In-Depth

How Microsoft Dynamics Partners Are Evolving with the Cloud

With Microsoft rolling out more of its key business applications in the cloud, the channel must prepare. But in interviews at Microsoft Convergence, partners and customers are finding the cloud is just one more reason to re-emphasize good old-fashioned services.

• By Barb Levisay
• July 25, 2011

While the cloud will undoubtedly affect partner services models, many partners are already taking steps to expand their relationships with customers to build services revenue streams. During Microsoft Convergence, the annual Dynamics customer and partner conference held this April in Atlanta, partners, customers and Microsoft executives shared their impressions of how partners are delivering services that meet the changing needs and expectations of customers. There were three themes that emerged from the conversations: "packaged" services are more profitable; strategic planning with customers adds value to the relationship; acting in the customer's best interest pays off.

Simplify the Services Model
Partners are finding a number of ways to package their services to make them more repeatable, profitable and cloud-friendly.

Managed Services. A growing number of Dynamics partners are expanding on the platform managed services provider (MSP) model by adding Microsoft SharePoint and Dynamics support to the package. Both service areas are fast-growing and high-margin. These partners monitor and maintain servers and applications through a monthly service package.

Robbie Morrison, director of Technology and Professional Services for Solugenix Corp., a Dynamics AX VAR based in California, describes his company's managed services approach: "We fully manage the environment and hardware so all the customer has to do is use the system," he says. "It's a natural progression to the cloud offerings we plan to add."

Vertical Solutions. Long evangelized by Microsoft, partners seem to be finding practical ways to ease into vertical markets without major investments. Vertical solutions are defined by most partners as repeatable implementation, configuration and reporting delivered to multiple organizations in the same industry. Dynamics CRM and SharePoint are components of many of the new vertical packaged services, building the deal size and offering more value to the customer.

John Hendrickson, CEO of InterDyn BMI, a Dynamics VAR in Minnesota, explains his company's approach to target industries. "We bundle the solution based on our knowledge of the industry requirements -- not so much pure IP, but business process with workflow," Hendrickson says. "Core GP solutions plus linkage with the best-of-breed industry solutions create a valuable package. Then we build reporting to bring it all together."

Other simplified services models that are helping partners build revenue include:

• Fixed-fee project pricing with strict adherence to Sure Step, the official Dynamics implementation methodology from Microsoft.
  
  
• Out-of-the-box repeatable, functional workflows (such as automating the purchasing process) using Dynamics plus SharePoint.
  
  
• Modified SQL Reporting Services (SRS) reports built to meet industry-specific government compliance reporting requirements and packaged for resale.
  
  
• Dynamics CRM configurations that address unique sales and customer service requirements for industries from boat rentals to real estate management.

George Mackiewicz, owner of CAL Business Solutions, a Dynamics VAR in Connecticut, says his company has found success with an industry focus. "We've developed middleware to connect line-of-business applications with GP to provide industry solutions. There's no need to build the functionality on GP if you can successfully partner with someone else," Mackiewicz says.

Plan with the Customer
Whether it's called a Business Process Review or an Annual Check-Up, working with the customer to build a technology plan that supports the organization's strategic goals clearly benefits the partner and customer.

"With the roadmap, your relationship with the customer becomes strategic and helps them plan their projects and expenditures with you," Hendrickson says. Customers were equally supportive of -- and willing to pay for -- a yearly meeting to evaluate the current system effectiveness, discuss processes in need of improvement and explore technologies that could enable business improvement.

Some partners go so far as to offer a money-back guarantee on the value of results from an annual check-up. Charging customers for formal business system evaluations can make underutilized consultants billable and uncover opportunities for additional product sales and service contracts.

Doug Kennedy, vice president of Microsoft Dynamics Partners, believes that too many partners are undercharging for these business-planning services that bring best practices and technology knowledge to clients.

"Customers aren't deriving the most value out of their systems and partners can help them," Kennedy says. Partners need to appreciate the value of their own knowledge and experience enough to feel comfortable charging for sharing their expert advice, he contends.

Partners often mentioned that an added benefit from the expanded MSP concept is an increased familiarity with the day-to-day operations of those clients. With more insight into the operations of an organization, the partner can suggest process improvements proactively. "Business advisor" has long been the role that Dynamics and platform partners have aspired to -- perhaps that day has arrived.

Build Customer Trust
Most partners get it: There's a direct relationship between the partner's concern for the best interest of the client and partner success. As Gretchen Freeman-Cromar, VP of Client Services for the Oregon-based Dynamics VAR eSoftware Professionals, puts it: "We work to cultivate trust by demonstrating that we have a team of experts who want to partner with our clients to make the best use of technology, and not just treat them like a dollar sign."

Successful partners don't jeopardize long-term relationships by trying to provide services outside their areas of expertise. The most common complaint heard from customers was about partners who attempt to implement applications or modules they don't know instead of bringing in experts. One Chicago customer described a botched Analytical Accounting (AA) module implementation performed by a partner who finally admitted they had not implemented AA previously.

Another customer talked about having to find an expert on her own to implement HR and payroll when their partner was unable to answer basic configuration questions. Through an Internet search -- rather than a partner recommendation -- she found Integrity Data, a Dynamics GP HR/Payroll ISV, whose extensive knowledge made the implementation a showcase.

Bringing the best the channel has to offer to your clients builds trust and expanded service opportunities.

"We can plug in where we're needed. The local partner builds the relationship and the software manufacturer [ISV] delivers the domain expertise to a portion of the project," says Michael Lilek, president of Shining Brow LLC, a Dynamics field service ISV. "Customers appreciate that. We delight the customer and save them gobs of money over the enterprise solutions."

Whether it's the partner's desire to keep all service dollars or fear that clients will think less of them for not knowing a product, some partners hesitate to bring in the experts. Several ISVs noted that, as vertical solutions are expected from customers, partners should feel confident in the value of bringing the subject matter experts in to improve project success.

As Jeff Holway, director of Sales and Marketing for Experlogix Inc., a configurator ISV for Dynamics, explains: "Our partners love this model. It doesn't make sense for them to learn the services because we're a niche product. We come in as the subject-matter experts and make sure the product is deployed correctly. We make the partner look good and keep the customer happy."

The Cloud Is Not the End Game
The Microsoft Convergence conference provides a unique opportunity to hear from partners and customers about what's important to all the players in the Microsoft business solutions market and how they're responding to change. The cloud was a topic, but the challenges customers face -- operational efficiency, faster communication, expanding markets, green initiatives, business insight, the list goes on -- were the real focus of Convergence conversations. Partners that deliver cost-effective solutions to help organizations improve their business operations have and will continue to find the silver that's lining those clouds.