Dynamics 365 – Thoughts on the Business Edition

Yesterday we had the Executive Briefing for the Dynamics 365 Business Edition Sales and Marketing Apps. It was non-NDA so that means we can talk about it, that also means that lots of details were left out. I have been working with that team for some time now, and while still under NDA for many things, I can finally talk about the publicly shared stuff.

Can You Keep a Secret?

One thing I have learned, if I want to covertly get information out to my family and friends, all I have to do is tell my wife to keep it secret. It’s not her fault, many people suffer from an inability to keep a secret. As soon as the label “secret” is applied to something, it becomes a big ball of gas in your stomach, pressing on you until you finally belch it out. But it is not yours to belch. In the call yesterday, I felt a wave of gastric relief as Kishan and company revealed a lot of information about the upcoming, and obviously much anticipated, Business Edition Sales and Marketing Apps.

Enterprise Glasses

I was paying close attention to the questions, and for some I think there was a misunderstanding. The Business Edition is not intended to be a lower cost product for a customer with sophisticated requirements, of any size. I know many partners were salivating at the idea of a half-priced subscription, but then complained that it was missing things they wanted, or expected. I think you need to take off the Enterprise glasses. We should not be comparing Business Edition to the Enterprise Edition… at all. BE is not in Competition with EE, it is in competition with all of the other SMB Cloud CRM apps out there… think “Insightly” for example. When you compare cost and features of BE against the actual target competition, it is really fantastic.

Some Random Speculation

While I may not be able to repeat some things I have been told, I can certainly speculate about some things I have not. Even before the Marketing app was shown, there was rampant concern about why it was not going to be available for Enterprise customers. After seeing some of the Marketing capabilities, particularly with the Event management addon side of things, it was hard to imagine many SMBs needing something this capable. But what better place could you test and develop something, than with… let’s call them “easier to please” SMB customers. I fully expect the Marketing app and event addon to make its way to Enterprise, after SMB has given it a thorough test-run.

Scope Creep

I think with the Sales App, Microsoft has stayed within the guardrails, but Marketing clearly jumped the rail. I discussed a similar path that I felt “Financials” took here. I feel like these initiatives can sometimes start with a set of goals, that quickly get replaced with “what can be”. As partners, we know this sensation very well. A new customer, with an interesting business, comes in with a specific set of requirements. With an interesting customer, we can’t help but go into “what if” mode, as we throw our head back and the gears start turning. But usually, it ends up being the customer who actually grabs our ankles and pulls us back down to their reality. I am not sure who does this at Microsoft. I can imagine that Marketing started out as a fairly basic plan, and as the develop team started to float out of their chairs with possibilities, no one grabbed their ankles. At some point, I have to assume it became obvious, that they were heading towards Enterprise level capabilities, and the powers that be said… “continue”.

The Business Edition Partner

I think that for many of today’s CRM partners, Business Edition will prove to be frustrating. They will know exactly what capabilities have been intentionally left out. Business Edition Sales is built on the same platform, and knowing that some particular function, that you are used to using, is just out of reach…well, that’s just gonna piss you off. It might have been better, if it were built from the ground up, completely separate from the platform… at least then you would not see the features on the other side of the glass. But the real issue is you, and getting out of your top-down way of thinking.

Protecting the Mother Ship

Microsoft has defined SMB as up-to 300 users. This makes sense for Office 365 customers, and for no other reason than consistency with Microsoft definitions, Dynamics 365 Business Edition is also limited to 300 users. In reality, we all know that out of 300 Office 365 users, there may only be a need for 10% (30) of them to use Dynamics 365. If we flip that math around, it means that “theoretically” an organization with 3,000 Office 365 users, could use Dynamics 365 Business Edition, for their 300 users that need it. A legitimate, and over-arching concern, of Microsoft is the potential for the Business Edition subscription to cannibalize Enterprise Subscriptions. In fact, if you step back ten feet and look at that possibility, everything around the “limits” of Business Edition makes complete sense. Personally, I think they should reduce the maximum number of users to less than 50. The sweet-spot for Business Edition is probably more like 10-20 users, but there will be some poor customer who tries to put 300 users on it, to save money, and will complain about it from day one.

Advanta-B

Down the hall from the SMB development team at Advanta-B is the Enterprise Development team. In that area, all you hear is a cacophony of “what ifs”. These guys are the ones building all the crazy cool stuff, and they have the Azure Analytics team on open Skype video all day long as they collaborate on all the possibilities, seemingly with no budget constraints. They are building things for the 10%. The 10% of Dynamics customers who generate 90% of the revenue… big customers. The SMB team is actually building for the 90%, that today only accounts for maybe 10% of the revenue. When you think about it, you might wonder why Microsoft is even bothering with SMB for Dynamics at all. But they must have seen the huge white-space, currently being filled by CRM start-ups, and assumed that a lot of those customers would prefer something with the Microsoft brand on it. Also, a huge number of those customers are using Office 365, so the door is already open. It also seems like the Enterprise team has been peeking over the SMB team’s shoulders, and stealing some nuggets, here and there.

Will Microsoft have the Patience?

Patience does not seem to be an attribute that Microsoft values very high. When an initiative does not start to generate results quickly, they have a tendency to pull back on it even more quickly. For something that is focused on a segment that only generates 10% of revenue, how patient will they be? I would say that this is my biggest fear with Business Edition, and that includes Financials. The high level of partner interest is encouraging, but partners get excited by almost any shiny object, that does not mean they will sell it. I am sure that Microsoft has internally created a bunch of ridiculously unrealistic sales projections, to justify going down this path. Odds are, that initially, sales will fail to meet these lofty projections, which does not mean there is anything wrong with the product other than over-optimism, but this could lead to Microsoft doing their pull-back dance. This is what keeps me up at night.

Meeting Unrealistic Projections

To clarify, I have no idea what Microsoft has projected for Business Edition, but my guess is that they made some assumptions based on a key component: partners. For a company that is so invested in, and dependent on, partners, it is usually these same partners who let Microsoft down. Partners are the reason Microsoft is not farther down every single path than they could be. Their biggest asset is also their biggest liability, yet they continue to overestimate their valued partners’ willingness to play ball. My last post touched on this also. If all of the partners who are oohing and ahhing at Business Edition today, don’t actually do anything about it tomorrow, then that would be typical partner behavior. If this typical behavior is what we actually see, than I expect Microsoft may pull back.

Overcoming Typical Behavior

I was reading a rant post by Joshua Greenbaum where he makes the case that way too many customers are unaware of Dynamics… never heard of it. He blames Microsoft for not screaming from the rooftops directly into customer ears… I have to agree with him. Again, Microsoft depends on their partners to carry this load, and again partners as a whole, consistently fail to deliver, and I expect them to fail with Business Edition as well, if left to themselves. To overcome this, Microsoft will need to go over the partners’ heads, and market directly to end end customers in a much bigger way than they typically do. Not cutting partners out of the picture, but not waiting for partners to promote Business Edition either. Microsoft has the ability to generate customer demand, and get customers to pull partners from the other side of the fence. Partners can ignore Microsoft, but they cannot ignore customers. This is not a muscle Microsoft has historically flexed, but maybe it is time.

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  15. Jake Horn

    They played this game before with Small Business Accounting. That didn’t work, It might work this time if there is a direct migration path from BE to EE. I won’t look to BE for clients with more than 10 users or so.

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