Today at Microsoft WPC Doug Kennedy Microsoft VP for Partner and Channel Marketing announced some significant changes to the way Microsoft will go to market with Dynamics products that provide big opportunities or risks for Dynamics Partners. The implication for many is they must transform themselves to capitalize or risk becoming irrelevant and out of touch with Microsoft and the market.
The new strategy aligns to three customer segments; Enterprise, Corporate and SMB customers. Microsoft announced big new investments in a sales force capable of addressing BDM’s and CIO’s in very large Enterprise accounts. They also announced that their flagship AX ERP product will be available under VL (Volume Licensing). This means that Microsoft is going after the Enterprise segment and competing against SAP, Oracle and Salesforce.com. The implication for partners is customers will be able to buy both ERP and CRM products under their existing licensing agreements with Microsoft through Microsoft’s LAR’s and the services will be delivered by the large Systems Integrators addressing these accounts.
The way an existing Microsoft partner who has a focus on the Enterprise segment can capitalize on this shift in strategy will be to form very close partnerships with the SI’s who already have the relationships with the Enterprise Accounts as well as building very tight connections with the new Microsoft Solution salesforce who are being hired to target these accounts. The salesforce will have the job of ensuring that the SI’s have the relationships with partners who can help them round out their solution offerings.
Microsoft also announced their vision for how they see the SMB market opportunity for partners. Microsoft makes it clear that customer needs are changing. SMB customers want fast, connected, packaged, secure and reliable solutions. These solutions are increasing available from On-line partners who have a volume based approach to doing business. In the future the margins per new customer add will not be significant enough for traditional Microsoft VAR partners who do not have a volume mindset to survive.
So what is to become of the large traditional Dynamics Channel predominantly made up of geographic focused VAR’s (value added resellers) who now find themselves stuck in no man’s land between the Enterprise segment where the only players in town will be the large SI’s and the SMB segment where the new volume based partners are much better positioned to address the needs of SMB customers for whom many of these VAR’s traditionally have focused.
There are three strategies open to traditional VAR’s. They can either transform their business into a high velocity volume based business or they can move upwards into the Enterprise segment knowing that the only way to play will be to form partnerships with the big SI’s and the new Microsoft salesforce. There is however a segment that sits between Enterprise and SMB that is often referred to as the Corporate Accounts segment. This segment is made up of customers that think and act as if they are Enterprise accounts but they are not large enough to truly be so, but on the other hand they are not small enough to be SMB. The opportunity for the Microsoft VAR who has traditionally sold into the SMB segment is that the size of deals is generally much larger and the project cycles much longer, fitting better with their existing business models. The challenge is that these customers think and act as if they are Enterprise customers. This means that their needs are very specific to the industry, vertical or even micro vertical market that they are in. In order to be successful in targeting this segment Partners must transform themselves from being horizontal focused to being vertically focused. This will be a big challenge for many traditional VAR’s who’s business has been built up over many years supporting horizontally focused SMB customers.
Transformation is in the air. The world for Microsoft Dynamics Partners is changing at a rapid pace and so the boardrooms of the base of traditional Microsoft VAR’s must be reverberating with the voices of those Managers and Directors returning from Microsoft WPC this week with the words “We have no choice, we must choose which segment we want to address and start to transform our business and we better start today.”
For more information on Alan Dowzall go to: www.alandowzall.com