Dynamics 365 – SMB Apps Myth-Busting

My flight home to Tampa from Seattle, following the Worldwide Dynamics Partner Advisory Council meeting, is a relatively short hop compared to that of many of the other partners in the group, but nevertheless, it feels long to me. But it is a perfect time to write up what little I can tell you about my week.

Loose Lips Sink Ships

So last year one of the PAC attendees thought it would be a good idea to post the “Confidential” pricing for Dynamics 365 on their blog, which got picked up by several other blogs immediately. The biggest problem was not just that a slide got released early, but more that it got released without any context, and therefore transmitted massively incomplete information, leaving customers to think that the price had simply gone up. Thankfully, that moron was not in attendance this time, so make no mistake, Microsoft takes NDA’s very seriously. This is something I had always assumed anyway, but it was actually nice to see it is true. So, as I have said many times in past posts, there will be no dissemination of “Microsoft Confidential” information here. But that does not mean that I can’t share my opinions on what is already publicly known, and maybe clear up some myths that have been circulating… including some that I started.

Dynamics 365 Business Edition Sales App

We have all known for some time now, that the upcoming SMB focused Sales App would be a “slimmed down” version of the Enterprise Sales App. Vague terms like “Slimmed Down” are a feeding ground for speculation, and I have done my share of that. While I am not able to talk about what “is” coming, I think I can safely clear up some rumors.

Many of the rumors I have heard, have assumed this “slimming” process meant the complete removal of key capabilities, like for example XrM, or the workflow engine, or customization capabilities, etc. l can report that these “doom and gloom” rumors are all basically wrong. I can also tell you, as someone who is umbilicallly connected to SMB, that I was fully prepared to be disappointed, throw a tantrum and berate everyone involved. Maybe it was the fear of that very thing, but the team has done a pretty amazing job… so far. For someone who is not easily impressed… I was impressed.

Dynamics 365 Business Edition Marketing App

I had heard before that this was going to be based on the old MDM Product and if you recall, my reaction to that was… let’s say I was not a fan of that plan. Now, I don’t know if that ever was the plan, but I am pleased to say that this rumor turns out to be false also. Some of you might be thinking, “Wait a minute.. Didn’t you start that rumor”.  All I can say is, you should not start rumors about rumor starters, it is really beneath you.

Did Microsoft thread the needle right?

In a recent post I talked about how these SMB Apps, need to be simpler than the Enterprise version for a couple of reasons, a better fit for SMB, but also Microsoft would not want Enterprise to try and use these lower cost apps. This is fair. I also talked about the Outlook Customer Manager capability currently rolling out to Office 365 Business Premium users, and how the new Dynamics SMB Sales App needs to provide enough additional oomph for a user of Outlook Customer Manager to add $40 to his current $12.50 monthly cost to want to move up. This is the threading of the needle I was referring to. I looks like the team pulled out their old “Operation” game board, and seemed to have placed the bones with nary a buzz… if you don’t get the metaphor, the answer is yes. In looking at a few of my SMB focused Peers in the room, they were also smiling, and some of them never smile. In fact the only people I can think of who won’t be smiling are NetSuite, Salesforce and a few other competitors, who were hoping Microsoft would bungle this one. If this were a few years ago they may have even placed wagers on it, but that has become a sucker’s bet under this reconstituted Microsoft.

Who is Happy about Dynamics 365?

The launch of Dynamics 365 has had a polarizing effect on the channel, or a least parts of it. Generally speaking, after the dust settled, most “Artists formerly know as CRM Partners” are happy. In addition most AX and NAV partners seem quite pleased. On the other side of the fence, most GP and SL partners, and those that only worked in the on-premise space, are feeling like they were not invited to the party with the cool kids. The other effected group would be Office 365 partners, who I would say, for the most part, are still oblivious to what is happening.

A Lot of Words to say Nothing

It is about this point in this post that you are thinking I did not really tell you anything that you really wanted to know… I’m sorry. I did clear up some rather extreme rumors, and I did tell you that the SMB Apps are looking great… that will have to do, for now. But I can weigh in on some other rumors that were not NDA related.

On-Premise is Going Away

In spite of Microsoft’s insistence that this is not true, I think it is more a matter of when, not if. I just sat through two days with Microsoft’s Dynamics leadership, and the top Dynamics partners in the world, and “on-premise” did not come up one time. It is clear to me that on-premise solutions, or any solutions that are not on the current talk-track (GP, SL, etc) have become the new red-headed stepchildren (apologies to any redheads who were stepchildren). While there have been promises of continued development of these platforms, it will be way back in the shadow of the major developments of the cloud solutions. Think in terms of a cloud focused development activity, that just so happens would function on-premise also, like a left-over. If you are one of these partners, and you are finding solace in what you are hearing from Microsoft, and as a result are not making moves to protect your future… you better wake the hell up. I would consider the “grace period” has unofficially begun.

New Competition for Dynamics Partners

I remember the uproar when GoDaddy started offering Office 365. Many Office 365 partners felt like Microsoft pushed them aside to pursue these potentially high-volume, non-traditional resellers. “Pushed Aside” was probably not the right characterization, it was more like “stood up next to”. As Microsoft evolves to a “Services” company, it is also evolving into a “volume” driven organization. Those outlets, traditional or not, that can provide volume, are going to continue to be enabled by, and potentially favored by Microsoft, like it or not. I hear you, “Those companies can’t provide the services the customers need”, maybe not, but that is a problem for tomorrow, today they are moving seats at scale. For Dynamics, this will come from BPOs.

What the hell is a BPO? Business Process Outsourcer… yes, I had not heard of this either. Think of the large Accounting firms who can offer services at scale to SMB. Not unlike ADP, who offers “outsourced” payroll services to SMB. This is sneaking in through the Business Edition Financials door, where many of these BPOs already operate in the Quickbooks space. I am sure the SMB focused ERP partners know these folks, but they were new to me. How these BPOs may handle Sales, Marketing and other parts of the Dynamics 365 Business Edition is not clear. But if you think that the cost for one application, say Financials, is $40, and adding another would put you into a Plan for $50, it is only another $10 of revenue. So from Microsoft’s standpoint, Financials alone snares 80% of the total potential value (to Microsoft) from that customer, how much will they really care that the customer adds other workloads if BPOs are moving tons of Financials seats? If you walk up to a stack of soaked sponges, pick one up and give it one good squeeze, you get 80% of the water out of it, are you more likely to keep squeezing that one for the other 20%, or just grab the next one and give it a big squeeze? Particularly if you are in a hurry to fill a bucket?

Pressure from All Sides

For an SMB focused CRM partner, who previously owned the space since no one else was that interested in it, suddenly, SMB is the queen entering the prom. In addition to BPOs coming in from the outside, you will also have traditionally Enterprise partners “dipping” down into a space they previously ignored. They will have to make up for the on-premise revenue erosion somehow. On the other end are the Office 365 partners who have already added Azure, still feeling margin compression, and are looking for the “next thing”. When Business Edition is fully fleshed out, it is going to make a pretty attractive target to both of your former neighbors.

Turf Maintenance

Sorry for the doom and gloom, but before you slit your wrists, there is a silver lining. the SMB market is HUGE, and we have barely tapped it. Prior to Business Edition we were basically trying to sell sledgehammers to cobblers. With a product that fits the cobblers, we should finally be able to build scale-able engines. Granted you will be in competition with folks that know how to do that better than you, and have the financial resources to overwhelm your puny attempts to get noticed. You better start thinking about a differentiation strategy, the long-tails that are vertical.

The next paragraph in this post was going to be around Industry Focus, but I decided that it would be better as a post on it’s own, which I will write shortly.


Add your thoughts below, just don’t pimp your stuff on my blog 🙂


  1. @Mark_R_Howe

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  2. Jeff Dreke (@JSDreke)

    Dynamics 365 – SMB Apps Myth-Busting | Steve Mordue https://t.co/YqF9jC4vQT

  3. Slow D365 (@SlowD365)

    Dynamics 365 – SMB Apps Myth-Busting https://t.co/e3ynAXRzqm #MSDYN365 by @stevemordue https://t.co/2MjZYRswVS

  4. @dannyhellemons

    RT @stevemordue: Dynamics 365 – SMB Apps Myth-Busting https://t.co/KOlzxymvps https://t.co/qzonWlKoco

  5. @TimWappat

    RT @stevemordue: Dynamics 365 – SMB Apps Myth-Busting https://t.co/KOlzxymvps https://t.co/qzonWlKoco

  6. @JamesCrowter

    RT @stevemordue: Dynamics 365 – SMB Apps Myth-Busting https://t.co/KOlzxymvps https://t.co/qzonWlKoco

  7. Kamalu Manango (@KManango)

    Dynamics 365 – SMB Apps Myth-Busting https://t.co/QPPN6va9wS #msdyn365 #msdyncrm #mspartner https://t.co/FYDSL1TTOS


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