Dynamics 365 – Backward Walking Gorilla

So I am approaching this post with some trepidation. My last one led to a bunch of phones blowing up in Redmond, and I don’t want a repeat of that for sure. But I do want to share my thoughts, now that the dust has started to settle.

Backward Walking Gorilla

So the 800 lb Gorilla in the room after Monday was primarily centered around the White Label only approach for NAV partners. Clearly, they were not fans. In the closing session Wednesday, Marko walked that back. “Based on what I have heard, loud and clear, it is obvious that the White Labeling is not gonna fly“. And with that, all of the pressure went out of the room. He also said that the other issues that were raised would be addressed fast “There is an urgency, like I have never seen before in the org, to address the feedback“. So from riling the partners on Monday to the point of grabbing pitchforks, he concluded the closing session to a standing ovation. Amazing… a suspicious person might think he planned it that way, but I spoke to him minutes before he took the closing stage, and he seemed genuinely caught off guard by the reaction, and sick that he may have actually caused it. If it were not for the fact that the NAV partner channel obviously loves this guy, this could have gone a whole different way.

Bad Timing

So, it would seem that all of the announcements that were made, were the result of very recent directional changes. So recent in fact, that other than the high -level direction, most other details had not yet been sorted out. And here comes Directions… right freaking now! You have to give Microsoft credit for providing the new directional information at this time at all, knowing that without the details, they would get a lot of heat. In other bad timing news, at the same time, Dynamics Inner Circle was also going on at the same time, and I understand that James Philips and Alysa Taylor also got an earful from that group about this. But the alternative would have been what? Not mention it? And try to keep a straight face in front of 800 of the most effected people? In every catastrophe movie you have ever seen, we always have that mayor, who is reluctant to alert the public about the incoming meteor that will destroy the planet, because of the chaos that would ensue. That may well have been the tack taken by Microsoft not that long ago, but today, I am really feeling like the Black Box that Dynamics has historically been, is getting more and more transparent. The downside to this transparency is you may not get the answers you want to hear, or the messaging may not have been vetted fully. But I would rather know the good, the bad and the ugly sooner rather than later, so I can plan for it. The difference is, that mayor cannot stop, or even alter the course of, the meteor.

Screaming from a Paper Cut

The news was not actually “bad” at all. There never was a meteor…. well, other than that white label thing, but with that now presumably gone, what is left seems really awesome, albeit different than what we had been conditioning our brains for the past year. In my last post, I hoped that this would go the way of other big directional change announcements in the past. A brief period of terror, followed shortly by “Oh, is that all?“. It seems like that process has actually started even faster than I expected this time.

So Nothing Happened?

I am not a NAV partner, and actually had not even planned to attend the event, but I am only an hour drive away, and curiosity caused me hop over for the day on Monday. I will put aside the NAV stuff as I am not really qualified to comment, other than they got some stuff to absorb. As an outsider looking in, it looks like they got a great new toy in Tenerife. I was actually a bit jealous. But there were some more things that did happen. I assume the elimination of the Business Edition concept came from the NAV side, but you can’t eliminate it there, without eliminating it everywhere, so that bit of “Directional Change” also impacts the partners that work with CRM. Thankfully for us, that decision was made prior to launch, so the only real harm was some wasted partner energy preparing for it. The scenario would have been much worse if they waited until after launch to pull the plug, MDM or Parature anyone?

CRM Side Impacts

Even though open, non-NDA Q&A’s proved quite hazardous on Monday, two were scheduled for Wednesday morning with my friends, Kishan Chetan and Daniel Dallala. These guys have basically been the faces, and the force behind, the Business Edition Sales and Marketing apps. These two Q&As were sparsely attended due to the NAV focused nature of the event, and I also don’t think they were noticed on the schedule due to an unfortunate event name. Based on Monday’s events, I am sure Kishan was just as happy to have a small crowd, but I did not get any sense of a renewed opaqueness, instead Kishan was Kishan, and basically said “Ask me anything, I’ll tell you if I know“. So the Business Edition App that many of us have been previewing, is not going away, in fact, if anything the opposite is true, although the moniker “Business Edition” will be. The App formerly know as BE, was built on the new unified interface framework, and Kishan confirmed, as I had suggested in other posts, that it was a testing ground for the whole interface approach across the platform. So this directional change, really has no impact on the product or platform. It is, at least for the CRM side, 100% Marketing related. So if you have been poking the BE preview with a stick, you should actually go ahead and dive all the way in, as that will be the UI will need to know, all-up.

Licensing, Pricing and Limits, Oh My!

Where the partner noise will come from over the next couple of months, or more, will be on Licensing, including pricing obviously. and any sorts of limitations. Limitations is a whole new concept that was introduced with the Business Edition, one that partners have struggled to wrap their heads around for a while now. I would say that all of the partner conversation with the teams has been 5% product and 95% about those darn proposed limits. You just don’t announce at your buffet, on all-you-can-eat Shrimp night, that there is a new limit of 20 shrimp. Even if your customers never ate more than 15, they will revolt. In fact, it was a missing comma in my last post, that some might have read to mean that limitations were gone, that blew up the phones. So are limitations gone… or not? THAT HAS NOT BEEN DETERMINED YET! Limitations, just like pricing and features are simply possible levers that Microsoft can use to steer the right products into the right hands. The process of figuring out how to set those levers has only just begun. How long will that take? However long it takes.

The Current Licensing Matrix

So, I think we can all agree that the simpler licensing that was promised at the initial launch of Dynamics 365 did not materialize. In fact, it became way more complex than we had ever seen before. Had Business Edition continued on its path, it would have added yet another order of magnitude of complexity to the licensing conversation with a customer. From my perspective, and many partners that I have talked with, this was far and away, the biggest challenge with the whole Dynamics 365 concept. One partner told me, “We just sell everybody Plan 1, because it is too complex to explain the options, and that is still cheaper than Salesforce“. This is a problem. Microsoft needs to get this right. Even with the current model, the number of customers who need Plan 1 across their entire org is exactly 0. They are paying more than they need to, making the product appear more expensive than it is, leading to some level of churn that would not have occurred had they been put on the right combination. You can call it a lazy partner, or an overly complicated matrix, or a combination, but either way it ain’t good for any of us.

A New Approach

So part of the idea behind the ditching of the Business Edition concept is the realization that price points based on size of organization is not the right path forward. I don’t get a lower price for my Big Mac, than the big guy standing next to me. However he will probably pay more than me, because he is actually going to add a Filet-o-fish sandwich to his order. He’s a big guy. This is the direction that we are heading. For the Sales app for example there will only be one app for all users. Imagine a single app with a filter laid over it. That filter may exclude features, and/or it may place limits on other features. It will be the lowest price view of this app. For users that need more, one or more “filters” can be removed at higher price points. The highest price point would probably be what we know as Enterprise today, the initial “filtered” app would probably be what we have been calling Business Edition today. While the segmentation by org size may have been removed, I expect that most SMB customers will get by with the filtered app, and most Enterprise organizations will gravitate to the unfiltered version(s). So really, I don’t see a lot of change in our GTM plans. We will white out “Business Edition” and put in “Basic” or whatever other name Microsoft gives this. (OMG, Microsoft and Product Naming)

A New Matrix

The pricing matrix is probably the single most important factor to the success of Dynamics 365, for partners and Microsoft. I am not talking about the actual prices, obviously everybody would like them to be lower, let’s set that aside because frankly, that has not proven to be the biggest issue. Unless of course you are a crappy salesman who can only sell on price, in which case you should just go ahead and leave this business, because you missed the point of what we all do. Will this new direction provide for a “simpler” pricing matrix? Let’s think about this for a minute. For Sales for example, we may have an easy to explain, “Small , Medium, or Large” approach, like ordering a Coke at McDonald’s. That is certainly easy. If you carried that same idea across the other first party apps, like Marketing, Service, PSA and Field Service, that makes a pretty simple and straight-forward matrix. To clarify, I am not saying that each first-party app will have two, or three levels, I’m just talking here, but for example, let’s say they do. Maybe a single user could have a small Sales, a medium Service and a large PSA. Oh crap, stacked up, that gets expensive, so we will need some sort of “Combo Meal”, uhoh, with all of the different combinations, this matrix just blew up again. And we have not even overlaid a Team Member, if that still makes sense. Fortunately, Microsoft has to solve this and not me. But there is no way that it ends up “Simple”, yet it has to be simple enough for partners to wrap their heads around it, and to explain it to their customers. For those of you who are frustrated right now with all of the TBDs around this, would you really prefer that they just “whipped” something out?

How to present a Directional change message

The timing of events clearly conspired against Microsoft. Had Directions been just one week later, they would have had the benefit of the feedback from the tight Inner Circle group to know how things would land. This would have at least given them time to jigger the pitch, the whole White Label kerfuffle might have even been avoided.  Most product companies use focus groups before they launch things. Gather a bunch of kids in a room and have them try their new cereal for example. If all the kids spit it out on the floor, they just save themselves a gazillion dollars. Were it not for timing, Inner Circle could have been those kids. But Microsoft has other similar groups the form of PACs (Partner Advisory Councils) and MVPs. I am fortunate to be in both. I can attest that they typically use these avenues for exactly this purpose. Maybe PACs would have had the same timing problems, but the MVPs are standing by, ready to provide feedback on a moment’s notice.  But they forgot to check that box this time. Maybe it was haste, or just bad timing, but none of my MVP peers knew anything about this before Monday, when the whole world heard it. I am pretty sure they won’t miss checking that box in the future.

What do you do right now?

Nothing. The fact that we may have to wait a while for this “new stuff” to be sorted out, simply means we have a longer runway to keep doing what we’re doing today. The Promo skus are not going away. Right now, we are busier than we have ever been, our RapidStart is blowing up, and we just got some breathing room before we have to sort out the next version. So Keep Calm and go Sell some shit.

18 Comments

  1. Lars Martin

    Licensing is always a really annoying topic.
    I would prefer when Microsoft could provide analytics about CRM usage by user which recommends the necessary license. Of course this can only be done when a user is already working with the platform but it would provide the customer a chance to adjust the license on their real usage.

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