Focus Pays: Iteration2

It's not yet three years old, but Dynamics partner Iteration2 has two U.S. Partner of the Year Awards under its belt, a tribute to its ability to focus.

Less than three years since its inception in January 2004, Iteration2 is closing in on $30 million in annual sales, has more than 100 employees and has not once but twice been named the Microsoft Business Solutions Outstanding Partner of the Year for the U.S. To Mike Gillis, president of the Irvine, Calif.-based Gold Certified Partner, those achievements are largely the result of a single attribute: focus.

"Whenever you want to do better than you're currently doing, focus," he says. "Wherever you can, focus, focus." For Iteration2, that means focusing on select vertical markets and being the best at delivering Microsoft Dynamics solutions in those markets. It also means focusing on the company's core corporate values every day, and its overall mission to be recognized as the world's finest Dynamics partner -- a goal its two Partner of the Year awards certainly indicate that it's on the way to achieving. Winning those awards stems from focusing on being a good partner, which involves getting strategic wins, turning them into references, and sharing knowledge with partners in other verticals to collectively raise the Dynamics tide and float all MBS partner boats.

Gillis has maintained his focus since he founded Iteration2 with two colleagues -- Gary Peterson and Greg Carter, both now company vice presidents -- who each had experience with JD Edwards enterprise resource planning (ERP) software, either as JD Edwards employees or partners. Gillis was with Systematic Systems Integration, a Microsoft partner that performed custom application development to integrate with ERP packages from SAP AG, JD Edwards (now part of Oracle Corp.) and others with Windows. After that company was acquired in 2000, he took a few years of semi-retirement.

During that time, Gillis and his partners watched with interest as Microsoft entered the ERP market, buying up companies such as Great Plains and Axapta. "We knew there had to be a better way to do ERP, but you had to have the application and infrastructure pieces to execute it," Gillis says. "We decided to bet our careers on Microsoft."

Before he started Iteration2, Gillis attended the 2003 Worldwide Partner Conference in New Orleans and was "captivated" with presentations by partner- and Dynamics-oriented Microsoft executives such as Allison Watson, Orlando Ayala and Doug Burgum. Perhaps most importantly, he also attended the awards ceremony. "I wrote furiously the qualities of the winners, what they did, how they helped other partners," he says. "I took the awards ceremony speeches almost as prescriptive guidance in how to build a top partner."


Headquarters: Irvine, Calif. President: Mike Gillis
Founded: 2004
Employees: 108

Line of Business: Microsoft Business Solutions
Annual Revenue: 2005: $20 million; 2006 forecast: $30 million
Growth Rate: 110% year-to-year, 2004 to 2005

Customer Base: Agricultural, residential construction, field service companies, manufacturers
Clients: TASER International Inc.; Calence LLC; Wonderware; NRPI; Growers Express; The Linc Group Inc.

Microsoft Partner
Program Level:
Gold Certified
Microsoft Competencies: Microsoft Business Solutions, ISV/Software Solutions, Mobility Solutions
Microsoft Awards: Microsoft MBS Outstanding Partner of the Year, U.S., 2005 and 2006; 2006 West Region General Manager Award; 2005 Microsoft Winning Customer Award; three Area General Manager Awards; two Area Winning on Value Awards; one Area Marketing Excellence Award; two Area Best Practice Awards; two-time President's Club and Inner Circle Member

Vertical Definition
Among the chief lessons he took away from the awards presentation was the need to have intellectual property that differentiates your company in the market. "We knew instinctively that a vertical industry approach was the way to go," Gillis says. But it was encouraging to hear Microsoft harping on the same point -- and backing it up with useful education.

While Gillis and his partners had experience playing in vertical markets that were already defined by JD Edwards, they had never done the market analysis required to decide which vertical to target. "That's pretty much a science and Microsoft helped teach us that science," he says. That included attending a beta version of a Microsoft workshop on how to make a vertical approach work.

First targeting Axapta software (now the Dynamics AX ERP suite), Iteration2 learned how to build a matrix that would identify vertical opportunities. The goal was to find verticals where Axapta did not have a good natural fit. "That's where we could build our value," Gillis says. "You need to get out and build some functionality yourself and build some domain expertise that will differentiate you in the marketplace."

To fill out the matrix, the company analyzed criteria such as how many existing ERP software companies had deep penetration in each vertical, the viability of the hardware and software platform those companies employed, and their financial viability. Its first target turned out to be produce companies, particularly those that chop, cool and package produce, such as for packaged salads. Only a couple of players had deep penetration in the market and both were built on aging software platforms, which put the future of those players in question.

"We took the foundation things like financial, supply chain and customer relationship management, then built deep vertical industry functionality on top that is specific to the grower business," Gillis says. For example, for each of their crops, growers typically have multiple investors, and reconciling their investments can get complicated. Iteration2 software also addresses issues such as inventory tracking and cooler management, tailoring them to the produce vertical.

Using the same matrix approach, the company has since expanded into two additional verticals: field service and residential construction. Each of its markets is highly localized, giving them natural protection from off-shore competition, which helps give the markets long-term viability. The verticals are also largely regional, making it simple for Iteration2 to identify potential customers and harder for competitors to find them.

Marie Huwe

Impressive Results
The results have been impressive. "We went from zero sales to close to $30 million of forward-looking sales, and over $20 million in the previous 12 months," Gillis says. "And we have more than 100 people. We have a lot of momentum."

Much of that momentum he attributes to Microsoft's "People-Ready" marketing campaign. "It's everywhere. You can't open a Fortune, Business Week, Business 2.0 or any of those magazines without seeing People-Ready or Dynamics advertising all through it," he says. The campaign is making it difficult for anyone considering ERP not to look at Dynamics, Gillis says. As a result, the Iteration2 pipeline is growing faster than ever, with more deals coming through to close.

The ability to keep up with that ever-expanding pipeline requires speed, which is the company's real differentiator, Gillis says. Crucial to maintaining speed, he says, are recruiting and retaining the best people and sharing knowledge seamlessly.

"We work like crazy on creating the coolest place to work, and that leads to good retention of people," he says. Toward that end, the company throws four family-oriented events per year, including a company picnic and holiday party, as well as four staff-only events where people can get to know each other better. Employees are also encouraged to continually go after more advanced Microsoft certifications. "We have 100 people who are becoming 100 experts," as Gillis puts it. In fact, a commitment to personal and team growth is one of the guiding principles, or, as Gillis puts it, "Pillars of Strength," upon which the company was built.

Team members who know and like each other are also far more likely to share knowledge. "Friends share information better than knowledge management systems," Gillis says. After any given meeting at Iteration2, a flurry of e-mails and phone calls will go back and forth with staffers sharing information. While Gillis maintains that's the best way to share knowledge, he acknowledges it has limits in terms of scalability. So the company also employs systems for sharing knowledge, such as Web sites for each project, which take advantage of Microsoft collaboration tools. The company also has subject matter expert groups devoted to specific topics. "Sharing knowledge seamlessly is something we work on all the time," Gillis notes.

What's in a Name

The name Iteration2 stems from the fact that the company represents a second go-round in the career of each of its founders. For President Mike Gillis, it's his second time being a Microsoft partner, while Gary Peterson and Greg Carter each previously worked for ISVs.

Landing Awards
Winning awards is likewise never far from Gillis' thinking. "Our mission is to be recognized as the world's finest Dynamics partner. Not just to be the finest partner, but to be recognized," he says. "That's what the awards do -- make us a recognized industry leader."

What does it take to be named U.S. Partner of the Year two years running? Closing deals certainly helps. "Get strategic wins. Make them referenceable, then share those references with other partners so they can create strategic wins," he says.

He also advises would-be award winners to communicate openly with Microsoft about ways to improve its partner program. Iteration2, for example, has successfully lobbied Microsoft to deliver more and deeper video-based training and has worked with Microsoft to create and refine some vertical industry marketing programs. Microsoft is now running a series of vertical campaigns throughout the United States that are much like those first prototypes, Gillis says.

"So get in a leadership position, help make the program better, and make sure that [you] keep growing, getting more customers and more people involved in the success of Dynamics," he advises. Doing those three things better than other partners do leads to winning Partner of the Year awards, Gillis says.

Part of making the program better involves openly sharing information on what works and what doesn't. "It's important for us to share so we can all be more competitive, so we can beat SAP all the time and beat Oracle all the time," he says. "We have to get out there and carve out our own niches and show the world just how good [Dynamics] is. They can't know unless we show 'em."