Dynamics 365 – The Cloud “Fad” has Passed

As some of you may know, we were formerly Salesforce Consultants, a product that was “Cloud” from day one. For us, cloud was not something we even thought about, until we pivoted to become a Microsoft Partner in 2011. Suddenly “Cloud” was a new thing? Huh?… Okay, we’ll play along.

Déjà vu all over again

I was reading a CRN interview yesterday with Gavriella Schuster, CVP of the Worldwide Channels and Programs Group at Microsoft, where she said, “I think the biggest challenge for a lot of our partners is crossing the chasm from the up-front revenue that you get from a traditional, on-premises licenses into a cloud service delivery or a managed service delivery because you’re going to get that on a month-over-month basis versus up front.” I was struck by that déjà vu feeling… I have heard this before. In fact, I have heard Gavriella say this before… many, many times. So many times in fact, that have to think that she must be sick of saying it. Yet, she still is compelled by circumstance, and I assume, internal metrics, to continue saying it.

Still? Really?

So because of our history we seem to get a fair number of prospective customers who are weighing Salesforce vs. Dynamics. Of course, I will start extolling the virtues of Dynamics 365, when I am often interrupted by the customer. “I was talking to another Microsoft partner who said Cloud was not the way to go, that it is neither as good, or as safe, as on-premise” OMG, I am not competing with Salesforce in this deal after all… I am competing with on-premise, from another partner. One who did his best to discredit Dynamics 365. Telling the customer that it is not “safe”… seriously!

I thought, why would this partner do that? I guessed one angle, would be to scare the customer away from cloud altogether, that would also knock out Salesforce. And, since we only support Dynamics 365 in the cloud, it would also knock us out. Not necessarily putting the customer first, but I can see that as a sleazy sales strategy. I decided to look at this partner a little closer. It turns out, they had not yet made the transition that Gavriella keeps chanting about. I am pleased to report that we ultimately won the deal. Once I realized what I was up against, it was child’s play to knock them out of it. But I have to wonder, how many deals will that partner have to lose, before they realize that the cloud “Fad” is real.

Is Change Good?

When it comes to a partner’s business model, it does not really matter if change is good or not. Ask the person who used to run the fax division of any major printer company. I do feel for the 60 year-old owner of a Microsoft Partner, who was just hoping to make it over the finish line unscathed. Now all this cloud shit is going to require re-investing their retirement dollars into a seismic shift in their business model… or what? It’s like some board game you have been carefully playing for 20 years, suddenly sending you back to “start”. Worse, it put you at the “Start” of a different board game, and you are way behind the other players.

Born in the Cloud

This is actually a Microsoft designation for a small segment of their partners. The “unburdened”. We are part of that segment, partners who never knew “how they used to do it in the old days”. Within this segment are many partners who were “born”, when the Microsoft Cloud was born, as well as almost any partner who was born since. We are in a sub-segment of those, ones that were actually “cloud”, long before Microsoft “invented” it. The rest, and vast majority, of Microsoft partners are fully burdened by the past. For me, talking to them is like listening to my Dad talk about how much better corded phones were… and me thinking, how in the hell is a cord “better”? I see the same look on their faces, that I see on the one of the corner hardware store owner, who reluctantly concedes that Home Depot has an entire aisle of these connectors, that he is showing me a single bin of. But he is too old, and set in his ways, to do anything about it. Of course, unlike any Microsoft Partner, there is nothing he can actually do about it.

The Legitimate Cloud

I guess it was about 15 years ago that I recall hearing this term “cloud” being tossed around. Suddenly, every local IT company, who had made their living selling and maintaining on-premise systems and networks, was renting mini-warehouse space to spin up servers. The more advanced ones were at least renting racks in a colo. “Cloud” was a vague enough term to cover many scenarios, and many customers had no idea that sometimes it meant their data was in unit 267 at U-Store, or the garage at the home of whoever was selling it to them. It was the wild west, with a snake oil salesman on every corner. It’s no wonder we had to spend so much time in the last few years, and even sometimes today, convincing customers that the Cloud is “okay now”. Of course it doesn’t help when your own cousin is still telling customers that you’re a snake oil salesman, feeding their paranoia.

The amount of money that Amazon, Google and Microsoft have spent to overcome the cloud’s past, must exceed the GDP of the U.S. by now… and Gavriella still has to press play on the side of her head… yesterday.

 

8 Comments

  1. Jake Horn

    Online is appropriate in probably 80-90% of scenarios, especially in the small and medium spaces. In the enterprise space On-Premise has a definite place. If you have to move a lot of data around or do some deep integrations you are better off with on-prem. It’s a case by case situation. I do both, and the difference in how you approach the implementation isn’t that big of a deal.

    Like Neil, the amount of money we earn from licenses doesn’t figure into our revenue models.

  2. My CRM practice earns 97% of its revenue from professional services. It doesn’t matter much to me whether the tiny amount we earn from Microsoft software licenses is paid upfront or as a recurring revenue stream. Perhaps we’re doing something wrong if software licensing revenue is such a small percentage of our income and not something we worry about.

Add your 2 cents to my 2 cents and we'll have 4 cents!