on whether there is shared data. If these two departments will be sharing Accounts for example, then my recommendation would be to create a new app for department #2, specific for their needs, but add it to the existing environment. We certainly don't want to have two separate Account tables to deal with. This is the silo busting approach that we have been working towards for years now.
When might it make sense to create a separate environment? In my opinion, it is when the users are not sharing any data. This is a frequent occurrence in enterprise organizations in particular. Rarely have I seen HR for example, use any of the data that Sales does. In this scenario, I would take Microsoft up on their offer and spin up a separate environment. Could I accomplish this in a single environment? Yes, but it could get messy, and there is no upside any more. It is hard to completely isolate two apps from each other on the same environment. Changes to one, could potentially impact the other, if you are not paying close attention. Data segregation strategies can also get complex to maintain. Fiddle with a workflow condition for App A, and all of the sudden the records in the App B are doing weird things, if you aren't on your toes. There are a lot of ways to get in trouble if you are not right on top of it... and why bother?
On the licensing side there seems to be some confusion also, which is not unexpected. Let's say you have a sales team using the D365 Enterprise Sales app, they also have rights to PowerApps. Let's say a part of that team is focused on Lead Generation only, and not Opportunities. Clearly they will share some data, but they have different roles in the process. You can build another app on the same environment targeted to them, and they are already licensed to use it. But let's say H.R. pops up with a need for an app, and they won't be sharing any common data with sales. If those users also have a D365 Sales license, you can spin up an entirely separate environment for them and they can use that. Better yet, if H.R. does not need any of the sales related entities at all, those users could get by with PowerApps P2 licenses and save some money. However those PowerApps licensed users could not use the Sales App. There... that should be clear.
Okay, I know it is not clear. Licensing is a tricky thing to navigate, but it is important to understand what licenses you need for what you are doing, or you could easily "over-license". Meaning you bought a license that allows for a lot more than what you need, and so you are paying more than you need to. I have found that Microsoft Support is often clueless to the nuances of licensing, and Microsoft Sellers are motivated to sell the most expensive licenses. Even partners struggle with this one sometimes, so it is definitely not something to figure out on your own. Your best bet is a "licensing knowledgeable" partner, which is also a rare find.
I am sure there are other opinions and CDS strategies being used, let me hear yours in the comments.
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It would be helpful to know the origins of Dynamics 365 Business Central "BC", to understand how it came to it's current position, and then I'll discuss it's current position. Once upon a time, there was a product called Navision that Microsoft acquired. There is more to that story, but that is all that is relevant here. That product, since shortened to "NAV", is still alive and well and in use by many businesses around the world.
Several years ago, Microsoft started their shift of Business Applications to the cloud, following the tremendous success of Office 365 and Azure. The first product to make that move was Dynamics CRM, and at the time it was launched as "Dynamics CRM Online". Dynamics CRM was not the only business application in the stable, it was just the first to go SaaS. Other products included Dynamics GP, Dynamics SL, Dynamics AX and Dynamics NAV, each of which were different flavors of Enterprise Resource Planning or "ERP". Enterprise Resource Planning is a pretty vague term. It could include human resources, supply chain management, sales activities and many more, but all of these activities revolve around a General Ledger in an ERP system. GL, AR and AP are the common denominators for each of these systems... and every business must have these components. All enterprise sized companies have an ERP, and most Midsized businesses do as well. Smaller businesses may have a solution like Xero or Quickbooks, that fills this purpose at a smaller scale for simpler needs. Many Midsized businesses are also using these simpler products... some successfully, and some who have outgrown them and are considering an ERP.
Darwin's Theory of Evolution by Natural Selection was not conceived for software. But similar rules apply. Basically the strongest will survive. What was strong yesterday, may not be strong tomorrow as the environment changes, and when previously strong players do not adapt, they are replaced by new strong players. This was what drove Microsoft to the cloud in the first place... seeing other players adapt, and become leaders. So Microsoft adapted as well, and given their war chest, they were able to adapt very quickly to a SaaS model. But along the way choices had to be made. One of those choices was, which ERP solution(s) would take the SaaS path.
Shifting an on-premise product to SaaS is no small feat, and requires a significant investment. Having four on-premise ERP solutions, it was obvious that all four would not go SaaS. Microsoft drew a line across their customer base, dividing Enterprise on one side and everybody else on the other, and decided to pick one ERP for each side that would go SaaS. Why not just pick one? Well, I didn't have a vote, but I wrote about that here. Regardless, Microsoft selected AX for the Enterprise and NAV for... everybody else. It was pretty hard to argue AX as the Enterprise choice, but there was some debate about NAV vs. GP. GP is much bigger in the US, but NAV is actually bigger globally, so that decision made the most sense.... unless you were a GP partner.
I won't go into the cloud journey for AX, instead I will focus on the journey of NAV... which actually starts with CRM. Several years ago, Microsoft had an idea to create a specific offering for SMB called "Business Edition". It would be a scaled down version of the Enterprise CRM solution, better suited for the needs of Smaller businesses. Shortly into that initiative, the decision was made that this would be the best place to start the SaaS journey for NAV as well, and thus began the project code-named "Madeira". Given the SMB target segment, this was going to be positioned as a Quickbooks/Xero competing product. Understand that this was well before the idea of a "Common Data Service" was even on the future roadmap. BTW, another product that got it's start in the Business Edition effort was Dynamics 365 for Marketing.
About a year into the "Business Edition" effort, Microsoft decided that the path they were on, was not going to reach the original goals as intended, and the goals had shifted as well. CRM itself was heading down a path of componentizing its parts, and separation from its platform... this ultimately led to what we now know as the Common Data Service. But what about "Madeira" and Marketing? Dynamics 365 for Marketing continued it's journey as an independent application, no longer bound by the "Business Edition" limitations. And Madeira?
Project Madeira, similarly became unbound from the Business Edition limitations, and was launched as an independent application called Dynamics 365 Business Central. There are a lot of side routes that this took that I won't go into here. Today, Microsoft Dynamics 365 Business Central is one of the fastest growing SaaS Business Applications in Microsoft's stable. A far cry from my earlier predictions that it would never see the light of day. Maybe the product owner at the time, Marko Perisic, made it successful just to prove me wrong. Nevertheless, it is on fire. So where did it go?
Once the Business Edition tag was removed, Marko quickly pivoted BC from a Quickbooks/Xero compete, into a product those customers could move up to as they outgrew them. While the CRM side of the house was going through a massive evolution into what we now know as the Power Platform, Marko was able to stomp on the gas pedal. BC was evolving at a faster pace than any other product, partly because it was in a lane by itself. Weekly updates were the norm, and the new northstar became NAV on-premise parity. A goal that I believe has been largely met. SMB might be a fine market, but this thing could go way beyond that... in some cases even standing toe-to-toe with AX for some enterprise customers. So what exactly is BC?
At it's heart, Business Central is a SaaS ERP. "Manage your financials" is at the top of the product's page of capabilities. As you would expect from an ERP it has the GL, AP and AR core functions, but it is much more than that. Like everything Microsoft is doing in Business Applications today, BC is infused with A.I. The next listed capability is "Automate and secure your supply chain", that sounds pretty "enterprisy" to me. Next up is "Sell Smarter and improve customer service", so BC also includes some CRM capabilities. After that is "Keep projects on time and under budget", so we can add some project management capabilities to the list. The last item is "Optimize your operations" for inventory and warehouse management.
Clearly this product has grown up quite a bit from its humble "Business Edition" beginnings, and there is a growing number of partner extensions (ISVs) to extend the capabilities even further. The pricing is pretty straightforward, at least in comparison to the Customer Engagement applications. There are only three flavors: "Essentials" at $70/user/month, "Premium" at $100/user/month, and "Team Members" at $8/user/month. To figure out which licenses you need, you can review the licensing guide. You can also sign up for a free trial here.
Since I am not an expert on Business Central, I reached out to two guys who I know are knee-deep in the product for their thoughts.
Andrew King is a Partner at WebSan, a Toronto based Business Applications partner. Since WebSan supports both Dynamics 365 Customer Engagement "CE" as well as Dynamics 365 Business Central "BC", I thought he would be a great guy to contrast the two. Andrew shared that there is some confusion in the market, "The products are as different as Golf and Baseball, but we frequently see customers asking about the product that does not meet their needs. Like BC for CRM needs, or CE for Supply Chain. Would they work? I guess if you like playing golf with a baseball bat".
James Crowter is the Managing Director of Technology Management, a UK based Business Applications partner. Technology Management also supports both Dynamics 365 Customer Engagement "CE" as well as Dynamics 365 Business Central "BC", and has a long history with NAV. James talked about the amazing pace of innovation, "I can talk to a new customer in the morning, and have them using BC by the afternoon, which is amazing! For the right customer requirements, BC is a no-brainer... but not for sales workloads, there is not even a workflow capability (for sales), which is a key component for sales!"
Both Andrew and James agreed that while Business Central is an awesome solution, it is not really a very good Sales tool. Both agreed that they would typically position Customer Engagement for any CRM type requirements, and they often position both products for a true end-to-end solution. They both had some choice words for the Sales Capabilities of BC, and clearly neither one had any interest in activating those, but instead would bring in Customer Engagement for any customers looking to transform their sales processes.
So I guess it boils down to, what it is that you are trying to transform. If you are looking to modernize your financial processes, including supply chain and inventory, or have outgrown Quickbooks or Xero... Dynamics 365 Business Central is an excellent option, and you could reach out to Andrew or James for more guidance on that. If you are looking to modernize your sales or service processes, Dynamics 365 Customer Engagement is the clear way to go, and Andrew, James or myself can help you explore that further. But are these the only Microsoft options?
If your ERP requirements are really big, and include things like HR management, you might look at Microsoft Dynamics 365 for Finance and Operations. This is Microsoft 's enterprise-grade ERP. Again, we have seen Business Central get into some pretty big businesses, but F&O is the next step up. Conversely, if your sales or service requirements are fairly basic, you may find that Dynamics 365 for Customer Engagement is a pretty big hammer to start with. In that case, you might want to explore RapidStartCRM, our PowerApps based CRM solution. It is an excellent option for small businesses or enterprise departments, built on the Power Platform and running on CDS so you can never outgrow it.
Hopefully I cleared up some confusion, but if I actually made you more even confused than before... please keep that to yourself.
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Starting soon Microsoft will be moving to a pay-to-play model for ISVs. The first reaction I am hearing from many ISVs are various "avoidance" schemes. Remember, this only applies to SaaS products. Since all of these SaaS products are hosted by Microsoft, and they have all the telemetry they want, you really will be challenged to find a way to avoid Revenue Sharing. It is not an "Optional" program. Though for the time being, you can still "side-load" your solutions, Microsoft will easily discover them. When they do, if you are not part of the program, according to Guggs, "If your solution is not on Appsource, we will tell customers not to use it --- we will get very "pointy" with this message over time". I can't think of any intelligent customer who would not heed this warning, so I suggest you drop your "avoidance" plans. Instead, focus on the promised benefits, and maximizing those.
Depending on where you fall, you have several "levels" of benefits across three buckets: Technical, Marketplace and Sales. I'll share the slide first, and then we can unpack these. Understand that these are subject to change, it is a lever Microsoft can use to increase engagement.
Let's start at left most column, which is the minimum required "non-optional" option. When you publish a Bizapp solution to AppSource, and you commit to 10% as part of that process, this is what you will get, even without selling anything yet:
The above are all listed as "Technical Benefits", and you may notice that they are the same across all levels. This is where I expect whatever they are planning to do around IUR will probably be differentiated. Today, the differentiations between levels are really around Marketing, (Sales does not kick in until later), so let's take a look at the minimum Marketing Benefits
Once your app has generated $50K USD of revenue sharing fees, which is actually $500K of ISV revenue, in a rolling 12 months, you move up the the $50K Club. This is no small feat, if your solution sells for $10/Month/User, you would need to have sold about 4,200 seats. Again the technical benefits, for the moment, are the same. But you do get additional Marketing Benefits, in addition the the entry level benefits, including:
Once your app has generated $250K USD of revenue sharing fees, you have the option to "opt-in" to the 20% revenue sharing model, but you don't have to. Understand that this means you will have sold $1.25 million USD of ISV revenue, which for your $10 solution, means about 10,500 seats. The air is starting to get thinner here, and the numbers of ISVs in this category will be smaller. But if you do get there, you will not only get additional Marketing Benefits, but you will activate the Sales Benefits. The additional Marketing Benefits include:
In addition, this level kicks in the Sales Benefits, which are the same as at the top level, so I will cover those below.
Let's say you somehow sold $3.75 Million dollars of ISV revenue, which for a $10 app, would mean that you miraculously sold about 31,250 seats. I think it is clear that there are only a handful of these ISVs, and maybe not even a whole hand. But you three will also get some additional Marketing Benefits, that include:
Once you cross the $250K mark, and you opt-in to the 20% program, you activate the Microsoft Sales Benefits that include:
A final point on Co-Selling. Microsoft is aligned strategically to industry verticals. SSP/TSP teams are not only targeting particular horizontal solutions like "Business Applications", but they are also segregated vertically along industry lines. For Example, "Business Applications in Healthcare Sector" would be a specific charge of an SSP/TSP team. In addition, depending on the size of the industry, the teams may be geographically bound also, ie. "Business Applications in Healthcare Sector for US East". Basically, there are a lot of people you would ultimately want/need to engage with.
Needless to say, horizontal Solutions and "widget" solutions are probably not a good fit for Co-Selling, as should be obvious from what I wrote above.
So this was a long post and I am sorry for that. To add to that, everything I wrote above is subject to change as the program rolls out. It may change a little, or it may change a lot, but as I opened with, this side of the program is a lever that Microsoft can easily adjust.
For ISVs that are confused, worried, mad or acronym challenged, I am part of another consulting group called PowerISV with four other MVPs who may be able to help.
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The journey to Public Preview has been a rather long one. Originally coined the "Custom Control Framework" (CCF), which gave way to another name, "PowerApps Control Framework" (PCF), to ultimately landing on the name "PowerApps Component Framework", this "framework" has been quite the work in process. According to the new Branding Guidance, we are not supposed to use the acronym (PCF) anymore, but whoever decided that, does not write blog posts.
When PCF was first announced, there was a lot of excitement, among the MVP community in particular. We were all eager to get our hands on this new "capability" that was coming soon... but it did not come soon. It was not because there was any lack of will from the team behind it, rather it was another example of Microsoft seeing an "Opportunity". I recently discussed this "opportunistic re-trenching" that has been going on across Microsoft Business Applications on Mary Jo Foley's podcast. The source of this particular delay, was the realization that if both Model-Driven and Canvas PowerApps could share the same Component Framework, it would be way more valuable to everyone. So one step back was taken, to get two steps forward to the Preview. A frustrating delay for some, but well worth the wait.
Is it charts? Is it Kanban boards? Is it Gantt Schedules? Buttons, dials, widgets, cameras? It is actually a way to create all of these, and many other "components". Is it a "Citizen Developer" capability? No, it is not. Building "Components" is a developer-level job, requiring Javascript/typescript and other development skills. For those of you on the development side, this is the future of what you now know of as html Web Resources... but way better.
Flexibility, portability and supportability are three things that come to my mind of why this is way better. As opposed to building a hard-coded webresource tied to something, with a Component you can package that up with parameters. This means that your Component is abstracted away from the particulars of a specific environment.
For example, during the just concluded "Private Preview", we worked directly with the Microsoft development team to refactor a Gantt Chart Webresource that we had built for a specific custom project management entity in one of our ISV solutions. Our original html webresources were of course hard coded to this entity. The finished "Component" version instead included a parameters capability, meaning we could actually display our Gantt Chart "Component" on anything that met the minimum requirements to display it, which in our case was a start and end date. If additional parameters are present such as predecessors, successors or percent complete, it would take advantage of those also... very flexible. We can install our component solution on any environment, and use it wherever we want. While Citizen Developers may struggle to "build" a component, configuring one for their use is completely within their capability.
From a supportability standpoint, since Microsoft developed and owns the "Framework", it falls on Microsoft to handle component lifecycle, retain application business logic and optimize for performance... instead of you.
Well, it's new to you, but you have actually been using "components" for quite a while, possibly without even knowing it. Remember the fanfare about the addition of editable grids? That was a "component' built by Microsoft on the framework. In fact, a lot of the features you see in the new Unified Interface are actually "Components", including all of the original charts. What is new is your ability to now create your own components.
Personally, I think the largest opportunity around the PowerApps Component Framework is for ISVs. Either building components as part of their larger solutions, or even freestanding components that they might resell individually via AppSource. There is some development effort involved, and I don't see a lot of SIs necessarily learning the nuances of building components for individual end customer needs. Better that they just incorporate components that exist, or will exist in the near future. Of course many ISVs still need to get themselves up to the Unified Interface, but that will happen pretty quickly, or they will be in a world of hurt.
A common question today from customers and partners, whenever the Microsoft Bizapps team launches something new, is whether the old stuff will go away. Everything you are doing will eventually require change. Microsoft can only advance so fast when they are dragging a big bag of legacy behind them. This was the impetus for the One Version strategy. But even in the One Version world, a level of backward compatibility is a requirement... but for how long. How long will Microsoft allow that technical debt pile to grow? As long as they absolutely have to, and no longer. I have not heard anything about deprecating anything as a result of PowerApps Component Framework. But of course the same could have been said two years ago about other, now deprecated things.
Neither the future nor Microsoft is waiting for you.
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I am usually pretty cynical, but over the past few years, I have consistently fallen for the promises from many Microsoft team members, each of whom was independently responsible for some sliver of an ISV effort. Each of them failed to live up to the lowest of promises and expectations. The scattered effort lacked both direction and motivation.
Yet, in spite of that history, I continued to get excited about ideas, and shared many of them here with you. If you had taken some of my advice, you to would have been disappointed with the results. For that, I apologize.
AppSource should work... but it doesn't. In Microsoft's zeal to turn it into something big quickly, shortly after it launched, they lowered the bar to entry and it promptly filled up with shit. It remains full of shit as I write this. From apps that won't even install, to some that are downright security risks.
Co-Sell should work... but it doesn't. The idea that a Microsoft Seller could actually close a deal faster with an ISV, is not one most Microsoft Sellers have embraced, instead they see ISVs as confusing the conversation and slowing the sale.
ISV Competency should work, but Microsoft pulled the pulled the plug on it, only a few months after it was introduced, because they could not remember why the launched it.
The very definition of insanity, doing the same things and expecting different results, was fully in-play.
The landscape that I described above, is what Steven Guggenheimer "Guggs" was brought in to fix. Turn this shit show, into a jewel. I previously wrote of my high hopes for this new savior of ISV. Right out of the gate, priority one for Guggs appeared to be, how can Microsoft make money on ISVs. For many, it seemed like adding insult to injury. Seriously, you offer ISVs shit, and now you want them to pay you for that shit!
If I were to stop writing this right here, it would not sound very good, but you know I always find the rainbows... Revenue Sharing is Brilliant! Not a novel idea, every other platform has been doing it for years, but Microsoft doing it also, will actually be the best possible thing Microsoft will have done for ISVs.
Guggs is no dummy, far from it. He is a no-nonsense kind of guy, that I have gotten know, he was even on my podcast recently. As Guggs surveyed the failures I outlined above, along with the many other failures I did not go into, he spotted the obvious common denominator. He slapped his forehead and said "Holy Crud, we actually don't give a shit!"
My dad was my early business mentor, a truly successful entrepreneur. One of the things he would often say in response to ideas that I had was, "There's no percentage in it!". My dad was not a philanthropist. What he did know, was that without some monetary reward, any business effort would fail. Guggs quickly reached the same conclusion. If you want things fixed, and you want people to give a shit, you need to put a bag of money at their end of the path.
While reading through the new program documents, it is clear that Revenue Sharing is not the only step Guggs and Team are taking, but it is the only one that matters, and is the single one, that will make all of the other ones happen. It is Pay-to-Play for ISVs now, which may come as an initial shock to many who had gotten used to the free ride.
The challenge that Microsoft has with this new effort, is of course, history. For most ISVs, their success has come, in spite of Microsoft. They have learned not to expect anything. I was talking to one of the ISVs that Microsoft often showcases as an "ISV Success Story" today, who told me that Microsoft never gave them anything. No leads, no technical assistance, no sales support, no funding, no... anything. They succeeded completely on their own. It will be a tough sell for Guggs to convince ISVs that they will get a return on this new mandatory cost, and he is well aware of that.
The line between "Eternal Optimist" and Moron, is thin. I'd like to think I am the former, rather than the latter. But, up until now, that has not proven to be the case. We transitioned from a mostly SI, to a mostly ISV, because I drank the original Koolaid. Where many of those that did so at the same time, have since abandoned Microsoft as an aid to success, I continued to stay the course, and continued to be disappointed. My gut reaction to the new program announcement was excitement, but then found myself tempering my enthusiasm. Microsoft has also cried Wolf many times.
The choice of reactions for ISVs will fall fairly clearly on one side or the other. Initially, I expect a lot of them will scream. After digesting the full value proposition, I think a significant number will embrace it. I am embracing it, but I am aware that my credibility on this subject is now dubious. One aspect that I see as key, is with the fact that I will now be paying Microsoft for the privilege of being an ISV for their products, that they "owe" me something.
Up until now, the only way to get any ISV help from Microsoft, was to be persistant and super nice and hope that they might throw you a bone for not being an asshole. This "Program" turns the table. In return for my 20% "Payment", (yes, we will be opting into the premium tier), I will be expecting them to step up to the plate, and yes, if necessary, I will be a complete asshole about it.
For the screamers, I think their screams will fall on deaf ears. I know that some of the bigger ISVs, who like to position themselves as more important to Microsoft, than Microsoft is for them, they will march up the ladder, "You do realize that our solution generates a ton of sales that you would not otherwise see?" This is the anecdotally, hard to quantify argument, that they have leveraged for years. I am sure there is truth to it... but again... hard to quantify. Many of the Bizapps team have proven pliable in the past and quick to buckle under pressure. I don't think Guggs is a buckler, particularly when he knows he is right.
I'm sure some ISVs will attempt this tactic, but it sounds a little hollow. I mean, where you gonna go? Revenue Sharing is not a new idea that Guggs came up with, it is what the other platforms have been doing all along. In fact, it eerily resembles the Salesforce.com AppExchange model... because it largely is!
I would suggest that instead of trying to brow beat Microsoft into some kind of "exception", that ain't gonna happen anyway, you instead hold them to their end of the bargain. I'll go into the specifics in a future post, but based on what I have seen, and been told, if they do hold up their end, this is a no-brainer on ROI, if they don't, you can join me in the asshole club.
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I know, many of you were thinking, "Ugh, here comes Steve's long, drawn-out 'How we got here' story". But this is for the normal people, who don't really give a shit how we got here, they just want to know if there is something here they can make use of... or not.
In a meaningless to you nutshell, the Power Platform is comprised of PowerApps, Power BI and Microsoft Flow, each of which are kinda their own platforms. Each of these is able, but not required, to run on top of yet another platform, the Common Data Service. Additionally, they can be used individually, or in any combination. A well-known example of a PowerApp, would be the Dynamics 365 Enterprise Sales Application built by Microsoft, but you can also build your own.
Where this fits, and your interpretation of what I am saying in this post, has a lot to do with where you are. If you are currently using Dynamics 365 it may mean something different, than if you are not. For this post, I want to focus on the person who is new to all of this.
You have several paths that you can take with Microsoft Business Applications, which one you take, will depend on what you are trying to solve for, what kind of budget you have for solving it, and how sophisticated your users are. Let's crack them open one-by-one, starting with a critical concept.
If you have heard this term, and your name was Cliff, you may have thought you were excluded from playing. But what this really refers to is the idea, that no matter where you start, you can keep going without hitting a wall. This is a pretty unique proposition that today, only Microsoft can fulfill. With most other platforms, you will reach a cliff, a point where you can go no further without switching platforms, migrating data etc. Microsoft Business Applications are used by one-person companies, all the way up to the largest companies in the world. There are no gates, you can start with the simplest need, and keep extending, and extending with no limits. You can literally grow from a one-person firm, to a 100k employee enterprise, without ever having to change platforms. No other vendor can say that today.
We might as well start at the top with Dynamics 365, a set of world-class, enterprise grade applications that deliver an incredible array of capabilities. From Marketing Automation to Sales Force Automation, Project Service Automation and Connected Field Service Automation, all with baked-in intelligence. No other vendor comes close to what the collective Dynamics 365 applications can bring to bear, on the most advanced business requirements on the planet. While Dynamics 365 applications may be the top of the mountain, they are also the tip of the iceberg. Even these world-class applications are cliff-free with the ability to tap into Azure for even more advanced capabilities, or Microsoft Flow, to connect to vast array of other services, including competing services, who does that? Nobody else does that.
There is a growing number of enterprise organizations that are making the move to Microsoft Dynamics 365, as well as smaller organizations with complex needs. So if you are not an enterprise organization or have complex needs are you out of luck? Hardly. Microsoft has a path for every business. Let's jump to the other end of the spectrum to Micro-Businesses.
For a micro-business, I am going to first make an assumption that you are already an Office 365 customer. It's not a requirement, but it is a no-brainer, and opens up even more doors. Personally, I think the easiest place to get started with graduating from spreadsheets, is Microsoft Flow, hands down. A no-code solution for activating automated processes in your organization immediately. Microsoft Flow has hundreds of connections to other Microsoft and non-Microsoft services and tons of pre-built templates. From something as simple as grabbing an incoming email, and auto-replying with a Dropbox attachment, all the way through to multi-step, multi-path, multi-vendor processes spanning your entire organization. Remember, No Cliffs.
Personally, I think the best place for a mid-sized business to start is with PowerApps. A low-code way of building simple to sophisticated apps, that are highly specific to your unique needs. If you want a head-start, check out RapidStartCRM. PowerApps can of course leverage Microsoft Flow, to supercharge your automation, all with no developers required.
Once you have started collecting data and information with your applications, you may want to start adding a layer of intelligence over it so you can really get a tight handle on what's going on. This is where Power BI comes into play. Another low-code capability for gaining insights into your business at a level you probably never had before.
No matter where you begin, you can add any of the other ingredients, at any time, in any order, to any degree. Went big with Dynamics 365 right out of the gate? You can easy add a simple PowerApp for some other department with simpler needs. Or the other way around, started with a simple departmental PowerApp, you can easily add Dynamics 365 Connected Field Service to that. Extending Microsoft Flow with a PowerApp, or extending a PowerApp with Microsoft Flow... all possible, and easier than you think.
The big pivot, that really opened up all of this possibility, was the introduction of the "Common Data Service" (CDS). For most of you, this will be invisible, kind of like the engine in your car. But it is this Azure powered substrate that sits under everything I mentioned above, that lets you effortlessly snap in additional capabilities, and provides this "No Cliffs" evolution. While you don't have to even think about it, it is Microsoft's not-so-secret super sauce, that has competitors either worried, or wanting to join the Microsoft Party.
As I re-read this, I am realizing that I am sounding like a Microsoft Stooge. Really it is just my excitement with the possibilities overflowing onto this post, maybe as a result of my recent Summit attendance and an even further crystallization in my head of the possibilities. I promise, I'll get back to poking Microsoft in the nose... when and if, they do anything that deserves it.
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At the recently concluded MVP Summit, Mark had the opportunity to lob his "D365 is Dead" grenade at Charles Lamanna for reaction. Charles seemed legitimately puzzled by the thought, and simply replied that "D365 pays for the entire Business Applications Team and Advanta campus". So... not dead.
I think we are a long way from knowing if Mark's assertion will prove correct. What sometimes gets missed, is the second part of his proclamation "... long live the Power Platform". Clearly Mark is placing his bet that the fairly new ability for users and developers to build apps directly on the platform, will eclipse the long-standing App offerings from Microsoft, that are built on the same platform.
If anyone should be agreeing with Mark on this one, you would think it would be me. After all, we were one of the first ISVs to shift our applications from above the first-party apps, to under them. Our focus is 100% around building on the platform, avoiding the first-party apps entirely. We went "all-in" on the platform. Do I think this motion will overcome the First-Party apps? I do not. It is also not a goal or desire of mine. I don't see it as a zero sum game at all.
There is no possible way that my relatively small team is ever going to build a more sophisticated sales application, or any of the other first-party apps, on the platform. You are talking about a vast repository of development and refinement, created over a very long time, and the hits keep coming with AI and Mixed Reality, etc. I hear some people try and compare on price in a sales conversation, that the platform license is a third of the cost of the plan! As though they discovered a coupon to get the same thing for 66% off. But, they are far from the same thing.
Clearly, sales of Dynamics 365 Apps are growing significantly YoY, and customers are not buffoons. Many have complex needs that can only be practically met by the power of the first-party applications. Is a partner really going to build their own Connected Field Service app on the platform? Force.com did not eliminate Salesforce's Sales, Service or Marketing clouds, in fact, it was the opposite.
The real genius of Microsoft releasing a platform license, was to grow the entire pie exponentially. As opposed to taking away from the first-party apps, I think apps built on the platform, by partners, ISVs or Citizens, will actually drive more first-party app sales. This is happening through two movements.
I don't have actual figures, but anecdotally, from my own experience, I think it's fair to say, that well over 50% of all organizations, from SMB through Enterprise, are still using Outlook and Speadsheets. Most organizations have not even made the move to a legitimate Business Process Application of any kind, and instead torture Excel. I worked with one Fortune 40 company that was using Outlook as a CRM for a 15,000 person sales force. Does this company have the need and budget for a sophisticated application like Dynamics 365? Obviously. Would it transform their business? Clearly. Are they eager and ready to jump into an enterprise-grade solution? Often not. Could a simple business application be built on the platform, that would be significantly better than Outlook and Excel? Absolutely. Is that a net new customer for Microsoft that they would not have gained otherwise? No Doubt. Should I continue asking and answering my own questions? I think not.
The Microsoft Bizapps ISV community is growing, maybe not as fast as they would like, but the momentum is there. Many ISV solutions were built on top of, or depended on items in, the First-Party applications. These would be the ones that fall into Guggs' patterns of "Extend" or "Connect". Many of these offered significant enhancements to the D365 Apps, others built their own end-to-end features on top of the first-party apps because that is what they had. So the second movement I see, is for certain ISVs to decouple their dependencies, and relaunch underneath the First-Party apps. This reduces the license cost to their customers, greatly expanding their addressable market, which again grows the whole pie. If a solution does not need anything from the First-Party apps, there is no need to price limit your market by sitting on top of it, if it is not necessary.
Both of the above movements, will significantly expand the total addressable market by a factor of [insert big number here] . Will they siphon off some potential first-party sales? Sure, but they will also introduce a ton of customers to the Microsoft Business Applications Platform. A customer who starts with some departmental need filled by a custom PowerApp, and has a good experience, leads to more investigation by the customer. I have directly witnessed, with our own entry-level solutions, customers who then moved onto to add the full first-party Sales, Marketing and AI applications. This was not going to happen without an easy entry point. In fact, I feel comfortable saying that close to 100% of our customers, would not be using Microsoft Business Applications at all, were it not for the options we made available to them.
I know that the Bizapps leadership gets it. I know that the PMs who have P&L responsibility for the First-Party apps, do not get it. Right now, there are only two barriers to explosive growth. The first is artificial, first-party protection schemes. The second is prioritization of the tools and programs required for these motions to flourish. I also know that both of these barriers will be coming down very soon.
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It seems that whenever Microsoft announces a "new" way to do something, they are hesitant to say the the "old" way will be eliminated. "We have no plans to deprecate the old way in the foreseeable future". In reality, they can't wait to pull the plug on a whole slew of inefficient, or misaligned things; but they can't grab their customers' legs and swing them back and forth like rag-dolls either. Or can they?
It's no secret that Microsoft is the final stages of snapping all online customers onto a single version of the product. With rare exception, most of us are already there, whether you knew that or not. This is the best place for Microsoft to have us, and for 99.9% of us, it is the best place for us to be. Why is that not as scary as it sounds to people who are slow movers? Because the old things, that have been replaced by new things, are still there. When will they be removed?
It can't remember exactly how long ago it was, that I heard Ryan Cunningham say in response to a question from an audience, that something will happen "In the Fullness of Time". I can distinctly remember trying to deconstruct that phrase; was it a month, year, decade? It was such a brilliant response, I adopted it for use with my wife and kids. When my wife asked when we could get a puppy, I replied "In the Fullness of Time", with a wry smile. Turns out, it equals exactly three days.
One of the awesome things about being an MVP, that I share with my fellow MVPs, is the ability to see into the future... in chunks. The fuzziest chunk is the 2-5 years out chunk. As MVPs, there is an expectation that we are all smart enough to "get it", so of course we all nod knowingly as we are being exposed to the distant future state. In reality, our brains are all scrambling between excited and terrified as we try to wrap our heads around things we never thought about. I'm pretty sure the team knows this, as there seems to be the occasional unnecessarily long pause for effect. I did take a look around the room for a two-way mirror that the team might be cracking up behind, but did not see one. It is reassuring as a partner, to know that the team is thinking that far out, but in today's world... 2 years is a long damn time.
The upcoming release vs. the one after that. Let's face it, at any point of time, there is an upcoming release. As soon as it lands, the next release is now the "upcoming" release.. every six months. As a partner, your highest focus is always on the upcoming release. As a partner you are, or should be, in a continuous state of preparation. If you are not, you will be replaced by one who is... it seems Darwin was correct. As we are being presented with things that will be in the upcoming release, vs. what got pushed to the next one, it is an odd mix of "Awws" and "Yays". Since the release notes are now released 90 days before the release, there is a 3 month window for surprises. The best surprise is that stretch goal, that was not listed in the notes, that suddenly appears. Of course there is also that occasional listed item that lands, but not exactly as we had hoped. Yet, all clearly within the doctrine of ITFOT.
The most critical chunk, is actually the present, which, not that long ago was a future chunk also. But now that chunk has landed. If it was a new "way", then it landed next to the historical "way" chunk... if it was a new "thing", it landed by itself. Even though we may have known it was coming, and had time to test, play and prepare for it, often we are still caught unaware... like we forgot. It's like sobering up real fast, when the blue lights flash behind you, when your customer asks, "Hey, what's this new button do?".
I wrote a ISV focused post a while back on Ryan's Five Things. This was based on a response from the Business Applications Chief Traffic cop, Ryan Jones when asked about what ISVs should focus on. Turns out it was from his own playbook for how Microsoft is running the Platform today. Ryan and his team may be the most important cog in the entire Business Applications team. Their job is not coming up with the newest whiz-bang feature, rather their job is making sure it will work efficiently, and reliably for end customers once it launches. I get the feeling that Ryan says "No"... a lot. This was not the case in the not too distant past. Less than two years ago I wrote about what seemed like a strategy of punching customers in the face... a strategy Ryan has clearly obliterated.
Okay, so I know I veered off of the topic quite a bit, and I don't want to be accused of link-baiting. So this Common Data Service thing... yeah, it's pretty big. I will unpack it in a future post, but now I need to prepare for another week of firehose drinking at the Partner Advisory Council meetings... then can I go home?
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We are in that fuzzy time, between something "new and significant" being launched, and the world understanding what it is, and what it means. Many customers are still saying things like, "I don't want this new Power Platform, I want Dynamics 365". Of course, Dynamics 365 runs on top of this "new" Power Platform. While confusion remains, I have covered this in other posts, so the "confused" obviously have not read them. For this post, I am more interested in the Developer's Dilemma.
Lately, Microsoft has been using the term "Citizen Developer"... a lot. To listen, you would think that any boob could build an enterprise grade application in an hour. That may be the case in the future, but we are not quite there yet. However, we are at a point where a technically inclined, non-developer, who understands their business, can indeed get quite far, all the while thinking that C# is either a musical note, or some kind of cheese. So what is the current, and future role of that hard-core developer in this equation?
Even though more apps are now being built by non-developers, most of them will hit some deep water at some point. That deep water is about a mile further out than it was just two years ago, but eventually they will reach it and either settle, or engage a developer to help paddle through it. But they got a mile further before having to do so! That's a mile of work that previously would have kept a developer busy... and the deep water line continues to move out.
Not anytime soon, but I can see the need for advanced C# developers fading over time. On most partners' benches, these are among the highest paid resources. It is because of this, that the off-shore industry was born. But as the need diminishes, and the opportunities become scarcer, rates will come down, and never go back up again. This spells long term trouble for both on-shore and off-shore companies focused on deep development.
I was chatting with my good friend and fellow MVP, Mark Smith (aka @nz365guy) the other day. Mark has been around development for decades. He suggested that all code is logical. At the end of the day, all code results in 1s and 0s. It's not emotional, it's not creative. Mark feels that in the not-too-distant future, code will be written by AI. I can't come up with a single reason to disagree.
So, if the world continues to grow... a given, and platforms like the Power Platform continue to evolve in the direction they are... another given, what skills will be needed? Whenever I have looked at complex things built by coders, one thing always stands out to me: it's some ugly shit. In a world where UI/UX trumps functionality, the world that we have been living in for some time now, it seems the future needs are clear. Business Analysts and Front-end Developers will be the coveted skills. BTW, Mark is with me on that one.
The tools of the Front-end developer trade, are currently the tools that will become even higher in demand than they are today. I'm not saying that we won't need that occasional bit of complex code to accomplish some thing, but that box keeps shrinking. Far more important to me, and customers, is the UI/UX we engage with. We don't really care, or appreciate, what goes on behind it. Just like everything else, UI/UX tools will continue to evolve also, and at some point that skill set may be in jeopardy also.
If you abstract out the developers, both front-end and back-end, what is left is the business logic and process. I have always found developers to be lousy analysts, they work with the other side of the brain. But those people who are able to dissect a business, really imagine all of the components of it floating in the air, see how they connect, see where they fail and can improve, from the front all the way to the back... they will be the kings. And they won't need to know a lick of code. Of course the Business Analysts I have known, are not UI/UX capable, they take more of an "I'll know it when I see it" approach, rather than a "Here's what it should look like". Couple a good analyst, with a good front-end developer, and you can rule the world
Microsoft sees it. So do the other major players, but Microsoft has a unique set of assets to actually seize upon this. The "Power Platform" is the tool-set that is rapidly evolving to fulfill this exact scenario. I don't know if Microsoft actually coined the term "Citizen Developer", but they have taken ownership of it, just like they did with "Cloud", which contrary to what you might hear, Microsoft did not invent. But unlike Cloud, this time they are not late to the party... they are right on time.
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When asked about what ISVs can do better in working with Microsoft and AppSource, Ryan said Microsoft focuses on five things.
Depending on whether you are "Build", "Extend" or "Connect", these may have slightly different meanings to you. If you don't know what Build, Extend or Connect are, read this post. Let's dive in a little deeper on these five things.
Like I said, this seem like a twofer, and really feels more like a Connect track issue more than the others. If you have an external service that your solution connects to D365, then obviously you will want to make sure you have provided for redundancy in the event something happens, so your users are not suddenly without your wonderful value-add. In addition, you will need to stay on top of changes to Microsoft's end of the platform, to make sure your solution continues to connect, day in and day out, to delight your customers.
For a Connect ISV, you need to make sure you have enough capacity to scale and handle whatever may come your way, without bringing your solution, or D365 to a crawl. For all ISVs this is an important consideration. Poor performance can come from many different things, but the result is that your customers suffer with a bad experience. In addition, poor performing code could put unnecessary strain and cost on Microsoft's end, which may cause you to be removed from their Christmas Card list. Microsoft recently launched the Solution Checker to help you identify performance issues. You can read about it here.
We know that Microsoft is maniacal about security. It is a competitive advantage that they do not plan to put at risk. ISVs are a weak spot in their defense. I have seen apps in AppSource, that request you provide tenant admin credentials into a form displayed in an iframe. Seriously! Microsoft has started to focus on this "hole" more, and I expect that to tighten up significantly. It is not enough for them to waive responsibility for your app, they need to ensure that your app is not creating a security doorway.
There are certain ISV apps that continuously generate support issues for Microsoft. You do not want yours to be on that list. If it is, you already know it. Deprecated code is probably the main driver of lack of supportability. Fortunately the Solution Checker and AppSource Pre-Certification tools are here to help you identify these issues. Many of these issues will also cause performance issues, so you should fix them. Microsoft has not yet launched a tool to automatically fix your crappy code, so for the foreseeable future, you will need to crack it open and do it yourself.
This one is getting tougher to keep up with. Things you built a particular way, only a year ago, are not necessarily the most efficient way to do that task today. Some thing that you wrote 500 lines of code to do, might be accomplished with a checkbox today. This is particularly true for legacy ISVs. If you have not touched your solution in the last 6 months, you are already out of sync. And we both know, many of you have not touched your solutions in years. If you did, it was just patching it up to keep working, so today you have a real house of cards. Efficiency is not even a consideration.
Up until now, Microsoft has been more than forgiving of ISVs and Customer solutions that fail on one or more of the above five items. But that is neither scalable, or supportable as we rapidly move towards a single version of the product. Microsoft has tried the Carrot approach, and that has worked for a portion of you, but now it is time to switch to the Stick. I expect Microsoft to get much more aggressive around solutions complying with these five things soon. Consider yourself warned.
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In this fable, the Emperor is convinced that his new invisible clothes are "awesome", and as he walks naked around his kingdom, no one dares say otherwise. It reminds me of when I hear Microsoft attempt to calm the fears of GP partners today, by telling them that their platform is not a target for elimination. I'm not sure if the SL partners are even hearing anything.
Over the last month Microsoft has been trading places with Apple as the world's most valuable company. The difference is Apple's growth rate is declining, where Microsoft's is increasing, so it won't be long before they "own" that spot. The way they got there was with the Cloud, starting with Office 365 eventually overtaking every other productivity application on the planet. Right on it's heels was Azure, from nowhere to neck and neck with Amazon as the largest cloud infrastructure provider on the planet. Next is Business Applications and the Power Platform. Given the success Microsoft has seen with cloud, do you really think they are going to continue to invest in, and support on-premise technologies for long?
The Hybrid story feels like making lemonade out of lemons. The fact that Microsoft can support you both on-premise and in the cloud is an advantage today, only because of laggards that have not moved to cloud yet. For some, it is a good story today, but that story will not be needed for too much longer. One of Microsoft's biggest on-going motions, is moving their on-premise customers to their cloud, once they have enough of them over there, the Hybrid story will fade away.
In Poker, a "Tell" is something that a player does unconsciously, that an astute opponent can spot, that telegraphs their position. Back at the Directions NA conference in Orlando in September of 2017, Marko Perisic stunned the audience by saying something along the lines of "Tenerife" will become a white-label only solution. Again, with no dog in the fight, I wrote about it at the time, which started a shit storm. It was later that I learned that this concept was also being floated at Inner Circle, an NDA environment, at the same time Marko was speaking, at a public event. I don't know this for a fact, but I think Marko saw the writing on the wall and spoke out of turn, intentionally to rally the NAV troops. What was the writing he saw? I think he saw Phillips looking at all of these ERPs and thinking out loud, "why do we need all of these?" Shortly after, Microsoft walked all of this back, which I wrote about here. It seems Marko was at least temporarily successful in thwarting this idea.
Marko recently announced that he is leaving Microsoft. Again, I have no knowledge, but I am guessing he was asked to leave. Tenerife, now Business Central, the cloud version of NAV, was brought under Muhammad Alam, the PM for F&O, the cloud version of AX. This is interesting. While for small or large customers there was clear distinction between the platforms, for customers of a certain size in the middle, Business Central and F&O competed. They both now fall under one leader...
CDS 1 gave way to CDS 2, which was the existing XrM platform that sat underneath Dynamics Customer Engagement. Smart move, one less database to deal with. Since that move, CDS has sprouted many more branches: canvas apps, connectors, flow, platform licensing, industry accelerators and the list continues to grow. I think it is clear that CDS is a big bet for Microsoft, and the biggest so far for the Business Applications Group. Most of this is a common codebase, as well as common data model riding atop a common database. But then here we got these two ERPs, each with their own codebases and schemas, that want/need to jump on CDS, in a "real" way. Imagine a Common Database Schema under both your CRM and your ERP? I would call that a Power Platform! But we're not quite there yet. For the time being we have some hacky "connectors/integrators".
Getting an ERP stood up fully, and directly on CDS is going to be a significant undertaking. Is Microsoft really going to do that twice, once for F&O and again for BC? Remember Phillips' first reaction when he walked in the door, "Why do we need more than one ERP?" Maybe we don't.
I got a lot of heat from NAV partners the last time I even suggested this. I get it, you built an entire practice around the product, and you have a bunch of happy customers, and it generates a bunch of revenue. The same can be said for GP, and I think you have to thank Marko's herculean efforts for NAV not following GP towards the path to exit. But the product champion has left the building. I had also heard that F&O would never work for anything but the largest enterprise customers, which I think was a hope more than a reality. We proved with RapidStart that a small customer could be successful with an Enterprise focused app on the Customer Engagement side, so I am sure it could be accomplished similarly with F&O.
I could be wrong, but I sense that F&O has a shorter path to standing up on CDS than BC does, and could ultimately handle a broader range of customer segments. If in fact BC has a shorter path, then maybe this flips, but still... only one needs to go down that path. The codebases will continue to be different but the data will reside directly in CDS with a Common Data Model.
To be honest, I don't really know what "Project Green" was all about. The best I can tell, it was an effort to merge several products into one. So to those of you who think I am tossing out a new scary idea, clearly this idea has been around since long before myself, or Phillips were involved with Dynamics. I don't now if the Project Green effort actually failed, or just failed to launch, but clearly as far back as 2003 Microsoft was questioning the need for multiple ERP solutions.
The white label idea, that was proposed in 2017, was not a bad option for attempting to keep the partner and customer base, while pulling NAV out of the mainstream D365 effort. NAV Partners did not agree, and blew up the phones over their potential loss of the D365 brand. With Marko leading the pitchfork wielding base, James clearly decided to save that fight for another day. Is that day coming soon?
The huge opportunity still exists for an end-to-end, fully connected enterprise solution, that spans Customer Engagement and a single ERP, all of which is extendable by citizen developers using the Power Platform. No other vendor has grabbed that brass ring yet, and Microsoft is reaching for it. How does more than one ERP solution make that easier to get to? It doesn't. Back in 2017, there were still a lot of things to sort out with CDS. Today, most of that is sorted, and I expect to see Microsoft focus hard and put the pedal to the metal on it.
The last time I wrote about this, a bunch of NAV partners said things like, "You suck, you're wrong, I'm unfollowing you". They were at least temporarily right!
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Unless your business requirements happen to fit exactly into the out of the box first-party applications, a circumstance so rare that I have never seen it, Solutions are going to come into play. They serve a few purposes, for Customer deployments, a Solution is where you, or your Partner, should do your customizations to make the product fit your needs. While many will just use the "Customize Button", which will then allow you to make changes to the "Default" Solution, I am not a fan of that. It may add a step or two, but making your customizations in a new Solution of your own will make managing them a lot easier over time. There is another reason for this approach that I will get to in a minute.
Solutions are also the primary vehicle for ISVs to get their IP into your environment in a manageable way. Either by directly installing them, or installing them via AppSource. Whether it is a custom vertical solution built directly on the CDS platform, or an addon solution extending the First-party apps, Solutions is how they will get in there.
If you were to crack open a typical solution, you would see a lot of stuff. That stuff could have been put together by a highly skilled Business Applications Developer, or a Citizen Developer who is an expert at Googling. Needless to say, the quality of the Solution will vary widely. Just because something works, does not mean it was built well. Working in the App Designer, a citizen developer can't get in too much trouble, Microsoft has abstracted some of the more complex capabilities away. You may build something that does not work, or is not efficient, but you "should" not have to worry too much about breaking anything.
While Microsoft came up for a term for the Citizen Developer, I did not hear a term for those of us who are expert at this, so I am going to call us Pro Developers. Pro Developer sounds highfalutin, but actually the quality of build varies just as greatly there. The fact is, that anyone can hang up a shingle and call themselves a Pro Developer... how would you know. Sure there are certifications and competencies, but as many freelancers pointed out in this post, that does not prove expertise. Well Microsoft has couple of new tools to help.
The PowerApps Solution Checker is a new tool that will be available to both Citizen and Pro developers soon. This tool, when installed on your instance, yes it is a Solution also, will activate some capabilities for you. Once installed, you can go to https://web.powerapps.com, open up your environment, select an "unmanaged" solution that you, or your Partner are working on, and click "Go". That Solution will be run through a battery of tests, resulting in a pretty thorough report about the quality of what was done, along with areas for improvement. Shingle hangers beware. Using this report, you can go back through and modify an unmanaged solution, and keep rechecking it until it is snug as a bug in rug. Nice! This is also why you should consider creating an unmanaged solution for your customizations instead of modifying the default solution.
Sure, ISVs can use this same tool to check their Solutions in development, but ISVs have an even more robust tool at their disposal. The "On Demand Code Analysis" pre-certification tool. This tool is available to ISVs who plan to publish Apps on AppSource and is a more robust version of the PowerApps Solution Checker tool. With it, you can test Managed Solutions.
For customers, you should ask your Partner to run the PowerApps Solution Checker on everything they do, and provide you with a clean report as part of your exit criteria. It is probably the only way you can know if they customized your environment correctly, or just built a house of cards for you to maintain.
For legitimate ISVs, this should be great news! We all know that AppSource is currently loaded with a bunch of crap, hacked together by who knows who. Many Apps in AppSource will not even install today. After a few tries by a customer, the whole of AppSource gets a bad name, and your solution by association. Microsoft plans to fix that. As of now, Solutions that cannot pass the pre-certification tool, cannot be published to AppSource. This should significantly improve the quality of Apps in AppSource.
Next step is to run all the existing solutions back through pre-certification and remove all that fail. Which will be many. The good news is that your quality ISV solution will be more easily discovered, now that it is not sitting in a huge pile of crap.
To be fair, many of the existing Apps in AppSource worked fine at one time. But with the continuous, and significant upgrades to the platform, they don't work any more. Many fly-by-night ISVs could not be bothered to go and update their apps, or even remove them. That should be rectified soon. I have also been told, that as changes are made to the platform, the pre-certification tool will also be updated, and Apps will have to get "re-certified" on a regular basis. This is a major step in the right direction for AppSource, and may help lead to it becoming what we all hoped it would be.
If your AppSource plan was to build shit, and throw it up there just for lead generation... you will need a new plan.
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Yes, I am aware that I have written much about AppSource in the past, in fact, exactly 18 posts. In many of those posts I said something along the lines of "Now is the time to get onboard with AppSource", and I am about to say it again. I am familiar with the story of the "Boy who cried Wolf". So how is this time any different?
I am keenly aware that when it comes to Business Applications, AppSource, and the larger OCP "Sell-With" motion, have not lived up to our expectations... okay, it's been a shit show. ISVs, some possibly at my encouragement, have gone down the path and invested a lot of time and money, for little or no result. So why would I have the balls to even suggest you look at it again?
Looking at the primary competition in the business applications space, Salesforce.com, it is hard to argue that ISVs are not key. AppExchange is a major driver for Salesforce's success, just like Google Play is a major driver for Android and the Apple Store is a major drive for iPhones. If your goal is to be a platform company, then ISVs are the only way to ever get there. Microsoft telegraphed their recognition of this not long ago, with the hiring of the now late Ron Huddleston, the purported "architect" of AppExchange.
Ron skipped right over the low-hanging fruit, and instead aimed straight for the top of the tree with the One Commercial Partner program (OCP). Ron was not a guy who wanted to fix things, he wanted to re-invent them. He put all of these vaguely defined, not fully bought into plans, for OCP in motion towards a big fuzzy goal, and then left the company long before the goal was achieved. When Ron departed, the reins of all of those motions were let go, and the meandering began. It's not like ISVs had a clear understanding of what Ron was doing in the first place, he was one of those "Trust me, it will all make sense in the end" kind of guys.
If you are a Business Applications ISV, I think it clearly has not been a success yet. But we are not the only players in AppSource or OCP. Azure partners are in there also, on the other side of the wall. I am not sure who picked up the dropped reins on the Azure team, but they are blowing the lid off of it. Azure ISVs via AppSource or OCP Co-Sell are seeing every bit of the success we had hoped for. So... it is working... just not for us. Why not?
Up until now, AppSource and OCP efforts for Business Applications have been driven by a smattering of people on the team, each with a very narrow slice of responsibility, and little or no authority to do very much. There was a lot of shoulder shrugging going on. Many of the dropped reigns were laying on the floor. Some of the people on this team have responsibility for recruiting new ISVs to this dysfunctional platform. I assume James Phillips is the one we can credit for reaching out and asking for a "Fixer"... and his wish was granted.
Steven Guggenheimer (Guggs), is a 25 year Microsoft veteran, and has been a Corporate Vice President for at least the last 10 of those. For us, he is a "Fixer" who has been brought into the Business Applications group to fix the ISV business for James. I have certainly heard his voice echoed before over the years, like hearing a battle cry from the leader of another group, down the hall from ours, but he was never engaged with our teams. Where I was previously betting on a concept I believed in, now I am shifting my bets to the man who might finally make it happen.
As content is being throw at you rapid-fire at these PAC meetings, there is an assumption of NDA. Occasionally, someone will ask if some particular item can be publicly shared. It becomes hard to remember which items were green-lighted for sharing, so I seldom share anything. But one item was clear, and that was around a new high-level taxonomy for ISVs. Up until now, we were all just ISVs, which meant you had to level-set with everyone at MS where you played. We now have three high-level buckets, "Build", "Extend", and "Connect". You may have solutions in more than one, but each solution should mostly fit into one of these 3 buckets. Saying "I am an ISV on the Build track", should shorten your conversations in the near future. So what exactly are these buckets?
"Build" refers to a new type of ISV, one who builds on the CDS platform, without using any first-party apps. Our RapidStart CRM was the first end-to-end solution built on the "Build" track. Needless to say, I am a big believer that this new motion will be huge for Microsoft and ISVs.
This is probably one of the largest tracks, and includes ISV solutions that were built to run on top of one or more of the first-party applications. I think we will see some of these "Extend" solutions, transition over to the "Build" track over time.
Connect is for ISVs who have external IP that "connects" with either Build, Extend or first-party solutions, for example: DocuSign or InsideView.
Like I said, I lost track of what we could and could not share, but there is a lot. Guggs has been given a mission, he has the track record, he has the authority, he has the support, he knows how to navigate Microsoft, and he is in-charge. He seems like a "no-nonsense" kind of guy, who already is grabbing up the loose reins.
So is now finally the "real" time to jump in? At the risk of crying wolf again, I say Yes... again.
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We were recently engaged in a P2P scenario, where a partner had quoted a fixed price to their customer, to perform some work that they needed our help with. We were engaged by the partner on a hourly basis to perform this work. The project turned out to be significantly more complex than the partner had imagined when they quoted the fixed price. Sure enough, our hourly cost to the partner ultimately exceeded their fixed cost from their customer. This was a cost mismatch that was unfortunate for that partner.
While Microsoft aspires to the "One Microsoft" story, they fact is that there is not "one" P&L. Each business group has it's own P&L, which is necessary for Wall Street and many other reasons. When one Business Group uses services from another Business Group, they are not free... they get a bill, just like we do.
With version 9 of Dynamics 365, there was a lot of hoopla about the legacy CRM database moving to Azure. It was going to be so much better, more scalable, faster, etc. And it was indeed all of those things. But there was also one new wrinkle. The Business Applications group was now going to receive a bill from the Azure Business Group for all of those spinning servers and storage services. Azure is sold on consumption, but Dynamics is offered on fixed licensing. Sounds familiar to my P2P story.
I agree with Gus that having a 50 record aggregation limit can occasionally be an issue. While Gus feels his customer might be willing to wait an hour or two for the results of a million record aggregation to be complied, that is going to spin the Azure meters like crazy. That customer with a need for a million record aggregation, is paying Microsoft the same amount per user, as customers who never exceed 50K record aggregations. But Microsoft's COGS could potentially eclipse the revenue that customer is paying. This is not a good spot, it is a mismatch.
One way to fix the mismatch, would be for Microsoft to change the way they offer Business Applications from Licensing to Consumption. In a consumption based model, there would be no need for any limits, on anything. The customer could spin the servers, and save as much data as they wanted, as long as they were willing to pay for it.
Some of you may recall my battles with the Dynamics 365 for Marketing initial Licensing scheme. What I was really lobbying for was a consumption model. We ultimately landed on a workable compromise, which is kind of a quasi-consumption. I recall, one of the obstacles to going to a straight consumption model was "That is not how any of our competitors offer this". I was of course thinking that was exactly why we should do it.
Let's imagine that you are renting an apartment. You have a fixed monthly rent amount (License), but your electric bill varies (Consumption). While I cannot control my rent amount, I know I can control my electric bill, turn off some lights, adjust thermostat etc. When I go out of town for a month, my electric bill drops way down, but my rent does not. Imagine if instead of paying a fixed monthly rent amount, there were thermal sensors in the apartment, and was only charged rent based on the number of hours someone was in it. I would not pay any rent for my two week family vacation. Would people buy that? BTW, Microsoft IoT would be a great choice for any landlords considering this approach.
This is not unique to Microsoft Business Applications. Netflix charges a fixed fee to customers, but pays Amazon on consumption. When everybody started sharing their Netflix login with friends and family, Netflix was getting hammered, so they introduced limits. The opposite is also true. The licensing prices for Microsoft Business Applications are based on some formulas of typical usage. Some users are above the range, but those below, are in effect, subsidizing those above. Same as how skinny people offset the fat people at a Chinese buffet. The risk for the buffet owner is the local chapter of the "Society of Obese People", picking their place to meet. The recent exploration of changing the way Microsoft charges for instances and storage was an attempt to level this out. Microsoft temporarily stepped back from the consumption based storage model, but what if they came back to it... with everything?
Imagine that everything under the Microsoft Business Applications umbrella shifted from licensing to consumption. Use whatever you want, as much as you want, with no limits. No figuring out what licenses users need, instead maybe you stick meters on roles. It would not have to be tied directly to Azure consumption, but some sort of metric(s) that go up and down based on usage. Logins, record views, number of records in an aggregation, etc. If a customer closed the plant for a month for the holidays, their cost would be near zero. When they ramped up activity for back to school, their cost would be higher. A direct relationship of use vs. cost. No one subsidizing anyone else. Could you sell that?
Yup, I hear this argument. "Customers will always want to know exactly how much it will cost!". I think that is an assumption many are making on behalf of all customers, that has proven not to be true for other things. One of the fastest growing services on the planet today is Microsoft Azure, with no fixed cost. Azure sits right next to another service, from Amazon, that also has no fixed cost. Both of those tools have "cost estimators", which is as good an idea as you're going to get. It appears obvious to me, that customers are more interested in paying for what they use... or at least the "skinny" customers.
If the cloud is, as Gavriella Schuster put it to me recently, the "Fourth Industrial Revolution", then consumption models will be the fuel. By the time your high school age children, have children of their own, this will be the norm.
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I have been spouting off quite a bit lately, about the evolution of Microsoft Business Applications, and partners needing to get up-to-speed. No small topic to be sure, and one that will be crucial to Microsoft's success with growing our mutual customer base. What I have not spoken about as much, is the view of all of this massive "change", from the existing customers standpoint. It seems they are not nearly as excited as we are.
But I'm allergic to shellfish! The concept of keeping instances current, and ultimately everyone on the same version, has clear value to Microsoft and its Partners. With the rapid advancement of the platform, supporting old versions is just not an area where any of us wants to invest our precious time and resources. I mean, we're in a damn race here... against... well... everybody. For new customers, the "story" looks pretty amazing, for existing customers... not so much.
When Microsoft launched Dynamics CRM Online back in 2011, a fair number of customers jumped on the bandwagon. The growth trajectory has been pretty steady since. Customers paid us, and other partners, a lot of money to customize their instances to fit their needs over the years. But I don't know that enough of them grasped the difference between on-premise vs. SaaS, beyond the subscription vs. perpetual cost aspects. I don't think they fully appreciated what "out of their control" means. Many customers invested large sums of money, building mission critical applications, on top of a tectonic plate. This is not a Microsoft issue, it is a SaaS issue, and the entire world is racing to SaaS as fast as they can. Businesses today, will need to have flexible knees.
You know that feeling you get, when you see the new model of your 3 year-old car, at a stoplight? Wow! They completely redesigned it! It looks so modern; faster and more powerful, yet with better gas mileage, and the new tech they added is incredible. Suddenly looking back at your car, it seems like a piece of shit, even though you were perfectly happy with it.... yesterday! That's it, I'm trading it in on a new one. But wait a minute, I am upside-down on mine... damn, I'm stuck. Maybe in a year or two... This is where a segment of on-premise customers are sitting today. They are envious of the features, but have not yet recovered their prior investments. It takes a pretty confident person to march into their bosses office and ask for more money, when they said "This is all we will ever need" the last time they asked.
That is certainly an option, and one that many are electing apparently. You already own the software, it's functioning adequately for your business, and you spent a buttload of money getting it the way you want... so why are Microsoft and your partner hammering you to move to the cloud all the time? Is there really a compelling reason? A reason that is compelling enough to jump from the static world of on-premise, to the continuous motion word of SaaS? It depends. Don't you hate when people say that? You just want a black and white, yes or no answer, but instead you get an "It Depends". Maybe we should review the pros of each, which also are mostly the cons of the other.
I have to give credit to several MVPs who helped me flesh out the above lists, Nick Doelman, Mike Ochs, Aiden Kaskela, Joel Lindstrom and Andrew Butenko.
Back to the topic of this post, as I think about it, there is obviously a cost to keeping current, but there is also a cost to not keeping current. Some of these costs have nothing to do with Microsoft, but rather are specific to your own industry, competition or customer expectations. For example, let's say that you and your primary competitor, are both using Dynamics on-premise. You hear through the grapevine, that your competitor is moving to the SaaS version. Would that concern you? I would venture to guess that your on-premise system aligns to the description often provided by the leader of the Dynamics Engineering team, James Phillips, as a "Forms over Data, reporting system". As long as your competition was limited to the same capabilities, no problem. But what if they add everything under the Pro SaaS column above to their arsenal? Uhoh! Maybe you want to explore doing this first!
Let's assume you are on the SaaS version... and for those that aren't, this will be a peek at what they get to deal with. Updates every six months. That sounds scary as hell! It is scary, and it is bumpy, but getting less so with each update. Updates bring new capabilities, and if you are on-premise you might not know what those are, but you don't necessarily have to activate them immediately. In theory, new "potentially disruptive" features and capabilities are off by default, so you should not have to worry about your users running around like the house is on fire every six months. I say "in theory", because some things will not be off by default, or they won't stay off indefinitely. Updates are probably the biggest issue that we all need to worry about. They will add some angst to your life every six months, even if they go perfectly smoothly. If they don't, then you will find yourself scrambling for a little while grabbing the loose wires and reconnecting them. You should also prepare to be frustrated, when Microsoft makes available a robust new feature in an update, that you just paid dearly to have custom developed. Maybe you can ask your developer for a refund.
The real price of currentcy, is "Change Management", a term that seems to have risen in prominence with the SaaS revolution. In the on-premise world, it reared its head every several years, or for some customers, once a decade. In the SaaS world it is now a minimum every six months, and maybe more often than that. "Change Management" is a bitch. The biggest appeal to moving to SaaS, are the promised gains in productivity, efficiency, engagement, analytics, etc., but none of those are automatically "realized", they are just made "available". In fact, Change Management is such a big topic, I think I'll save it for another post.
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In the cloud business applications space, Salesforce.com is sitting somewhere around a 20% market share, Microsoft sits around 4%. You have to wonder why Microsoft came up as a subject so many times at Salesforce's just concluded Dreamforce conference. You might think that it would be better if Salesforce co-CEOs Benioff and Block, just ignored Microsoft and continued to marginalize their efforts. But Microsoft is not "Joe's Software Company", they're freaking Microsoft! In the grander landscape, according the Forbes list of the worlds largest companies, Microsoft is #20, and Salesforce comes in at #856! Even if you have a 5x larger share of a particular area, you simply can't dismiss a competitor who is almost 43 times your size. If Salesforce is the 800-pound Gorilla in Business Applications, Microsoft is the 34,000-pound Elephant who is starting to pluck bananas off their tree. So who is the David, and who is the Goliath here?
Before Satya Nadella took over the helm at Microsoft, Salesforce really didn't have much to worry about. Nadella's predecessor was more interested in buying things like mobile phone companies, and the Dynamics business group was just one of many things in the stable. While it is true that Balmer sparked the charge to the cloud for Microsoft, it was Nadella who poured the gas on the fire. Guess what? Nadella was previously a Business Applications guy! Uhoh. Since the day Nadella took over, Dynamics started becoming a part of the conversation at Microsoft. He replaced the boobs that were running Dynamics with a proven leader, James Phillips. Today, Dynamics 365, and the more recent "Power Platform", is part of every conversation that Microsoft has with customers.
Sure, Salesforce can crow today. I too am number 1. I am the world's most successful, and most read, blogger... "who is named Steve Mordue". Salesforce's worst nightmare is Microsoft actually focusing on their space. Remember Lotus 123, or Word Perfect, they too were number one, until Microsoft decided they wanted to be there. Salesforce has stepped up the rhetoric lately, particular at their DreamForce conference with slides like this one presented to investors:
An interesting claim... "Most complete portfolio in the industry". It's looks to me, like in addition to ignoring Microsoft Dynamics 365 for Marketing, and Microsoft's Industry focus, they also conveniently left off a few dozen columns.
Amazon (Forbes #53) also landed in Nadella's crosshairs, and based on all of the trajectories I have seen, it looks like Microsoft may overtake them in the not too distant future. Salesforce has reason to be concerned. If #20 can cause so much disruption for #53, imagine what they could do to #856! And now the turret is swiveling around towards them. There is seldom a public comment made by Nadella today, that does not have Business Applications mentioned within it.
While Nadella has elevated Microsoft Business Applications in the grand scheme, the people that Salesforce needs to be the most worried about, are actually James Phillips and Alysa Taylor. These are the two snipers on the hill overlooking the Salesforce camp, and Nadella has authorized unlimited rounds for their rifles. After he took over and got the Azure pathway cleared, Nadella turned to Business Applications. As I said above, one of the first things he did was get rid of bumbling leadership, and install these snipers. Phillips has methodically cleared out all of the Keystone Cops under the prior regime, many of which are now at Salesforce. It is kind of ironic that Salesforce eagerly snapped up, and put into leadership positions, many of the people that Phillips determined were "not good enough". Phillips inherited a losing hand, but instead of playing it out, he just threw the cards away.
Let's face it, before the Nadella/Phillips/Taylor focus, Salesforce had little to be concerned about from Dynamics. It was more like a fly that occasionally needed swatting. The Dynamics BG looked a little schizophrenic, a bunch of random smoldering piles seemingly lit by tossing matches willy-nilly in hopes of something catching fire. Phillips and Taylor poured water on a bunch of these, and then strategically injected gas onto others. In addition, with a specific plan in hand, they lit whole new fires, and have been methodically concentrating all of this raging flame into a blowtorch aimed directly at Salesforce. Based on Salesforce's reactions, they clearly feel the heat.
There is no question that Salesforce has great products. There is also no question that for CRM, Salesforce is a better known brand than Dynamics 365. There is also no question that Salesforce has a huge following of loyal fans. But Salesforce has some gaps, and Microsoft is uniquely positioned to fill those gaps in ways that Salesforce could only wish to. For one, the relationship of Business Applications to Productivity Applications. Seriously... Quip? WTF is that? Salesforce's announced integration with Google apps, might have been a big deal, had Office 365 not blew past Google Apps like they were standing still, a few years ago. Einstein? A thrown together pile of first and third-party parts vs. Azure? Microsoft "owns" AI today, and their Business Applications are being plugged directly into that "universe".
One of the segments of the Business Applications market that Salesforce should also worry about, is the on-premise market. Obviously they understand the opportunity, hence their acquisition of Mulesoft. But when you look across the on-premise market for I.T. all up, Microsoft is the far and away dominant player. Where Salesforce has Cloud Business Applications loyalty, Microsoft has decades long loyalty in the on-premises business. Microsoft continues to shift this legacy cache of on-premise customers into their cloud, led by Azure and Office 365. There are also a significant number of legacy Dynamics deployments in many of these on-premise troves. Probably not enough to eclipse Salesforce's 20% market share alone, but they will make a significant dent. In almost every one of these cases, Microsoft is in competition with their own legacy, Salesforce is not even in the mix.
Facing the market leader, Microsoft has spent a lot of time "catching up" to Salesforce. But we are seeing a shift to tit-for-tat. Einstein was in direct response to Azure AI by Salesforce. Microsoft Learn is a direct response to Salesforce's Trailhead. Salesforce's "Flow" is a direct reaction to Microsoft's leading the charge for "Citizen Developers". Both companies are looking for opportunities to launch the "next big thing", but given the huge palette that Microsoft has to work with, they could soon be the ones that Salesforce spends all of their effort catching up to.
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This is the most common response I get, when I suggest to someone that they should share their opinions with Microsoft. Whispering to each other in the corners is not going to accomplish anything. If you have built a practice that is dependent on Microsoft, you have an obligation to yourself and your company to make yourself heard; and I have found that Microsoft is not just willing to listen, but is usually eager to hear! That does not mean that they will act on your particular suggestion, but as a Partner Led company, partner opinions are core to everything they need to accomplish. If they built some thing that no partner liked or agreed with, then no partner would sell it! In fact, Microsoft has significant motions in place to get this exact kind of Feedback, from the MVP Communities to Partner Advisory Councils, and more, including the Dynamics 365 Strategy Simulator.
You know those flight simulators that they train pilots in, so Microsoft has a secret one, 24 levels below a non-descript building on campus. What if James Phillips were to say to you, "Okay smart guy, you take a turn in our "D365 Strategy Simulator". Umm... it is one thing to voice an opinion about some particular aspect that impacts your particular footprint, we could all do that pretty easily. But that is only navigating for your practice, at the end of the day, even if a course could be plotted that satisfied every partners' viewport, it would crash and burn. While Microsoft may be Partner-Led, partners are not the customers. So, let's try that again, but this time, don't solve for partners, solve for customers.
So I get this email from Phillips, "Steve, we have identified you as an opinionated know-it-all, and wanted to invite you and some other opinionated know-it-alls, to spend a day in our Dynamics 365 Strategy Simulator. Be on campus this Friday at 5AM at bus stop #12452". So I arrive at exactly 5AM and there are already several other partners, that we all know very well. We all get on the bus, and the blindfolding process seems to take longer than it should, but we are eventually underway. After about 30 minutes the bus stops, and I can hear a big garage door closing. We are all led, still blindfolded, down a corridor and guided into an elevator, as the door closes, we are told we can remove our blindfolds. The elevator has only one button, and Phillips pushes it and we start to go down. The ride takes a full 3 minutes, but stops smoothly and the door opens to a cavernous room. In the middle of the room is a large capsule, with a door on the back of it, sitting on a bunch of metal arms and levers. I snuck a photo of it when Phillip's back was turned.
We are ushered into a small auditorium, and sent down two rows to sit, I am in the back row. The first problem is that I am sitting right behind James Crowter, and he's pretty tall so I have to crane my neck to see. I look to my right to see who is talking, when we are supposed be be quiet, of course... Joel Lindstrom. Anyway, on the stage stands Phillips, and right behind him from left to right are Marko, Param and some AX guy I don't know. Above their heads are three large monitors, side by side. Each monitor is displaying various data about a particular platform like pricing, structure, licensing, functionality, etc. From left to right the monitors are NAV, CRM and AX. As Phillips opens his mouth to speak, George Doubinski jumps up from his seat and says "I am the only real developer here... just saying" and sits back down. Phillips looks at him for a few seconds, and then continues, "Behind me you will see an overview of the items that you will be able to control in the simulator. Each of you will have full control over every aspect of these items". I hear Mark Smith say, just loud enough for everyone to hear: "Brilliant!". Then I notice that Marko is kind of tipping his head, and darting his eyes up, motioning towards the NAV monitor. Phillips catches this out of the corner of his eye, and turns to Marko, who smiles sheepishly and stops. Param rolls his eyes, but the AX guy didn't notice. I also see Alysa Taylor, over by the door, whispering to some guy I have not met before, his name tag says, "Hi, I'm Hayden". We will be taken, one at a time from here to the simulator, and Crowter goes first. He stands and passes Sarah Critchley, who I can see is laser focused on her phone, I lean forward to see what is so important, at a time like this, and see she is editing a new cat emoji.
About an hour passes, and Crowter re-enters the auditorium. I can't tell from his face, whether he passed or failed, and he is not letting on. Before I get a chance to lean in and ask him how it went, my name is called. "Right Now Mordue!" Ugh. Phillips leads me into the main room, and the door is opened on the back of the capsule, and a staircase unfolds. He motions for me to enter, apparently I was climbing the stairs too slowly, because he kinda pushed me over the last one, and then slammed the door shut. It is quite dark, just a red glow, enough where I can make out shapes. There's a chair in front of me that looks like Captain Kirk's Star Trek chair, and I circle around and sit in it. As I sit, a metal seat-belt comes out of the left side and crosses my stomach and clicks into the right side. I look at the armrests, and it looks like almost all of the padding has been scratched off, and even the metal underneath has what looks like claw marks. Suddenly, I am awash in bright light as three monitors fire to life, in the same orientation as the auditorium. Below each monitor are switches, levers and dials to adjust what is on them. Below the middle monitor is a small LED that says "Mission One: Solve for Enterprise". It flashes a few times and then says "Begin", I feel a slight jolt as the simulator comes to life.
Hmm, Solve for Enterprise... not my area of expertise, but I'll take a shot, because it doesn't look like I can skip it. First, I reach to the left, under the NAV monitor. I am remembering Marko saying that NAV can be used for SMB, all the way up to Enterprise, but most of the NAV partners I know, are not focused on Enterprise. I don't know AX that well either, but understand it to be a more complex product aimed at enterprise. So I turn off all of the NAV capabilities, and on the right, I crank up all of the AX levers. In the middle, where the CRM label has been crossed through with a sharpie, and Customer Engagement has been hand written below, I also start turning up levers. Field Service: On, Project Service: On, anything marked "Insights": On. A new monitor lights up below, that I had not noticed before, it is not very tall, but it spans across and under all three of the big monitors, and flashes CDS before showing a whole bunch of other dials, and I see a new set of levers below it. I flip them all on. I sit for minute... thinking... looking at the glowing green button on the right armrest labeled "Start Simulation"... I press it. I hear laughing erupt outside of the capsule, apparently the crew has seen this configuration before, I fear that I won't do well, but hey, this is not my area of expertise. I have no doubt that Joel will crush my score on this one. The capsule rocks around for a bit and then stops, all monitors go dark, the LED says "Simulation Completed". It did not say "Mission Accomplished", so I have no idea what happened, but before I can even think further about it, the LED flashes, "Mission Two : Solve for SMB".
Now we're talking, SMB is my wheelhouse. The three big monitors light up again, the same as they started in the first simulation. The first thing I do, is turn everything on the right (AX) side off. When Microsoft says SMB, I assume they are really meaning upper small to middle sized companies, as nobody makes any money on the 5 seat deals, so that is the lens I am thinking about. I look at CRM, ugh, I mean Customer Engagement next, as that is what I know. First thing, turn off Field Service and Project Service. My goal is to solve for the meat of the SMB market, not the fringes, so I go ahead and turn off Customer Service for now also. This is going to focus on Sales, the door that 90% of SMBs enter from. Insights? Too complex for most SMBs, at least to start, so I push those levers down, but not all the way. Appsource? Yes, yes, that one goes full to the top, SMB would rather buy than build any day. Plus, some of the enterprise features I turned off, will be filled by SMB focused products from Appsource. As I make adjustments, new windows appear, based on the selections I have made, a new one pops up in the corner now, it is labeled Business Edition in a crossed through font with a question mark next to it. I know that regardless of that they end up calling it, this is the simplified UI, so I push all of those levers to the top. A box flashes at the bottom of the window, "Do you want to change the default price of $40/user?", I check "No". I lean back, feeling pretty good about this configuration, I let me head loll to the left, and I am facing the NAV monitor. Hmm, NAV, I am not an NAV partner, but something is telling me that is is important for this simulation. I look down to the LED and it is flashing: "Create a branch of this simulation?" I think about this. Many customers that I have encountered in the SMB space have been looking for just a sales solution. Is that because they are not interested in an end-to-end solution, or because I do not know enough to offer one? If I did, and I offered it, wouldn't that give me an even stronger competitive advantage? I decide to create a branch of what I started and find out. I look at the NAV monitor... it does not say Tenerife yet, but that just came out and the guy with the Sharpie hasn't got to it yet. I see a lot of items on the screen that I do not understand, and the levers look foreign also, but I do recognize a few. One says SaaS on the top and on-premise on the bottom. I place it to about 80% SaaS, because I know there will still be some customers who are ignorant to the cloud. I tweak a few other levers that I really don't understand, but I need to move them somewhere, as I am sure the defaults are not what I want. I notice another lever that says "re-factor platform?" Looking down at the LED, I see that I can create yet another branch of the simulation from here. I press it. When I select "re-factor platform" for my new branch, I notice some new grab handles on the windows. I had just talked to Crowter the other day, and he floated an idea by me as a CRM guy, for my opinion. Hoping he did not notice the "Create a Branch" option, I am going to steal it and see if can beat him in this simulation with his own idea... I'm not proud. I take the grab handle at the top of the NAV screen, and drag the entire screen over to the middle one, and drop it on top of the XRM box. What if NAV were actually a CRM App built on XRM? That would take care of any integration challenges. I know we have CDS, but would this not be easier. One UI, a platform within a platform instead of next to it... I'm liking this idea, thanks Crowter, ya sucker. A box appears, "Do you want to change the default price of "TBD?" Hmm, this is a good question. Knowing that in the App model, different users could use different things, and I already accepted the $40 price for Sales only, I decide that for this NAV App a good price would be $75/user. It does not give me an option to create a price for Sales and NAV, but that may not come up that often anyway. I press the button on the armrest to start all simulations. The capsule rocks back and forth for what seems like a long time, and then everything goes dark again, just the red glow. Nothing is happening. The seat belt slides back open, so I assume I'm done. I stand and turn towards the door and it opens, I squint from the light and I see Phillips waving me out. He leads me back to the auditorium, and as I enter I hear, "Right Now Lindstom!"
As my eyes adjust, I notice Crowter sitting in front of me. I lean in and say "James, did you see the branching option?", and he says "what branching option?". I lean back and smile. Several hours pass, and finally everyone has returned to the auditorium. The last one to return is Chris Cognetta, he is backing into the room, still turned towards the simulator, I think he is explaining to the simulator crew how simulators work. It's quiet now, but I can hear George grumbling about a lever in the simulator that was sticking, and obviously not well designed. Marko, Param and the AX guy are nowhere to be seen. Alysa is still whispering to "Hi, I'm Hayden", and pointing at some of us, although I can't tell who. Phillips clears his throat, and says "Thank you for your participation, the crew will re-blindfold you and return you to the bus stop". Before I can stop myself, I blurt out "Wait!! Who won?", Phillips shoots me a glance, pauses, and says, "Hopefully, we all did".
As you can clearly see, Microsoft is extremely willing to take feedback from partners. The next time you see Phillips, Marko, Param, Alysa, "Hi I'm Hayden", or the AX guy. Tell them you want to crack at the Dynamics 365 Strategy Simulator. They will probably deny its existence, and I will probably get some serious heat from them for exposing it. But don't take no for an answer.
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One thing that Microsoft has always been, is trusting. Even in the on-premise days, which for many are still today, but that's another story, customers would sign a Volume Licensing Agreement. In that agreement the customer would obtain the right to install 500 licenses of Office, for example. This is what we call a "Paper License". In fact, with that Volume Licensing key, they could install a thousand copies, but the deal was that they would not. It was a trust thing, call it the "Honor System". This "Honor System" concept has no doubt cost Microsoft billions of dollars over the decades in uncollected revenue. Even though it eventually spawned the "Software Asset Management" process, the "Honor System" is hard-wired in to the corporate culture.
The problem with Honor, is that not everyone is honorable. This Honor System approach of course permeated the Business Solution side of the house as well. No doubt, Microsoft has been taken advantage of there also.
As the engineering and development team is firing off new capabilities like a Gatling gun, the licensing team is charged with figuring out how much to charge for these things. Part of figuring out what something should cost, is figuring out what it is worth to users. Sometimes you come to the realization that not enough users will agree to your idea of value, so an accommodation is made for a lower price version. But in order to get that lower price, we'll exclude a few things. This would not be an issue if those things were actually excluded from the product for that license. But that would require the development team to stop all that "envelope pushing and bar raising" for a while, and either build a specific version, or somehow lock down the current one to comply with this lower price option. So instead, Microsoft will draft a document (paper license) outlining what you can, and can't, do with this particular license, and rely on the historical Honor System. But we have already determined that not everyone is honorable.
I would assume that there are plenty of organizations that are knowingly and intentionally exploiting the honor system. They agreed to the restrictions on, for example Team Member, with their fingers crossed behind their back. I have no sympathy for them. But more often than not, the actual users of the products are not the people who bought them. Indeed there is a document somewhere, oh here it is, The Dynamics 365 Licensing Guide. It is pretty clear right there in Appendix A of this 52 page document what a Team Member can do. So who read this? Do the users have it? Most likely not.
You are a user in your organization. You have been issued a Team member license. Maybe I.T. explained a few things about what you can't do, and you're like blah, blah, thanks. You go back to your desk and start to use the product. Wait a minute... I thought I.T. said I could not create an Opportunity... but I certainly can. "Hey Dana, check this out, I can create an Opportunity". Dana: "I thought I.T. said we couldn't?". "I.T. is a bunch of morons, they don't even know how the product works! Make sure we tell everybody." "Will do!" And just like that, this organization is in severe breach of the terms of their licensing.
It's kinda Contracts 101. When you go buy a new car, and sign the loan document, who is responsible for payment, and maintaining insurance? You are. Granted, you signed a 3' long document that you could touch, feel and leave with a copy of. In the online world, these documents usually sit behind a hyperlink under a "Agree to Terms" checkbox. Regardless, the customer is ultimately responsible for making sure their users are not using things, in a way they are not supposed to, even if there is nothing more than an online document somewhere preventing it. The lack of technical "locks" places a huge burden on the customer. Microsoft understands this, and efforts are underway to provide these locks for the first time. Customers should breathe a sigh of relief. But will that be smooth?
Most Partners are up-to-speed, and take great lengths to ensure that their customers understand the limits. But a few are actually co-conspirators. Some partners would be happy to engage with a customer who plans to explicitly violate the terms of the agreement. "I won't tell, if you don't tell". Even worse, I have heard of some partners who knowingly sold customers restricted licenses, without letting the customer in on the rules. I have no sympathy for either of these partners either, although I do feel for the unknowing customers. Today, with CSP, the partner is selling the license to the customer, there isn't even a checkbox, the customer is oblivious. Who is responsible there? I would have to assume that the customer would get a pass there on past use, but now that they know...
Let's assume that Microsoft was going to spend the technical bandwidth to build locks, on everything. For those in compliance, it means nothing. But for the knowing and unknowing thieves, it shall be significantly disruptive. "Hey Dana, I can't create an Opportunity... must be a bug, are you able to?" "Nope" "Well, we're all creating Opportunities, what do we do?" Here's what you do. You either stop creating opportunities, because you can't anymore, or you upgrade your licenses so you can. "How much more is the license I need to create opportunities?" Minimum of 8X. "WTF?" Seeing as Dynamics 365 is already significantly cheaper than Salesforce.com, you should not have expected that your cost would be an eighth of that!
Microsoft is not an evil empire. They have known for decades that paper is not enough. They share some responsibility here. It's like I lent you my car to go to the store, I guess it's partly my fault for not specifying that I meant a store in my state. So I expect that when the time comes, everyone will have been given way more time than necessary to get into compliance. Although I, for one, will not bat an eye, if they decided to smash the intentional thieves and co-conspirator partners right out of the gate.
Imagine if Microsoft could snap their fingers and instantly have everyone in the world paying for what they are using. There is probably a higher ROI on that, than anything else they could do. But clearly, some users will ultimately be lost. The thieves will cancel immediately, and even some of the unknowing will have to cancel, when they can't pony up the 8X. The few Partners who built a business around this scheme will fold up their tents. Knowing Microsoft, they will provide an easier path for the unknowing customers to get into compliance than having their cost octupled immediately. But most will stay with the platform that they have now adopted. For some of their users, compliance will not be an issue, for others they will upgrade to the proper license. At the end of the day, I expect Microsoft's revenue to be up as a result. Which is one more reason they should take care of this sooner rather than later. My advice to customers, review the licensing agreement, then review your use of the product, if those two things are out of sync, fix it now, while you have the time to do it in an orderly fashion. So when the time comes, your business will not be disrupted, in fact, you will not feel a thing. If you are not sure, contact us we'll help you sort it out.
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It wouldn't be a post by me, if I didn't first take you down some long-winded path of how we got here, before I get into "here"... and this is a post by me. So we're going to go back in time, to the day before "Dynamics 365" became a brand. The product I am referring to was called Dynamics CRM Online. This was Microsoft's answer to Salesforce.com, a CRM that was Cloud from day one. I won't go all the way back to 2011, when Microsoft clumsily stepped into the ring with Salesforce. Those early bouts were too painful to remember. But even though Dynamics kept getting knocked down, they kept getting back up. From first-round knockouts, Dynamics persevered... progressively making it to three rounds, then five, then eight, up to the occasional draw. For the ardent battle watchers, Salesforce.com is still winning, but their corner must be concerned about the trajectory of Dynamics.
Microsoft was on an acquisition tear a couple of years ago. In a seemingly desperate attempt to shore up their weaknesses against the reigning champion, Microsoft bought a bunch of crap to bolt-on to Dynamics. Since most of these have gone down the drain, how is it that Dynamics is closer now to knocking out Salesforce, than ever before? It is actually because of Field One. Huh? Field One was a third-party solution that provided field service capabilities for Dynamics CRM Online. Were these "capabilities" the secret weapon? Not even close. But there was something unique about the Field One acquisition that ultimately led to a huge light-bulb going off that changed everything.
I know, I made up another word, deal with it. In the Dynamics world, when it comes to third-party solutions, there is this idea of "Native". What it means is that the solution was built within Dynamics, using Dynamics as the platform. The former Microsoft Dynamics Marketing, Parature and other acquisitions were not built on the Dynamics platform, Field One was. A better known example of a Native solution is ClickDimensions. The evidence is undeniable, Microsoft's success with Native solutions, versus trying to incorporate non-native solutions, is clear. In case I lost you, Native is better. I am sure Microsoft would love to have figured this out, before they had squandered so much capital on non-native options... but some things just have to be learned the hard way.
With the Field Service example, Microsoft dove into their own development capabilities to build Project Service.. kind of a fork of Field Service, as both share many resources. Coming some time later, but with the same native-built mindset, was Dynamics 365 for Marketing, but I am getting ahead of myself. Let's talk about the "pivot".
A "Pivot" in the software business is when you change directions. Sometimes you pivot because you are failing, other times you pivot because you see a better path than the one you were on. Dynamics has been a pivoting machine. This includes "re-pivoting", where you pivot back from a previous pivot, like the "Business Edition '" pivot(s)... but I digress. A major pivot that Microsoft made, was to rebrand all of their disparate Dynamics offerings under a new name "Dynamics 365". Sometimes one pivot, leads to other pivots. In this case, for Customer Engagement, in particular, it was the idea of separating apps.
It starts with licensing. Dynamics 365 included Sales, Service and Marketing as a complete, single SaaS offering. This Field Service thing was a separate add-on solution, so It was priced separately, as was the Project Service offering. Seems like it makes sense to go ahead and separate the other workloads as well, so suddenly Sales and Service are licensed separately. Unfortunately, Sales and Service were not "separated", from either each other, or the underlying platform. No problem, a paper license will solve that! So, if you are keeping up, we now have separately priced workloads. We were hearing from Microsoft that Sales and Service would eventually be physically separated from each other, as well as the platform, but it was not clear at that time, how that would be accomplished.
The CDS Pivot, among other things, provided the means for Microsoft to untangle Sales and Service from the platform. I am not sure at the time of this writing, where they are on the separation of Sales and Service from one another, but at least they got the twins out of the mother. And what is the mother? CDS (Common Data Service). CDS is the underlying "Naked" platform upon which Sales, Service, Field Service, Project Service and the new Dynamics 365 for Marketing are installed upon. These "apps" as we now call them, are the "First-party" apps, the ones that Microsoft owns. But wait a minute... did I say Naked?
Today, as a result of all of this pivoting, we now have a new option. We have the ability to provision the Dynamics 365 platform, without any first-party apps... a naked platform. Okay, it is not completely naked. It includes what is known as CRM Prime, think of that as some basic building blocks. Things like Accounts and Contacts as record types (entities), as well as functional things like Activities, etc. But no Sales specific things like Leads, Opportunities, Quotes, Orders, and Invoices for example. Almost naked. But it does include the XrM development "engine", meaning you can build whatever you want on top of those basic blocks. This platform is available under the name PowerApps, and in particular "Model-Driven" PowerApps. The license required to utilize it is called the PowerApps P2, and it costs $40/month/user. If you are thinking that this sounds a lot like that thing they said they would never do less than a year ago, you would be right. It's called a pivot.
As a customer, with Sales related needs for example, you might be wondering, what's the point? Obviously you need the robust Sales capabilities of the first-party Sales app, otherwise CDS is just a glorified Rolodex. That would be a fair read. In the large majority of cases, I see the first-party apps as being the appropriate starting point. Why on earth would you spend the money to have someone build all of that on the naked platform, if it already exists? It would not be to save money, that's for sure. The first-party apps are highly evolved, sophisticated solutions. It would not be economically viable to attempt to replicate them, to save a couple of bucks. But what if your needs are unique? I know, everybody thinks their needs are unique. From talking to thousands of customers over the years, I can tell you, what most of you think is unique, is just configuration. But occasionally, you will find that situation where the first-party app will require so many development level changes, that there is not much left of the first-party app. In many of these cases, I see where it would be more economically viable to "roll your own" on CDS.
So Microsoft's first thought when all this came about was "OMG, Customers might build their own solutions and not buy our First-party apps". So up until very recently, it was a requirement that to get CDS, you had to buy one of their first-party apps. To me this seemed like a lack of confidence in the value of their first-party apps. Salesforce is not lacking any confidence, they have had a platform-only license for years, and it has not hurt their first-party apps. In fact, it probably drove many first-party app sales. As they thought this through, it seems Microsoft came to the same conclusion, and we had another "pivot".
For the customer, it is not a "one or the other" option. Sure, you can go with pure CDS and build everything from scratch. But what if the first-party Sales apps works great for you... but the "Service" app does not? No problem, the PowerApps license is included with most of the First-party apps. Meaning you can use the Enterprise Sales App for sales, but build you own unique service app on CDS. BTW, they both are running on the same underlying database, meaning your same Accounts, Contacts etc..
I don't know that I have heard Microsoft refer to Model-Driven Powerapps on a bare CDS as a "Platform as a Service" (PaaS) offering, but that is what it feels like to me. Just one more area where Microsoft is leading with "Platform". Like I said, for certain customers, this will be huge, for most it will be "So What". But one camp that is drooling at the mouth is ISVs.
PowerApps is Microsoft's answer to Salesforce's Force.com platform. A quick internet search for "Powered by Salesforce" will return a bunch of ISV solutions. Most of these solutions are vertically specific, highly targeted applications. This is an area where Microsoft would like to land some punches, and PowerApps is a new fist. I foresee, in the very near future, "Powered by Dynamics 365" will return similar results. Specific Vertical applications, for which the requirements were not contemplated by the first-party apps. So we start a new championship bout, the announcer says "Let's get ready to ruummble"... ding, ding .
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Listed in: Technology