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Dynamics 365 – Hurricane forecast to hit Channel

About a year ago, Ron Huddleston and Gavriella Schuster fired up a wave machine. You may be starting to feel a little movement already, but a hurricane is developing, and all of the spaghetti models show it tracking right into the Microsoft Partner Network.

First, for the acronym challenged, SI is “Systems Integrator”, this is the Microsoft Partner that you engage with to deploy and customize Microsoft products. ISV is “Independent Software Vendor”, this is a company that has built applications that run on top of, or in conjunction with, other Microsoft products. SIs outnumber ISVs 100:1 today.

The SI Reign

For Business Applications like Dynamics 365 in particular, the primary go-to-market motions for Microsoft have been in support of the SI. The SI was the “problem solver”; the necessary party who could take a customer’s requirements and execute on them through a combination of configuration, customization and pulling in ISVs where necessary. 99% of Microsoft’s resources were in support of the SI. All of MPN, all of the GTM materials, the main efforts behind former PinPoint, all training materials, all conference sessions… you name it, it was SI focused. ISVs struggled to even get Microsoft’s attention, much less any action. ISVs were treated like hood ornaments, fine if a customer wanted one, but not a key component. Microsoft did not make any money from ISVs, the real need was for SIs that could handle that significant sell/config/customize effort that was required for a customer to buy and succeed. What is changing?

The Configurable Revolution

Over the last few years, many things that required specific deep expertise to enable, have been reduced to checking boxes. Microsoft has become keenly aware that while necessary, SIs can sometimes get in the way. The cost for an SI to build something for a customer, often kept that customer from moving forward. I have used this analogy before, but I am too lazy to come up with another one: the hill of cost that the customer has to climb, is too damn high. Microsoft has turned their attention to flattening every hill they can find. A ton of money and energy has been aimed at common items that a customer would like to accomplish, where the SI cost component of getting them configured and customized is simply in the way. “Can we make that a checkbox?” is the new internal mantra. The more things get reduced to checkboxes, the less significant and necessary the role of the SI becomes. I pissed off a bunch of partners about this over a year ago here: https://stevemordue.com/the-end-of-the-microsoft-partner/

The ISV Evolution

One of the things that Ron brought over from his time at Salesforce.com was the understanding of how critical ISVs were in Salesforce’s success. He had to have been more than a little bewildered at Microsoft’s historical approach to ISVs, particularly in the Business Solutions area. Sure, in the past certain ISVs were acquired, but that has proven to be a mixed bag of success. I can imagine Ron saying in a early meeting “Why buy?, Why not just leverage?, we can’t buy them all…“, and the rest of the team in the room saying “That’s not how we operate“. Fortunately Ron came in with the authority to say “It is now“.  And just like that, ISV’s phones started ringing from Microsoft.

The AppSource Democratization

As an ISV, your choices, up until recently, were limited. Sure, you could put your solution on PinPoint, it was not meant for you, but Microsoft would not stop you, but that had become an unused pile of crap. There were a few scattered “Marketplaces”, mostly spun up by the BGs, but there was no promotion around them. You could spin up your own website and hope to be found in the sea of the internet by aimless users. Or, as many had to, you could build your own channel once you realized that your only path to customers that Microsoft was enabling, was through the SI. Then came AppSource. At first it just seemed like “yet another marketplace”, but I heard rumor that Scott Guthrie was “backing” it. So you had to look at it more closely. Over time, the other marketplaces have all collapsed into AppSource. AppSource has received the promotional effort that none of it’s predecessors could. It is rapidly becoming unavoidable by users, showing up directly in many apps today and more to come. AppSource was all about ISV. The recent addition of Consulting Offers is really the only SI play there, and even that in many cases, is in support of the ISV solutions that are in there. Customers can easily discover and consume ISV applications directly now. Solving this, was one part of the “grand plan”.

The OCP Verticalization

If you have heard Ron or Gavriella, at any event in the last year, you are hearing about One Commercial Partner (OCP). The over-arching idea of OCP, in my opinion, is that customers buy solutions to business problems. The more targeted the solution is to their particular industry, the better. While SIs play a role, the whole OCP idea fails without significant I.P., which is typically surfaced by the ISV community. In fact, OCP could possibly succeed without SIs at all, when you take into account everything else that is happening. But there is no conspiracy to kick SIs to the curb, at least not that I am aware of. What is clear however, is that OCP “leads” with ISV-built Industry Solutions, supported by SIs. For OCP to succeed, Microsoft needs world-class ISV solutions… as many as they can get. They need this so badly in fact that they are offering to Build it with you, take it to market with you, and Sell it with you. What other company is doing that today? I said in my last post, that OCP is not some “side-project” to finally throw a bone to the ISV community who has felt like they have been ignored for so long. Microsoft seems to have had an epiphany. OCP is now the primary go-to-market for cloud solutions, and it is fueled by ISVs.

A Reversal of Roles

So from only recently finding myself begging SIs to join our channel, and then begging them to sell our solutions, I now have SIs requesting my permission to let them list themselves as an SI for our AppSource solutions. It like time rolled back and I picked the red pill instead. “You take the blue pill—the story ends, you wake up in your bed and believe whatever you want to believe. You take the red pill—you stay in Wonderland, and I show you how deep the rabbit hole goes.” In the very near future, a customers’ first engagement will most likely be with an Industry focused ISV Solution for their problem. The ISV will be the one who recommends to those customers knowledgeable SIs who can support their solutions.

The SI of the Future

At Extreme365 last week, we heard Karen Del Vescovo, US OCP “Sell With” Leader, say on stage, “If you are an SI, and you come to me and say I do everything for anybody… that is of no use to me“.  The irony is that while ISVs focus on pigeon-holes by design, SIs fight being pigeon-holed to the death. The SI who does “everything for everybody”… has no future, at least not one that Microsoft will be championing. So, your past ability to take your broad knowledge and “learn” how to apply it to a particular industry opportunity, will be traded in for an SI who already knows that industry. Microsoft will go in with an SI who is already up-to-speed with the Industry ISV solutions that are, or will be, on the OCP Solution Maps. My advice to SIs… learn an industry.

The post Dynamics 365 – Hurricane forecast to hit Channel appeared first on Steve Mordue.

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