Microsoft steps up to Salesforce’s AppExchange


Let’s be real… the Business Applications ISV motion from Microsoft to date, has been a shit show. Many budding ISVs struggled to navigate the program(s) only to reach the conclusion that there was not much there. For all the talk about how important ISVs are, Microsoft’s actions to date have failed to live up to their words. I want to personally apologize.

The Boy who cried Wolf!

I am usually pretty cynical, but over the past few years, I have consistently fallen for the promises from many Microsoft team members, each of whom was independently responsible for some sliver of an ISV effort. Each of them failed to live up to the lowest of promises and expectations. The scattered effort lacked both direction and motivation.

Yet, in spite of that history, I continued to get excited about ideas, and shared many of them here with you. If you had taken some of my advice, you to would have been disappointed with the results. For that, I apologize.

A Story of Failure

AppSource should work… but it doesn’t. In Microsoft’s zeal to turn it into something big quickly, shortly after it launched, they lowered the bar to entry and it promptly filled up with shit. It remains full of shit as I write this. From apps that won’t even install, to some that are downright security risks.

Co-Sell should work… but it doesn’t. The idea that a Microsoft Seller could actually close a deal faster with an ISV, is not one most Microsoft Sellers have embraced, instead they see ISVs as confusing the conversation and slowing the sale.

ISV Competency should work, but Microsoft pulled the pulled the plug on it, only a few months after it was introduced, because they could not remember why the launched it.

The very definition of insanity, doing the same things and expecting different results, was fully in-play.

The Missing Piece

The landscape that I described above, is what Steven Guggenheimer “Guggs” was brought in to fix. Turn this shit show, into a jewel. I previously wrote of my high hopes for this new savior of ISV. Right out of the gate, priority one for Guggs appeared to be, how can Microsoft make money on ISVs. For many, it seemed like adding insult to injury. Seriously, you offer ISVs shit, and now you want them to pay you for that shit!

If I were to stop writing this right here, it would not sound very good, but you know I always find the rainbows… Revenue Sharing is Brilliant! Not a novel idea, every other platform has been doing it for years, but Microsoft doing it also, will actually be the best possible thing Microsoft will have done for ISVs.

Revenue Sharing is Brilliant?

Guggs is no dummy, far from it. He is a no-nonsense kind of guy, that I have gotten know, he was even on my podcast recently. As Guggs surveyed the failures I outlined above, along with the many other failures I did not go into, he spotted the obvious common denominator. He slapped his forehead and said “Holy Crud, we actually don’t give a shit!

My dad was my early business mentor, a truly successful entrepreneur. One of the things he would often say in response to ideas that I had was, “There’s no percentage in it!“.  My dad was not a philanthropist. What he did know, was that without some monetary reward, any business effort would fail. Guggs quickly reached the same conclusion. If you want things fixed, and you want people to give a shit, you need to put a bag of money at their end of the path.

Not the only step

While reading through the new program documents, it is clear that Revenue Sharing is not the only step Guggs and Team are taking, but it is the only one that matters, and is the single one, that will make all of the other ones happen. It is Pay-to-Play for ISVs now, which may come as an initial shock to many who had gotten used to the free ride.

Turbulence Ahead

The challenge that Microsoft has with this new effort, is of course, history. For most ISVs, their success has come, in spite of Microsoft. They have learned not to expect anything. I was talking to one of the ISVs that Microsoft often showcases as an “ISV Success Story” today, who told me that Microsoft never gave them anything. No leads, no technical assistance, no sales support, no funding, no… anything. They succeeded completely on their own. It will be a tough sell for Guggs to convince ISVs that they will get a return on this new mandatory cost, and he is well aware of that.

Steve Falls for it, Again.

The line between “Eternal Optimist” and Moron, is thin. I’d like to think I am the former, rather than the latter. But, up until now, that has not proven to be the case. We transitioned from a mostly SI, to a mostly ISV, because I drank the original Koolaid. Where many of those that did so at the same time, have since abandoned Microsoft as an aid to success, I continued to stay the course, and continued to be disappointed. My gut reaction to the new program announcement was excitement, but then found myself tempering my enthusiasm. Microsoft has also cried Wolf many times.

Embrace or Scream

The choice of reactions for ISVs will fall fairly clearly on one side or the other. Initially, I expect a lot of them will scream. After digesting the full value proposition, I think a significant number will embrace it. I am embracing it, but I am aware that my credibility on this subject is now dubious. One aspect that I see as key, is with the fact that I will now be paying Microsoft for the privilege of being an ISV for their products, that they “owe” me something.

Up until now, the only way to get any ISV help from Microsoft, was to be persistant and super nice and hope that they might throw you a bone for not being an asshole. This “Program” turns the table. In return for my 20% “Payment”, (yes, we will be opting into the premium tier), I will be expecting them to step up to the plate, and yes, if necessary, I will be a complete asshole about it.

Resistance is Futile

For the screamers, I think their screams will fall on deaf ears. I know that some of the bigger ISVs, who like to position themselves as more important to Microsoft, than Microsoft is for them, they will march up the ladder, “You do realize that our solution generates a ton of sales that you would not otherwise see?” This is the anecdotally, hard to quantify argument, that they have leveraged for years. I am sure there is truth to it… but again… hard to quantify. Many of the Bizapps team have proven pliable in the past and quick to buckle under pressure. I don’t think Guggs is a buckler, particularly when he knows he is right.

“Screw you guys”

I’m sure some ISVs will attempt this tactic, but it sounds a little hollow. I mean, where you gonna go? Revenue Sharing is not a new idea that Guggs came up with, it is what the other platforms have been doing all along. In fact, it eerily resembles the Salesforce.com AppExchange model… because it largely is!

I would suggest that instead of trying to brow beat Microsoft into some kind of “exception”, that ain’t gonna happen anyway, you instead hold them to their end of the bargain. I’ll go into the specifics in a future post, but based on what I have seen, and been told, if they do hold up their end, this is a no-brainer on ROI, if they don’t, you can join me in the asshole club.

Steve Mordue MVP

Steve Mordue, a Microsoft Business Applications MVP, is the CEO of Forceworks, a 2014 Microsoft Partner of the Year. Steve started his business applications consulting career in 2001, originally supporting Salesforce.com as a Certified Consultant. Steve transitioned his consulting practice to Dynamics CRM, (now Dynamics 365) in 2011. Steve has been engaged in hundreds of deployments over the course of his career. As one of the leading Microsoft Business Application Consultants, recognized by Microsoft as an expert, Steve has provided training, on behalf of Microsoft, to other Microsoft Partners globally on how to launch and build successful practices. Steve is a member of the Worldwide Dynamics Partner Advisory Council, and is a frequent presenter and panelist at global Microsoft events. The opinions shared in this blog are Steve's alone. If you are looking for Microsoft confidential information, you will not find any here.

2 Responses

  1. Phil Topness says:

    This program change started to make sense to me when I thought about it in the context of everything else changing in the Dynamics/Power platform world. “old” ISV’s would often build a business around a couple of vertical solutions. Solutions would be complex, often a complete takeover of Dynamics. Solutions would often be wrapped in services or even given away as a way to sell services, sold in large contracts.
     
    Tomorrow’s ISV’s will be smaller, even a single person, and more numerous. PowerApps solutions and components will be easier to produce, sold more transactionally and have broader markets. As you pointed out, to scale these will need a mechanism more like Salesforce AppExchange (which coincidentally has 15-25% revenue sharing). These smaller ISV’s, (e.g. me in my garage) will need and be willing to pay for, marketing, distribution and payment processing. I believe it’s this new model of an ISV is what this change lays the groundwork for.

  2. Gary Manske says:

    The proof will be in the reciprocity from Microsoft. If there is little/no value provided back for the 10-20 points, there will be hell to pay. The big question is the definition of value. Microsoft’s definition will need to line up with the ISV’s definition in order for this scheme to be a success.

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