Dynamics 365 – SMB does not mean “Simple Minded Business”

What is the first thing that comes to your mind when you hear the acronym SMB? Is it your lawn guy? Sure, he falls within the SMB (Small and Mid-sized Business) category. But, did you know Microsoft’s new Dynamics 365 Business Edition, could actually power a 3,000 person organization, or larger?

Steve’s Math

In our experience, with companies at any size, we have never seen an organization license either CRM or ERP to every single employee. Both CRM and ERP users are always a subset of the total employee base. Typically 10% to 20%, though some sales focused organizations could have a lot higher percentage. Given that the new Dynamics 365 Business Edition (Financials today, Sales, Marketing and Service coming in the Spring) is designed for up to 250 users, with a hard cap at 300 users, that could potentially support a 3,000 employee company.

Oops, that wasn’t the Plan

Interestingly, the temporary SMB promotion of the Enterprise Sales App, as a bridge to the Spring SMB Sales App, has a hard cap of 25 full users. By my same math, that could be up to a 250 person company. This is more in line with what Microsoft is thinking a SMB is. The logic behind this cap is obvious, Microsoft does not want larger companies, who should be paying more, taking advantage of the promo. Fair enough. But then how will they keep them from doing just that in the Spring when the cap goes up to 300?

Bring in the Strippers

The fact is that Microsoft cannot keep a 3,000 person company from having 300 of their employees use Dynamics 365 Business Edition. So how do they plan to keep them from taking advantage of the lower priced offering? By taking out capabilities that companies of that size most likely need, or at least want badly enough, that they will opt for Enterprise. Leaving behind enough features for SMB, will be one of the biggest challenges Microsoft will have undertaken with Dynamics… ever.

On one side of the tightrope, you have enterprise customers who would love to make do with the Business Edition if it will do “just enough”. On the other side you have SMB who is looking to see if Business Edition provides enough more capabilities than they have today, with whatever other solution they are using, to make the switch. A balancing act indeed.

What does Microsoft know about SMB?

Microsoft has a zillion SMB customers today using many different Microsoft products. I would not be surprised if more than half of the Office 365 business customers are SMB. The Office 365 team has done a decent, but far from perfect, job of drawing a feature line between the Business Premium offer, and the Enterprise Offers. Even still, many SMB customers had to go to Enterprise to get features they needed, and the cost difference was minimal. But those are productivity apps and services.

What about business apps, like CRM and ERP? These teams do not have much experience with SMB, and until recently, mostly ignored them. Granted there is a level of complexity and required capabilities that only comes when you reach a certain size, but what do you take out, and what do you leave in, to solve for the SMB… without opening the door too wide. Given the significant cost difference, I would not expect many SMB customers to jump to enterprise, instead they may look elsewhere if Microsoft does not get this right.

What does SMB need?

This is the $64,000 question. Microsoft has some partners, including us, who know the answers. Fortunately, they are engaging with us to help explain what looks like an odd science experiment in their eyes. Marko Perisic’s team is already trying to figure this out on the Business Edition Financials (a/k/a Project Madeira). They have taken Navision, saasified it, and stripped off what they felt SMB did not need, then proceeded to add stuff that they thought SMB would want. How did they do? Well, even though it is launching in a day or two, it is still getting fit-and-finishes behind the curtain. I see Marko scouring Twitter and LinkedIn daily for negative comments on the preview and asking “What can we do better?” And this is someone on the, heretofore elusive, Dynamics Team? Clearly, Marko has no interest in failing with Financials.

Core capabilities take a back set to Wow Features

Let’s face it, core functions are boring, and new features are fun. But for customers of any size, after the sizzle of new features has subsided, the core capabilities are what runs their business. This has been the modus operandi of Microsoft since they jumped into the cloud: dazzle with features. Don’t get me wrong, as a Seller, I love features. Whenever a customer starts asking about some core capability that is not as good as, or more complicated than, they might like, I can whip out some features and distract them. Sellers love features. But, the smart customer, of any size, says “I get that there are lots of features, but let’s talk about the core some more”. I am not saying that the core capabilities are lacking, just that the emphasis today is on the shiny objects. From an SMB standpoint many of these shiny objects are just that… distractions.

Basic Blocking and Tackling

With Business Edition Financials, we have some great new features, for example some of the Outlook integration possibilities look awesome. But the list of banks that you can connect Financials to is limited to just a few major banks. Many SMB customers use local banks. Not being able to connect Financials to their bank could be a non-starter for many SMBs. This is a Horse, the Outlook App is a Cart. With Quickbooks they can connect to almost any bank today.  How was this core capability given so little attention? I have asked Marko this question, and am awaiting his response. This is just one example of making sure the core capabilities are right first, before adding bells and whistles.

What will the SMB Apps be?

Well, aside from Financials, here is what we think we know. The SMB Sales App will be a slimmed down version of the Enterprise Sales App. There will be a new SMB Marketing App created from the carcass of MDM. Is this Marketing App necessary?  Probably not, but Microsoft can’t bring themselves to flush the MDM investment down the toilet, so it gets re-purposed here, notwithstanding the fact that ClickDimensions already has this base well covered. As a result of partner outcry, there is also a new SMB Service app that has just been penciled in, based on… who knows. Again, the scariest part for SMB Partners is exactly what will be slimmed out of the Enterprise Sales App to make the new SMB Sales App. Microsoft’s first thought was that SMB did not even need Service, so it is clear that they will need our help guiding the scalpel.

Microsoft gets a Second Opinion

I will be part of a very small group of SMB partners who will be advising the R&D team. Yes, they are letting a couple of us peek into the black box. Whether they take our feedback is yet to be seen, but it sure feels like it. In typical Microsoft fashion they have me muzzled with another NDA, so you are going to have to trust me on this task. But with over 300 SMB deployments, between Microsoft and Salesforce, I damn well better have a pretty good idea of what they need. Won’t I just be helping Microsoft to disintermediate our own RapidStart CRM solution? Probably parts of it, but the SMB customer should not have to pay us, just to get the solution off the ground, and that will be my goal. SMB will still need plenty of help to maximize their ROI, and we are already re-positioning our catapults.

I gotta go, I need to practice my own tightrope walking in the backyard.


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

1 Comment

  1. Josh Booker (@joshuaabooker)

    Great post. I really hope they get this right. All businesses need core functionality. Small ones just need a bit less capability in each department perhaps. Everybody does purchase orders yet I don’t see that in madeira. Most need service, inventory, even project accounting. There are small manufacturers that need basic BOM capabilities but maybe not multi warehouse routing for example. Not many small businesses need multi currency, collocation, multi factor auth, geo replication. paring down each module will accommodate every business but removing entire modules just makes small guys buy more then they need and as you know best pushes them up to a product that is too complicated to adopt successfully.


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