Microsoft’s Dynamics Partners Are Furious and Here is Why This Is A Good Thing for both Microsoft and Partners
Satya Nadella, the CEO of Microsoft since early 2014, should be commended for his much needed reset of Microsoft’s now infamous Lord of the Flies / Hunger Games toxic corporate culture. I sincerely wish him well in this monumental effort and hope that it leads Microsoft to become a leaner, better company that will be better aligned to focus on its core competencies and its current and future customers.
However, if that reset directed what happened this past year with the Microsoft Dynamics Partner channel then clearly a significant portion of Microsoft Dynamics Partners would disagree with some aspects of this reset. Judging by their collective response to another round of major product changes announced at the Microsoft Partners Directions Conference 2017 in Orlando, FL last month for Dynamics 365 Business, an offering just released less than a year previously, the partner channel is obviously frustrated and justifiably so. As a recently former Microsoft Partner (I decided to not renew my partnership on October 5th, 2017), I understand where they are coming from and I hope this article serves to help Satya understand what transpired and help him stop Microsoft from continuing to shoot itself in the foot.
The Partner Channel’s response at the conference was a culmination of frustration building up since last summer when Microsoft held its July 2016 partners conference call. With that call Microsoft’s caustic, dysfunctional culture was in full view. It revealed Microsoft’s fundamental lack of understanding of the role of VAR partners and of ERP systems and signaled an abrupt end to the trusted relationship with Microsoft. It also set off the race for Microsoft Dynamics partners to immediately look for and establish VAR partner relationships with other ERP vendors (Netsuite, SalesForce, Acumatica, and Inacct — now part of Sage — to name just a few) to diversify their product and service offerings and not rely solely on Microsoft. In short, the era of a company being a Microsoft Partner exclusively was over.
The Infamous July 2016 Partners Conference Call: What Microsoft SMB announced, in a decidedly hostile one-way conversation, on the Partner Conference Call
1) An incomplete version of Dynamics 365 for Business based on Dynamics NAV would be available for sale November 1st with only the basic financials functionality available. However, it should be full completed version should be available within a year or so.
2) Microsoft would be doing the first implementations and set an arbitrary fixed-price implementation fee for Dynamics 365 Business edition regardless of the specific customer, needs or circumstances.
3) Dynamics GP would be developed through calendar year 2017 with one last major version release and then later Microsoft would be releasing only minor version changes based on feature requests requested by customers.
4) Microsoft Support for Dynamics GP would drop in 2020
Note: See comments from Linkedin posting from Microsoft’s Pam Misialek, Product Marketing Manager for Microsoft Dynamics SMB — “Dynamics GP 2018 will ship December 1, 2017. The lifecycle will have the normal 5 year mainstream support which brings us to somewhere in 2022 (announced when we ship). I wasn’t at this call for partners back in 2016, but a 2020 end of life date is completely untrue. There are no end of life plans for Dynamics GP. It will continue to have ongoing development.”
5) There would be no conversion tool developed to help move current Dynamics GP customers to any of the new products once they were completed. They would have to be re-implemented on one of the evolving new versions of Dynamics 365.
What Microsoft VAR Partners Discerned from the July 2016 Conference Call:
1) Dynamics 365 Business was being prematurely released by Microsoft, having not been fully developed yet and that Microsoft was depending on their partners (and now customers) to beta-test it. Furthermore, the margins on the proposed per person/per month subscription price and the fixed price implementation fee regardless of complexity or customer made the selling of it a huge risk with little, if any, reward. In short, it was a “no go” from the get go and partner’s essentially ignored the new product.
2) Existing Dynamics GP customers were not to be told about the 2020 support drop by Microsoft or the lack of any migration tool.
3) Microsoft Partners were being forced into an untenable and unethical position as a trusted advisor to existing clients and potential prospects because they were being asked to continue to sell Dynamics GP and its third-party products with the full knowledge that support would be dropped by Microsoft in 2020 and with no assurance of future support for the customer in terms of discounts or assistance in transitioning to Microsoft Dynamics 365.
4) Microsoft was now treating its partners (separate independent companies mind you) to the same dysfunctional Microsoft culture its employees had been subjected to for years. The trusted relationship with Microsoft was officially over and partners must immediately diversify their partnerships with other solution providers in order to offer more stable and developed products for their customers thus saving their businesses.
5) No two-way conversation or input on these decisions was wanted. These were marching orders.
Conference Call Take-Aways
After that meeting most Microsoft Dynamics Partners became reluctant to sell this new subscription-based product because it was still essentially in beta. The risks of doing so were too high and the margins too low that it didn’t make business sense for them. Nor were they now willing to put their trusted advisor relationships on the line and knowingly sell existing product lines with a limited shelf life. It also became clear that Microsoft wanted to bypass their partner channel and deal directly with customers which, given the current state of quality of Microsoft’s Dynamics 365 released products, actually sounded like a pretty prudent idea to partners.
The Results Since that Conference Call
I haven’t heard of any successful implementations of Dynamics 365 Business and I’ve heard of two failures. If you have a lot of time on your hands you can follow the wanderings of the development of Dynamics 365 on Steve Mordue’s excellent blog here.
How Did We End Up Here?
Project Green
The seeds of the current partner frustration actually began back in 2007 with the waffling, conflicting announcements and then the eventual demise of Project Green which was originally announced in 2003. Starting in mid-2000 with the acquisition of Solomon by Great Plains in the US and the acquisition of Navision by Axapta in Europe Microsoft purchased both combined companies in May 2001 and July 2002 respectively. With that purchase Microsoft gained product lines that were a strategic fit to their business software focus and also a huge existing (and largely captive) customer base. Then in 2003 Microsoft announced project Green which was to take the best features of all 4 ERP software products and rewrite them using .net into one product with a 5-year timeline and that they would provide all their customers the necessary tools to easily convert to the new ERP system. I remember thinking that it was a huge ambitious project but that Microsoft had given themselves enough time and that only they had the required technical expertise and resources to pull this off for a safe landing for everyone concerned. I assumed they would bring in leading industry experts in process and discrete manufacturing, COOs and CPA’s to guide them in their development of the various aspects of an ERP system. But apparently that didn’t happen. Instead we saw the separate development of each of the 4 product lines leaving all the partners guessing which product line would survive. First it was Dynamics GP and Dynamics AX would be the ones to survive then Dynamics NAV became more viable. So consequently, at the time I formed my partnership in 2010 it was anyone’s guess which product would succeed so I named my company DYNx with the ‘x’ as the indeterminate variable to cover my bases.
Microsoft Partners get it — for example: we know that the Dexterity code base and the traditional on-prem desktop client model has run its useful life and that big changes need to be made — and we whole-heartedly agree with the recent changes to use the Common Data Model — but we’ve been waiting for that change to a single platform since the announcement of Project Green back in 2003 — we’ve been waiting for this change to be handled in a logical, planned manner with a market ready solution for the last 14 years.
Meanwhile Non-existent Features Were Being Released, Marketed and Then Later Pulled in Existing Dynamics Product Versions
Case Example: The Credit Card Processing feature in Dynamics GP 2013 R2
Based on experience, any Microsoft partner knows not to even consider upgrading any non-Office Microsoft enterprise-wide product for a customer until service pack two has been released. But we never expected to find functionality that was marketed and released in major versions that was completely missing or never functional, especially one so vital, critical and sensitive as credit card processing. Credit Card processing, if not developed correctly according to PCI-DSS standards, could result in a huge data breach and liability for a client and therefore, for the partner and Microsoft. With release of Dynamics GP 2013 Microsoft introduced credit card processing functionality for sales and receivable transactions. In early 2015, after a client rejected two proposals for 3rd party credit card processing add-ons for Dynamics GP because they were too expensive, I decided to implement Microsoft’s new credit card feature believing it to be a viable product since it was released and marketed as such and, since it was functionality the customer already owned, it would be cheaper. But it never completely worked and working with Microsoft technical support I learned that they couldn’t give me the exact Dynamics GP version where this functionality actually worked nor provide me with any other existing customer that was currently using this functionality. I then escalated this issue to no avail. Eventually I prepared and submitted a proposal on behalf of the client to Microsoft’s “Make It Right” program to provide funds for the client to purchase one of the 3rd-party products I initially proposed to replace the missing functionality and to pay for my time attempting to implement a feature that didn’t work. Eventually Microsoft came back and denied the request stating that it was my fault for not beta-testing the feature — let that sink in — Microsoft was essentially admitting that they had marketed and released a non-functional feature for purchase. Later that year Microsoft announced that it was pulling that “feature” from Dynamics GP. And in August of this year Microsoft announced they were discontinuing credit card processing in their other product lines (AX, NAV) as well.
This lack of quality assurance in Microsoft released products has even affected Office365. When Microsoft released this product it later announced an ill-fated collaboration with jajah.com to provide VOIP services for Office 365 Lync. It never worked well and when I called jajah.com for technical support they pointed the finger to Microsoft Support who when contacted pointed back to jajah.com technical support. Even getting managers from both companies’ technical support departments on a conference call didn’t resolve the issue. In an attempt to get Microsoft to listen I sent an email to Steve Ballmer about this and never heard back but soon afterwards Microsoft announced the suspension of its partnership with jajah.com for providing VOIP service for Microsoft Office365 Lync.
So Why Is All This Good For Microsoft and its Partners
Since the rather abrupt rude awakening delivered by Microsoft to its partner channel existing partners have been busy diversifying their businesses and are reclaiming their role as trusted advisors. Selling other competing products gives partners leverage over Microsoft to become more competitive and frees them from providing free beta testing services to Microsoft and allows them to demand that Microsoft up its game when it comes to quality control and releasing fully baked products. It also frees up partner’s resources because they can demand that meetings and conference calls become two-way communication events that and marketing efforts are clear, complete, concise and fewer — it frees them from having to learn about the latest fluff marketing campaigns with their ever growing list of marketing acronyms — so they can concentrate on their own business needs. In short, Microsoft will now have to become more competitive because they will have to compete with other solution providers for partners’ time, attention and energy.
My Advice
For Microsoft — Do Right By Your Existing Customers
1) Retract the plan to drop support of Dynamics GP in 2020 or spin it off to an organization that is willing to continue development and support.
2) Create a free bridge for current customers to migrate to the new Dynamics 365 platform, once it is completed, in the form of a migration tool as was originally promised with project Green 14 years ago.
3) Either reduce the annual enhancement plan fee for FY 2018 and onward or provide a discount for existing customers to migrate to the new platform.
4) Up your game on quality control and only release fully vetted products. Or offer discounts for beta releases.
5) Stop the rapid, incessant changes to your products and constantly moving the target and land somewhere.
6) Stop the constant rebranding and messaging marketing efforts and let things settle so that partners and customers can identify a solid product offering and be able to sell it with confidence.
7) Create a better communication channel between partners and Microsoft so that issues like this can get heard and resolved internally without having partners have to communicate externally.
8) Reward partners for finding and reporting bugs or non-functionality in their products.
For Microsoft Partners — Diversify your solution offerings and partnerships
1) Continue to vet new products and offer competing solutions.
2) Demand that Microsoft improve its quality control and testing efforts and let them know that you’ll no longer be providing free beta-testing services and that you expect Microsoft not waste your time with releasing half-baked functionality.
3) Demand that all your software vendors provide clear, concise, and stable marketing and development plans.
4) Don’t fall for white labeling schemes that essentially makes your company responsible for Microsoft’s shortcomings.
5) If Microsoft’s intention is to bypass their partners completely and go directly to the customers then by all means let them. Step aside, grab some popcorn and watch how all that plays out.
For Customers — Demand More from your Partners
1) Look for partners that provide more than just Microsoft solutions so that you know that they are looking out for your best interests and can once again act as your trusted advisor.
2) If you are a customer on an existing original Dynamics XX platform and it is working just fine then stay with it until you’re ready to change and then use your partner to research your best options that include the consideration of other product offerings. Who knows, by the time you are ready to purchase and implement a new system Microsoft’s Dynamics 365 will be your best option.
3) Demand that Microsoft not drop support for your Dynamics until a viable Dynamics 365 version with a vetted migration tool is available.
In Summary
ERP systems are not email, calendaring or collaboration tools. They are the critical heart and circulatory system of any business and they are subject to many rules, certifications and industry standards. Value Added Resellers are customers’ trusted advisors and should always represent the customer and have their customer’s best interests as their focus. Unplanned, chaotic and disruptive change for change sake is a tough sell to accountants, controllers, and CFO’s looking for functional and stable ERP systems to run their businesses.
It is my belief that partners should steer clear of Dynamics 365 until it has stabilized and let Microsoft find a willing, deep pocketed company with lots of time on its hands to fully implement and vet out and prove Dynamics 365 before stepping into the fray. But for right now — as far as the Microsoft ERP Division is concerned — it feels like there isn’t an adult in the room. How Microsoft handles this will be a true test of Satya’s reset.