Steve reads his Blog

Microsoft taking away Direct CSP from Small Partners

When I moved from Salesforce to become a Microsoft partner about ten years ago, they were just launching the "Advisor" model for cloud license sales. The road got rocky after that. Life was Good The Advisor model was great. Microsoft handled everything, billing, support, collections, etc. All we had to do was bring customers and get paid a commission on the licenses that were bought. Cloud was exploding at that time a rate Microsoft did not seem prepared for. The Advisor model was putting too much of a strain on Microsoft, so CSP was born. CSP sought to put Partners or Distributors in the line of fire, in front of Microsoft. As a CSP, you were now responsible for billing, support and collections. CSP Bumps Microsoft launched CSP in basically two flavors, Direct or Indirect. The Indirect model was were partners would transact though a distributor. But distributors seemed to have been caught flat-footed at launch, and not a single one of them had even a plan to figure this out. Distributors were still reeling from the loss of hardware and CAL sales as the cloud loomed larger. The other flavor was Direct CSP, originally intended for large partners. The problem was that large partners were moving to cloud way too slowly. Desperate to get out from under the burden, and not having the patience to wait for Disti to get their shit together, Microsoft decided to lower the bar to entry for Direct CSP, and a bunch of small partners, including us, rushed in. Our Strategy The CSP has support responsibility, meaning in the Indirect model, the Distributor was responsible for support, something they were ill-equipped to provide. But, as a small partner we were not really equipped to provide significant support either. So we became both a Direct and an Indirect Partner. My thinking was, that if we had a customer who looked like they would need a lot of support, I would run them though Disti, otherwise we would take them Direct. It seemed like a good plan, but again, Disti was not prepared or capable of anything. Simple things like adding a license was a huge project. Our Shift At the urging of Microsoft, we got into some things we were not particularly good at. As a CRM partner, we suddenly found ourselves selling Office 365 and Azure, and we pushed all of that through Disti. It was a mess, where our CRM customers thought we were awesome, our non CRM customers, rightfully thought we were idiots. So I got out of that business by transferring it all to a Gold Office 365 partner. Now we were back where we should have stayed, a CRM-Only partner. As a CRM partner, working with CRM customers, we had little need for support, from either Disti or Microsoft, so we dropped the Indirect relationship and went all Direct. Things were good. Microsoft Knocks A couple of years ago, I got an email from Microsoft saying that they were adding a new wrinkle to Direct CSP. "Advanced Support" from Microsoft would now be a requirement, at a minimum cost of $15K/yr. I thought for a minute about getting out of the licensing game. This was an obvious move by Microsoft to get rid of partners exactly like us. That $15K was eerily close to our entire license margin!  But licenses were still petty expensive, and I thought we would continue to grow that side, so I bit the bullet and paid it (a decision I regret). Worthless As a partner focused deeply on a single product, we really did not need any support from Microsoft. I think we may have opened one ticket, found the support to be no better than standard support, and never opened another ticket. Support was just a tax on our revenue... at least in our case. When the MS rep called about renewal, I said we were going to pass. He told me that we would basically be kicked out of the program. I pressed him on this, "What about our existing customers?", and he conceded that we would be able to maintain our existing customers. I decided that was good enough. I suspected that MS did not have any technical enforcement, and was correct, as we were still able to add new customers. The $10 Pass When Microsoft launched Power Apps at $40/month, and then the $10 Per App pass, we immediately started changing our customers licenses, where we could, to the lower cost licensing. Obviously this lowered our license margin revenue significantly, but it was the right thing to do for the customers. It also lowered our total license revenue to Microsoft. Microsoft Knocks Again I got an email from Microsoft the other day, that I am sure was sent to all small Direct CSPs. The next effort to get rid of small partners in the program. Microsoft has decided that the minimum revenue to remain in the program was now $300K/yr... oh and you had to pay the Support tax too. Otherwise you would be off-boarded. Off-boarded from a program they asked me to join. To be honest, since we are now focused on selling our solutions, that run on low cost licenses, there is not much of a license margin opportunity for us in CSP anyway. Option For those that don't meet the new requirements, Microsoft is suggesting we go to Indirect with a Distributor. I have no interest in that, Distis are idiots. What I would prefer, is to continue to manage my existing customers, and eventually move them to Microsoft Directly over time as their renewals come up. I have asked what the process is for that, and have not been given an answer. Pricelists Microsoft updates the Cloud Reseller Pricelist monthly. Often new SKUs are added, and some SKUs are removed. Once a SKU is removed, it can no longer be sold to new customers, but existing customers of that SKU can continue to add and remove licenses based on that now deprecated SKU. It is not at all clear to me that customers will be able to keep these SKUs in a transition to either Disti or Microsoft, which would now be a new tax on customers, if they are forced to move to the current pricelist in the transition. The Undesirables We all have them... undesirable customers. It would be nice to just flip a switch and get rid of them, but I made a commitment. In some cases I have agreements in place with terms that I regret, but again, I made a commitment. I can make up new rules for new customers, but I feel bound by the deals that were made with current ones. Maybe if I had as many customers as Microsoft has Partners, I too could be ruthlessly arbitrary... but... I can't. Basically this is just a "venting" post with no real conclusions, but I am sure there are other partners who are in a similar situation, so I thought I would share my opinions. Feel free to share yours below. Here are a couple of links of interest: https://docs.microsoft.com/en-us/partner-center/direct-partner-new-requirements https://docs.microsoft.com/en-us/partner-center/restricted-direct-bill-capabilities https://docs.microsoft.com/en-us/partner-center/transition-direct-to-indirect  

Steve Reads Jukka’s Post

In one of our private MVP channels, another MVP “joked” that Jukka Niiranen should consider reading his blog like I do, so I “joked” that I would do it for him, and then Jukka “joked” that he “fully approved this innovative art performance“, and so.... all jokes aside… a Special Edition of Steve Reads his Posts, where I instead, Read one of Jukka’s posts. But before I do that I have known Jukka for several years now, and I consider him "the" top blogger when it comes to all things Power Platform. I also write a lot about the Power Platform, but I have a much different style than Jukka. If you could only read one blog to get the latest information on the Power Platform, I would easily recommend his blog over mine. But we both know you can read more than one blog, so you should follow both of us. It was not hard to pick a great post of Jukka's to read, I simply opened his most recent, since all of his posts are brilliant. I’m reading his own words, unedited, so where you hear “I”, it is actually Jukka. Please enjoy this special episode of “Steve reads Jukka’s Post”.

I recommended Zoho!

In this past week, I had two potential customers who were deciding between our RapidStartCRM Power Apps or Zoho. For one of them, I had no choice but to recommend Zoho. I you want to know why, keep reading. Customer Number 1 I got a call from Bob, the owner of Little Bitty Inc., in Podunk, Nebraska. Bob was managing the finances for his 5-person business in his checkbook, and managing his sales with a Google spreadsheet. He said he had been considering Zoho, but then saw an ad for our RapidStartCRM talking about how it was "Simple-to-Use". I realized at that moment that "Simple-to-Use" is a relative term, and was pretty sure that our app was not "Simple" enough for Bob. Plus he wanted to move his checkbook onto something, and that is not what RapidStartCRM is. My mind flashed across an integrated RapidStartCRM/Business Central scenario for a brief second, and then I said, "Bob... if I were you... I would go with Zoho". I'm all about RapidStartCRM, or even just Power Apps, being a path forward from spreadsheets, but for Bob... it was going to be too much of a leap. Zoho was going to be good enough for Bob. I actually like Zoho, and for a customer like Bob, I think it is the perfect solution. Zoho is not particularly powerful, nor extendable, but then... neither was Bob. Customer Number 2 I got a call from Rich, the IT Manager at Acme Solutions, a 30-person business in Atlanta. Rich had already moved his company to Microsoft 365, and was ready to tackle his sales team's challenges. They were currently using Excel Spreadsheets and SharePoint to manage their pipeline. Rich was also looking at Zoho, but just their CRM capabilities, Acme did not need the finance side. But since Rich had recently moved to Microsoft 365, he thought he would explore Microsoft's options. He did a trial of Dynamics 365 Sales Pro, and while he liked the power and extensibility, compared to Zoho, he concluded that it was simply too complex, and would need to be modified quite a bit to meet their specific requirements. He knew that Zoho could not be modified to meet his exact requirements, but it was cheaper and easier to use. So he had decided to start with Zoho, and see how far it would take them... it was better than spreadsheets. He got a call from a Microsoft rep because he had trialed Sales Pro, and after explaining his concerns, she suggested he check out RapidStartCRM, and so we ended up on the phone. Knowing he was considering Zoho, I assumed price was important, so I started by pointing out to Rich that RapidStartCRM was free, and ran on a $10 Power Apps Per App license. He informed me that was about half the cost of Zoho's lowest plan, which I opened a browser and confirmed, Zoho's base plan was $18/month. This actually backfired on me as Rich became suspicious that since RapidStartCRM was less, Zoho's CRM must have more. I asked about his requirements and it sounded like 80% of them were covered with RapidStartCRM, out of the box, the same 80% that Zoho also covered. Then we explored that 20% that Zoho could not get to, and even though the requirements were quite specific, none of them were complicated to extend to in RapidStartCRM, which again is a Power App. In fact, we extended the conversation of his requirements, talking about some platform capabilities he was not even aware of, and then he decided those were now critical! I really love the "discovery" aspect of these calls. Solution Fit I would love to say that RapidStartCRM is the ideal fit for any company, in any situation, but that's simply not the case. It was the perfect fit for our new customer Rich, but not a good fit for Zoho's new customer Bob. I think the key difference is looking out beyond today's need. While there are plenty of simple-to-use apps, including Zoho and RapidStartCRM, it is really about where you can eventually go with them. Microsoft likes the term "No Cliffs", meaning you will never hit a wall with the Power Platform and have to migrate elsewhere. I like that term also, and so do companies that are expecting to grow into bigger companies. The offer you can't refuse Two things happened that changed the landscape for us. The introduction of the $10 Power Apps Per App Pass (license), and our decision to make our apps free. Where I had been quite used to making the case for more capabilities at a higher cost than the competition, we are now offering more capabilities at a lower cost than the competition. It sure makes selling easy! :)

The Evolution of an ISV

I get that it is mostly partners and Microsoft employees that read my blog, I have not really targeted my content toward customers, which was probably a mistake, but that is a topic for another day. Today, I want to break down some significant changes we made to our ISV strategy and why. Every ISV is Different Our strategy is obviously not going to work for every ISV. For us, I think it makes sense, for others it could be non-sensical. In this post, I want to further expand on our recent strategy to make our RapidStartCRM Apps free, and how we plan to generate even more revenue than before as a result. I had a Dream When I first conceived of the idea of RapidStartCRM in 2015, there was nothing else like it in the market. "Dynamics CRM Online" was a complicated product to deploy and get adoption on... and still is. We built a solution that sat on top of it, mostly hiding the complexity. I had joked to James Phillips once, that every time he adds a new feature, we have to go back into our solution and hide it... he was not amused. But this was not my dream. My dream, was that users would just install RapidStartCRM, pay us some cash every month, use it as-is, and leave us alone. I dreamt of thousands of companies just using the solution as we designed and intended for them to. Well, that last part of my dream never came true. Almost every single customer wanted some sort of "tweaks"! They completely ruined my plan of laying off all of my tweakers...and pocketing their salaries. Resistance is Futile I spent quite a few years trying to crack the nut of I.P. without services. It's okay, my tweakers were aware, and apparently knew better than me the futility of this effort. At some point you just have to play the hand you're dealt. So we pivoted from trying to minimize services for customers, to instead leaning in on that inevitability. Where I had hoped our revenue mix would be 10% Services and 90% recurring I.P. cash, it ended up the other way around. And of our services revenue for Forceworks, 90% of that was coming from our RapidStartCRM customers. This is also why we recast our apps as "Accelerators", an acknowledgement that no app is perfect for any customer. Five Years In Business is great, growth is great, revenue is great, albeit not in the ratios I originally intended it to be... but I got over it. So now what? What could be my next move, to go to the next level? I mentioned in my last post the spark of a new idea, that came as a result of building a new idea, ISV ConnectED. Looking at the WordPress ISV freemium model got me thinking. Some of these WordPress addons have hundreds of thousands of users. I'm sure most of those users are sticking with free, but it does not take a large percentage of them to opt for a "Pro" version or something, to add up to a significant chunk of change. In looking at our Apps, we make 10X in services over the recurring revenue on the apps themselves. If the apps were free, I would be betting that sacrificing the 10%, would easily be made up for in addons and services for much faster growing user base. Decision made! I need a Plan Just removing the costs of some apps was not going to be enough, the strategy had to be more comprehensive than that. A ton of new free users is useless if you cannot monetize them, even worse than useless actually, as there are still costs. Step one, how to support them. Knowing previously, that most customers were going to reach out for help to get the most out of something they were paying for, we had not worried too much about our documentation. We had documentation, but not at the level that would be needed to support a large number of free users. Why do I care about the free users, particularly the ones who are never gonna buy anything? Because we live in a world of ratings today. If your free apps are crap, or useless without paid extras, or you don't support them at all, your ratings in the marketplaces will plummet. Good ratings are hard to get, you almost have to beg even your happiest customers to go to the time to give them. Free users got nothing but time to go blast bad ratings all day long. It is the single biggest risk in the freemium strategy. Fortunately our apps are great, probably because they were not originally developed to be free. Freemium Support So reasonable support is important, even for free users, but you can't go broke providing it. It comes from 3 places in our strategy. The first is more comprehensive documentation. The more issues that can be addressed in your documentation, the fewer frustrations a customer will suffer. But a lot of issues can pop up, that are not able to be covered in even the best documentation in advance. The next step for that free customer is a free support forum. There is no SLA in a free support forum, and hopefully over time, customers will be able to get answers to previously asked questions there, or from other users, as well as us checking in. This is about the best we can offer to a free user, and it should be good enough for many of them. But you have to give them a path forward if that is not enough for them. But that path, at that stage, does not need to be free anymore... but it still can't be too expensive. So we bubble up our RapidADVANCE managed service offerings, a paid program that can provide that next level of support, in a few flavors. But what if that still is not enough? Again, 90% of our business was coming from customers who wanted significant customizations... so this brings them to our Forceworks Support Block model, the model we have used for many years now for current RapidStartCRM customers, or all other non-RapidStartCRM customers, including enterprise customers, and P2P projects. It is basically our SI model. Other Revenue Options We are also working on two other primary monetization paths. The first is what we are calling "Simplementations" via Forceworks. This is something that we have been offering for a while for some of our non-public I.P., and it seemed like a natural fit for our RapidStartCRM apps as well. Basically, Simplementations are fixed cost, scope and time engagements for targeted scenarios. Lastly, paid addons... an area that we will be focusing on heavily in the coming months. Our RapidStartCRM apps, are like platforms on a platform, this was intentional many years ago, but only to streamline our providing services for them. But they are perfectly designed for adding additional "packaged" capabilities quickly and easily. We already have some of these, RapidPROJECT and RapidSERVICE, for example. Again replicating our motion of taking something Microsoft made too complex , and creating a simple version of it. In this case, RapidPROJECT is a subset of PSA capabilities, and RapidSERVICE is a subset of Field Service capabilities. BTW, neither of these require RapidStartCRM as a pre-requisite. But over the years we have built all kinds of things on top of RapidStartCRM in response to customer requirements, and many of those things would have broad appeal, if we packaged them up. So this is going to be a busy development year for Forceworks. I'll keep you posted on our progress. If you are an ISV, I would really appreciate your joining ISV ConnectED, I may need the gas money for my motorcycle.  

ISV Connect ED!, also our Apps are now Free

I had planned on making this two posts, but frankly I have too much on my plate at the moment, so its a twofer. The first part is about something new I launched, and the second part is about a bold move I made. ISV Connect ED I have certainly been one of the "complainers" about Microsoft's ISV programs, including ISV Connect. Well, you can only complain so much, and then, if you are in a position to, you have to take action. I decided that what ISVs were missing, was a community that was ISV Focused, instead of just being in a subcategory somewhere. The ISV Ecosystem is a big business and Microsoft seems to be grasping how important we are, particularly after a recent study they commissioned on ISVs that got their eyes-popping. Toby Bowers confirmed this in my recent chat. Speaking of Toby, he is now the new leader for ISV Connect, taking over for Guggs who is retiring from Microsoft. So, new blood, new opportunities... seemed like the time was right to launch something to help everything move along. ISV Connect ED is a membership site, so it's not free. I would love to have done it for free, but then it would not get the love it would need to succeed... and it will require a lot of love and attention. I won't go into a lot of detail here, I wrote a post on it describing what it is, and why I am doing it, here. But I will say, if you are an ISV, I want you to join and participate, otherwise you better steer clear of me when in-person events resume in the future. My Bold Move Okay, I don't know how bold this seems to you, but it was a pretty big deal to me. I tossed and turned for weeks before committing. As we were building the site for ISV Connect ED, I found us making heavy use of WordPress plugins. Almost every plugin we found had a free version, and then a "Pro" version. For about 90% of the ones we used, we ended up opting for the "Pro" version. This got me thinking about our RapidStartCRM Solutions on AppSource. While our apps have done quite well, I found myself wondering what things would look like if I had 100X the user base. The only way that would happen is either a massive marketing campaign, which would cost a ton, or... make the apps free. Either way the cost is significant. Not only would I be giving up the potential future recurring revenue for the apps, but I would have to stop charging all of our existing customers for them too! How could this work! Obviously, my plan was not to go broke, but "free" certainly does not help a bottom line. Looking at the WordPress model, most of the free plugins have basic capabilities. But if you need something more sophisticated, almost all of them offer a "Pro" version. We could certainly do that. Our core RapidStartCRM apps are intended to be simple apps, but over the years we have built some fairly sophisticated I.P. on top of them for certain use cases, like Project Management and Field Service. So we already had our "Pro" addons started. Also, most customers ended up engaging us to do further customizations, and why not, who knows our app better than us? So there's two revenue generating possibilities... would that be enough? Controlling Costs Imagining thousands of customers on the free app... that could bury us in support costs. Again, the WordPress Plugins developers' model came up. Most of them offered free support for their free apps in the form of a User Forum. Not only does this limit the effort, but more often than not, another user answers the questions raised. If you want more than forum help, you can buy it from the developer, or in some cases upgrade to their "Pro" version to get it. Brilliant! We will replicate that motion as well. Farm Betting I am taking a big risk, but I am not betting the whole farm on this. Our primary revenue source has always been Project Services, often on RapidStartCRM implementations, but about half come from other customers. So trading the potential, and existing recurring revenue from the apps, for what may come with greater scale is not crazy. Or, at least I don't think it is. Well, I hope not, since it is already underway and too late to turn back. Unlocked Again, following the WordPress model, where the plugins are not usually protected code. If you have the development skills, you can edit them yourself. So our RapidStartCRM apps are also all completely unlocked and able to be extended by the customer, another partner or... hopefully by our team at Forceworks. I may be opening a Pandora's box here, but I feel confident we will get our share. Which Apps? So we are making free four existing apps, and one more in the future pipeline: The Original RapidStartCRM, the simple to use Sales and Service app that started it all in 2015. RapidStartCRM Referral, a version for businesses that operate on a referral model. RapidStartCRM Homebuilder, a purpose built sales application for production homebuilders. How2 by RapidStartCRM, an in-app training solution that actually was always free. In our pipeline we have a new "RapidStartCRM B2C" in development for businesses who primarily sell to and engage with consumers. Worst Case The worst case scenario, is not really that bad. It is possible that many organizations will use our free apps without ever opting for a "Pro" anything, or needing any help at all. I mean there could potentially be thousands of customers being introduced to Microsoft's Business Applications as a result of our free apps... I guess that's not a bad thing either. I'll be covering our progress with this approach on the blog at ISV Connect ED, so if you want to see how this ends up, well you'll have to join that!

Steve has a Chat with Toby Bowers

I recently wrote a post with suggestions for Toby Bowers, the new Leader of the Microsoft ISV Program. I assumed he had read it, but just to be sure, I ambushed him on the phone. If you are a Microsoft Business Applications ISC, this is the guy who will make or break you. We had a great discussion about his plans for ISVs. We also chatted about my latest undertaking, ISV Connect ED, he acted like it was the first time he heard about it, but I already know that it has been chatted up in the halls in Redmond :). Enjoy! BTW, don't forget, Mark Smith (@nz365guy) and I do PowerUpLive every Tuesday at 4PM EST, click here to be alerted, and here's a link to the replays! Transcript Below: Toby Bowers: Hello, this is Toby. Steve Mordue: Toby, it's  Steve Mordue. How's it going? Toby Bowers: Steve Mordue. It's going well. How are you? Long time no see. I have a suspicion on why you're calling. I read one of your recent posts, called Suggestions for Toby. Is it to talk through that? Steve Mordue: So, before you talk too much, I got to let you know, the record button is on and I'm going to publish whatever the heck we talk about in the next few days on my podcast, if that's all right. Toby Bowers: Ah, okay. Okay. I've heard about these calls, Steve. Yeah, no. That's fine. That's fine. I've been looking forward to talking to you. Steve Mordue: All right. Cool. So, news. Guggs is headed out the door, and he did the mic drop and you've picked up the mic. Toby Bowers: Yep. Yep. Steve Mordue: Which is a new role for you, but you've been in the periphery of this ISV, but you're now the guy, right? Buck's stopping at your desk, for ISVs and ISV Connect. Toby Bowers: Yeah, no, absolutely. I'm excited with the opportunity. Yeah. Guggs is retiring for the company, and just with the turn of the fiscal year here at Microsoft, we took the opportunity to sort of reorganize a little bit. But as you said, Steve, I'm not new to the ISV strategy or the ISV Connect program. We've been, myself and my team, have been working really closely with Guggs and his team over the past year. Just to sort of explain where my team fits in. So, I work for Alysa Taylor and the product marketing group. We have all of our field sales enablement for all of our sellers and marketing teams around the world. We do our partner strategy all up, not just for ISV. We do customer success. We're focused on usage and adoption and migration. And we also do community work as well, for both first and third party community. So, ISV has always been a part of my core team charter, but as you said, I'm just sort of picking up the mantle with Guggs, and we'll get more actively involved. Steve Mordue: Is it a little intimidating? Toby Bowers: Oh, yeah. No, it is. I mean, obviously this is incredibly critical for us to get right as a company. Such a huge opportunity for us and for this business. I joined the dynamics team about three years ago, and we started talking about this, Steve, because we really didn't have a modern SaaS ISV program, ISV strategy. We were still coming off the old legacy days where, of course, ISVs are critical in this business in driving success with our on-prem business. But we weren't able to sort of effectively translate that into the cloud world. So, really, really important for us to get right. Why it's important for Microsoft is, to be honest, this is just a massive market. I mean, we did some sessions at Inspire recently in fact, this is a $200 billion market. It's a very fragmented market, Steve, as you know, so the better we are in building out an ISV ecosystem and driving those ISV's growth, the more share we can take in this market, and attract ISVs to build on our platform with great solutions that help solidify it in the customer base. Steve Mordue: Was that kind of an eyeopener for you guys a little bit to see the results of that study you commissioned around ISV? I mean, I know you guys had always kind of, in the back of your mind, assumed there was importance in ISVs, but was that an eye opener for you guys as well? Toby Bowers: It was. It was. I mean, the fact that over half that addressable market is going to be driven by ISVs and the cloud in the business applications market was bigger than I thought, to be honest. It's also, Steve, it's interesting. It's split pretty evenly across the sort of the medium business space and the enterprise. So, there's equal opportunity across both customer segments, but for us, the real opportunity, Steve is... And I'd love a chance to talk about the opportunity I see for the ISVs, but for us, the opportunity to take share and reach new audiences through ISVs is something we really talk a lot about in our conversations. Acquiring new cloud customers, the fact that ISVs can build vertical and sub vertical solutions and reach BDM audiences that we're just not that great at it, Microsoft, to be honest. Just represents a huge opportunity for us from a customer acquisition perspective. And then, the last thing I'd say, Steve, is we still sort of have this tactical opportunity to continue to help the remaining customers we have on on-prem dynamics products get to the cloud, and ISVs are obviously critical in doing that, in helping them sort of move their IP from the legacy stuff over to cloud. So, yeah, there's a big opportunity for Microsoft in it, but I also feel like there's a big opportunity for ISVs, just choosing us over someone else in the industry based on just the innovation we're building in and the growth that we're seeing in the Dynamics 365 and Power Platform business, Steve Mordue: Well, they're choosing Microsoft to start or adding Microsoft, if they're already established elsewhere. Toby Bowers: Yeah. Steve Mordue: Both of those are good motions. There's a huge ecosystem of ISVs for Salesforce and some of the other applications out there. And I don't expect them to just drop that and come over here. But you reach a point in any business where you're kind of plateauing, right? You've got your market share and you're maintaining and you've got your steady growth, but if you're looking for a new opportunity to create brand new growth, I mean, nothing like jumping into another sandbox. Toby Bowers: Yeah, absolutely. I mean, I think that's definitely part of it, and it kind of comes back to where we are in our journey with this strategy and this program [ISV Connect], Steve. I think back with the transition from Guggs, we sort of spent about a year in the design mode, and I know we worked with you to bounce ideas off you as a sounding board during that phase, back in the back of the day. And then last year, our fiscal year '20 was really the launch year. And obviously, we launched it at Inspire in July, but then it really didn't become operational for a couple of months. So, the bulk of last year was really helping our existing ISVs onboard and get enrolled in the program, and really the focus that we had on cleaning up app stores, getting everything all nice and certified and enrolled in the program for our existing ecosystem. And we feel pretty good about the result, that we got over 550 ISVs, 1200 apps. We have a good base now, but to your point, now we can sort of transition into going after recruits, right? And not only making our existing ISVs successful, but continuing to build out that ecosystem with new ISVs who are looking at multiple platforms to your point. Steve Mordue: I've been, I guess, probably the best way to put it would be "optimistically critical". I mean, I am an ISV, so obviously I'm bullish and have high hopes for success of the [ISV Connect] program, but the program has had its challenges. I think it's been passed around a lot. Hopefully, you'll hang around for a while with this thing. That's one of the reasons I was asking about the survey, was that it seemed like for years prior to that, like I say, there's been kind of a, yeah, we know ISVs are important, but it wasn't particularly believable messaging, you know? Because I don't know that a lot of the folks inside Microsoft had a clear picture of what that means. It's was just Salesforce is doing it, so we should be doing it too. But I was thinking that study kind of would have really opened some eyes and poured some gas on this motion. Toby Bowers: Yeah. I mean, it really has, Steve, and you're right. And look, I'll acknowledge we've had fits and starts with ISV strategies across Microsoft for several years, and I've been there to witness it. I'm a 20 plus year vet here at Microsoft, and I've worked in pretty much every side of the company from sales to marketing out in the field in different countries, and now here in product marketing working on BPOS and Office 365 in the early days, and then Azure in the early days, and now Biz Apps. We've gone through several evolutions that are related to our ISV strategy, and we've changed course and made some missteps, to be honest, here and there. I think my whole goal, again, in sort of stepping in and taking a little bit more responsibilities with this program in particular is to deliver on the value, deliver on the promise we made to partners. Last year when we launched, we talked about things like access to our field sellers in the premium tier, access to our partners, access to our customer base through app stores in the marketplace, access to platform capabilities. We've delivered some of that, but we still have a long way to go to deliver on the full promise. And so, I'm a partner guy. I had lots of partner responsibility in my previous roles at Microsoft, and I just think if we deliver on that promise and we support our partners' growth, we're going to grow. So, that's my number one goal. And we can talk about some of the specifics in it, but I hear you. And I think we need to stay the course. Now that we're in market, this is the year to really mainstream the program across the Microsoft machine and really deliver on the value that we've talked to ISVs. Steve Mordue: I think one of the challenges with the ISV Connect... well, any of the programs in there is Microsoft is a huge machine, and you've got to get a lot of parts lined up in order for anything to happen, parts that are within your control, other parts that are not in your control. I mean, it's a challenge to get all those things lined up in a groove. And I know that effort has been ongoing. We talked about AppSource as an example of something that Biz Apps doesn't own AppSource. They kind of own their door to it. And so, some things that are kind of in your control, out of your control, some things you can influence, not influence. I guess a lot of it would probably be driven by such as interest in the success of the Biz App side of the business, which is certainly higher than any of its predecessors, right? Toby Bowers: Yeah, absolutely. We have huge sponsorship, not only in support, not only for business applications like Dynamics and Power Platform from the senior leadership team, Satya and his LT down, but even the ISV strategy within that, Steve. I mean, we get a chance to get in front of that leadership team twice a year. We often talk about this ISV strategy, the ISV Connect program, what we're doing. So, it's well known across the company. And I think to your point around the matrix here at Microsoft, and what I would say is I've been around again for a long time and I've worked in most of these teams that are going to be critical for the success of this program, whether it's Nick Parker coming in on the global partner solution side and Gavriela [Schuster], Casey McGee, or on the engineering side, James Phillips and Charlotte Yarkoni, who actually leads our commerce engineering team, including our marketplaces with Azure marketplace and AppSource. So, we've got high awareness, high prioritization to focus and improve in some of the areas, Steve, that we'll probably talk about, we know we need to focus on and improve. But the last thing I'd say in this vein is when we launched last year... Again, you probably know the way Microsoft works. I mean, we kick off Q1 in July. Everyone goes in a little hole for it for a month, takes a couple of weeks of vacation, comes back out, and we quickly get into planning mode for the fiscal year, to sit down and build the pipeline we need, think about the right plans and investments around the world to be successful. And the difference between this year, this fiscal year and last fiscal year from an ISV Connect perspective is we now have this great stable of ISVs and apps ready to go. So, we had 500 ISVs enrolled in the program on day one, July 1. We have 1200 apps. We've got a great set of premium tier apps that we're now working with our sales teams to align to their account and territory planning process. In fact, just earlier this morning, Steve, I was looking at a spreadsheet and you can imagine not to share sort of all the gory detail, but we have these things called sales plays, which are how we enable and align our sales force to go and talk to customers about our workloads and solutions. And we have six sales plays for business applications. Then, we have an industry focus. We have these industry priority scenarios. We have 13 of those. Then, we have 14 areas, we call them, around the world. These are countries and groups of countries around the world. So, if you think about a big spreadsheet with all of those, what we've done is we've mapped our ISV solutions to each one of those to say, "hey, if you're looking to focus on supply chain in the manufacturing industry in France, here's a set of ISVs that are enrolled in ISV Connect", perhaps have an app in the premium tier that you should align to your account territory planning process, so that you can go and engage with them to build pipeline. Steve Mordue: Wasn't that previously like the... What was it? The catalog? The CSP? No, what was it? Toby Bowers: That, yeah. It was the... Well, the OCP catalog is what we used internally. Steve Mordue: OCP catalog. Toby Bowers: Yep. There's a Co-Sell Solution Finder. That's more reactive, Steve. If you're talking to a customer and say, "Hey, do you know a partner that has a solution on X," you can bring up that tool and find one. What I'm talking about is more proactive, actual territory planning with the sales teams to sit down with ISVs and do that sort of engagement, to build joint pipeline, identify joint accounts. So, I just bring it up because we didn't have the opportunity to do that last year, because we were just launching the program. So, I'm optimistic, as you say, critically optimistic that that'll make a difference for us this year, at least on the Co-Sell side. Steve Mordue: When Guggs came in, I was actually pretty excited, because that's really the first time that someone who had been with Microsoft for a long time, had some clout, knew how to work the machine internally came on board, and he was on board for, what? About a year, and then retired. And I thought, "Uh-oh. Now what?" And so, hearing that you took over, I was once again, very excited. I've known you for a long time now. Obviously a completely different personality than Guggs. You are much less of a risk taker, I would say, and much more of a... You're a much more mellow kind of a guy. You seek consensus. Toby Bowers: Thank you, Steve. Steve Mordue: I've always thought you seek consensus more than... Certainly Guggs wasn't big on seeking consensus. I think that's going to be critical to your ISV success. I think... And I admit, I'm not blowing smoke up your butt. I think you're the right guy at the right time for this now, just knowing you the way I do. And obviously, a lot of ISVs will be listening to this. So, I don't want to... I've kind of gotten caught in the past of sounding overly optimistic, and then things not stepping up. But I'm feeling as optimistic as I ever have about you stepping into role and being able to really make it work for everybody. We've got some very successful ISV stories out there, but there's a lot of them that are struggling to get there. I think democratizing the process a little bit, because we definitely over-index on the big ISVs, which I get. We need to... But big ISVs didn't start as big. We need to have motions that bring all people, raise all boats. Toby Bowers: Yep. Steve Mordue: What are you thinking about, now that you're brand new in role? Although you're not oblivious to what's going on. You've been in the periphery there of this thing fairly deeply for a while. What are you thinking about things you want to try and attack right away that you think you can get some traction on right away? And then, maybe things that you want to focus on a little more long-term, so we can kind of see what we can expect quickly, and then what we can kind of expect down the road? Toby Bowers: Yeah. Well, I appreciate that your sentiment, Steve. We have known each other for a long time, and I know you're a straight shooter, and you're also just a great champion for the broader partner ecosystem. So, I would just say, just to put everyone at ease, I've been around almost as long as Guggs and have been behind the scenes, like we said, on this for a long time. So, I don't want anyone to feel like I'm going to come in and start cracking around and changing things up. I think to your point around risk taking, this whole design launch mainstream phasing that I talked about, the program is sound. I truly believe we have the right program in place for the long game, with the revenue sharing model, the different points of value that we need to provide to our partners. Like I said, we just need to deliver on that promise now. So, I'm not going to come in and change things drastically. I'm going to take what we have, and do my darnedest to make it successful Steve, because I truly believe it is set up for success if we have the right focus and attention. So, that sort of leads me to the way I work. I am a collaborative guy. I've got a lot of good relationships across the organizations that will be required to make this program successful, whether it's the partner team or the sales team or all the folks out in the field who are closer to where the rubber hits the road. So, I feel pretty confident about the amount of focus and energy, and what I can do to really push it forward from here. As far as short term, long term, to answer your question, Steve, and I loved your blog. I read it. In fact, I listened to it. I was out walking the dog, and I listened to it. So, thank you for reading it out loud. I don't know where you found that picture by the way. That's about a decade old, so thank you. That's very flattering. Steve Mordue: Send me a new one. Toby Bowers: Exactly. But there's a couple things. I would say to some of your suggestions around... Let's just take the first one around equalizing. We probably did over-index a bit on the Co-Sell side of things last year with our premium tier, especially, and getting those partners enrolled and engaging with our field around Co-Sell. That's what, to be honest, a lot of the larger partners were most excited about. And there's been a couple of really good examples of success there, Steve, and companies like Seismic. We just had Inspire. We talked about a few different ISVs and sort of success stories, but Seismic is a great example. Sales enablement solution, three clouds, Azure, us, Teams as well. They really got plugged quickly into the Co-Sell motion. And they talked about pipeline growth of 5X in the first 90 days. That's a smaller group of ISVs that are in that premium tier app, and they've just seen a ton of success. Sort of taking a page out of the Azure Co-Sell playbook, and now applying that and extending it to ISV Connect. So, we're going to continue to focus on that. Like I said, we're able to kick off our fiscal year with this set of ISVs. And so, I feel pretty confident about continuing to push on the Co-Sell side. Where we need to focus more, Steve, is to your point on a couple of the other value points that we talked about. First is access to our ecosystem, right? We've got massive partner ecosystem, all shapes and sizes. SIs, local SIs, regional SIs, the big guys, resellers, CSP partners. Today, we've got some partner to partner benefits, kind of matchmaking benefits as part of the program, go to market program. We've got such an opportunity in the future to tap into those channels in a bigger way. You think about incentives or our transacting partners reaching into new markets and geographies around the world. That's going to be an area of focus for me going forward. And then, the other piece around AppSource. You had some great feedback on AppSource, and I know you've been giving us feedback on AppSource, for years. Steve Mordue: Yeah, since it launched. Before it launched, actually. Toby Bowers: Yeah, exactly. This is going to be a real short term focus for me, Steve. The fact is we've been on and are on a little bit of a journey with AppSource, but we've got eyeballs in there. It's got a monthly active usage of 4 million users, right? And growing. So, what we've done in the last quarter with AppSource is really worked on some of the plumbing underneath. It was just not where it needed to be when it came to search, discoverability of apps, just block and tackle, basic stuff. So, we worked with the engineering team to really focus on just fixing up that plumbing underneath. This next few months where we're going to focus is the overall user experience. So, the website itself, focusing much more on the solutions themselves, merchandising the right apps, really helping customers who are going there find what they're looking for quickly, not just from a search perspective, but an overall user experience perspective. And that'll happen literally in the next few months. And then, from there, Steve, you know where we're going to go. We're ultimately going to light up transactability of third party IP through AppSource. That'll come together with the ISV Connect program, so that partners can really choose how they transact. But we do feel like for the right apps and the right partners, that'll really light up this big Microsoft install base of customers as a new way to sell and transact their apps. So, that's where we're going. Steve Mordue: I think that would be particularly critical for the startup ISV, or the one who's coming over from another platform. Toby Bowers: Yep. Steve Mordue: Because it's a big enough challenge to build a worthwhile solution, but that's only the beginning as an ISV of getting where you need to get. you've got to build some sort of a licensing construct to protect it, and you've got to build some sort of a billing platform to get paid for it. So, to the degree that you guys can offer some sort of plugin capabilities on those sorts of things, I think that's going to open up for a lot more ISVs to engage, because you've just lowered the bar of entry to really, if you've got a good solution, if you've got good IP, you can jump in here. We'll take care of more of this plumbing for you, because it's definitely, I think, kept some folks on the sidelines or a lot of people have ended up just making apps free, because they don't have a way to protect or sell them, which isn't what the goal was. Toby Bowers: Yeah, totally, Steve, and look. I'm going to be honest. We got to get better in this space. This is an area that I just see a huge opportunity for us to focus on and improve. We've seen some success there. I talked to Trevor [Nimegeers] at this company called ITRAK 365. It's like a safety management app for waste management. Again, talk about vertical focus. Yeah. But he's getting leads from AppSource. He's going... Canadian based company. He's cracking into New Zealand and winning some deals over there. And just the infrastructure that can enable that geo expansion through a marketplace like that has a lot of promise for a lot of our ISVs. But you mentioned something important as well, which I missed earlier. So, in addition to the marketing benefits, the go to market benefits, the Co-Sell benefits, we're still working really hard with the engineering teams, whether it's Charles [Lamanna] and his team, or the marketplace team on platform capabilities. So, obviously, we've got tools and stuff today with ISV Studio. We've got telemetry. We've got install telemetry today. We'll have usage telemetry tomorrow. We'll have licensed management capabilities tomorrow. That'll flow into transactability. So, a lot of those platform investments that we can make from an engineering perspective ultimately come together to sort of paint a nice picture for ISVs who are looking to tap into that. And again, strong focus and sort of commitment across the engineering teams to do that. Steve Mordue: And when you say tomorrow, so everybody is aware, you don't literally mean tomorrow. Toby Bowers: I do not mean Labor Day. That's a very... No, no, I don't. Yeah. I mean, I don't have, and I can't share specific dates, Steve, but we are on this biannual release cycle with James and his team. Obviously, you know our release cycle there with October and April. The commerce and marketplace team is on a biannual cadence as well. So, we just fit into those engineering cycles to continue to champion for what ISVs need to be successful, in that long list of work that those teams will do to just get it higher and higher on the list. And we're really moving in the right direction. Steve Mordue: And I see a little bit of a parallel with the ISV Connect motion and really the whole Power Platform motion. My last call with Charles Lamanna when I was asking him about what are the big things that they're planning next? He said, "Actually, we're going to focus on making everything we have work better." Toby Bowers: Yeah. Steve Mordue: We have all the parts that we need and they're all out there. They're not necessarily wired up as ideally as we'd like, and you can't just keep launching, launching, launching. At some point, you've got to take a look at the pile you've built and make sure that it's organized and sorted and working, well oiled. And I kind of feel that way about ISV Connect. All the parts are there. We don't need any new, necessarily any brand new things, some add-ons here and there. But it's really just making that whole pile of components work like a well oiled machine. Toby Bowers: Yeah. I think the table's set. We just got to get people eating. Like I said before, I think the program is sound. The elements, the business model. It's a self-fulfilling business model. The more success we have, the more we can invest and grow together. And I do think that we stay the course. It's all about execution and delivering on that promise. Now that said, there are a few things, like we were just talking about that we need to add quickly or fix, to be honest. Things like getting AppSource where it needs to be, some of the benefits. You and I have talked a lot about internal use rights, and that is a benefit. We just need to get that done. I know we've been talking about it for too long. There's a broader Microsoft dialogue going on around ISV and programs and IURs. I'm just going to move forward with the right IUR strategy for ISV Connect, because that's just something we have to deliver on, Steve Mordue: Just put your head down and crash through. Toby Bowers: Exactly. Exactly. So, that's a big one. Steve Mordue: So, I recently started a new venture myself kind of on the side, towards this ISV Connect motion. I don't know if you'd heard anything about it. Toby Bowers: No, I haven't. What are you doing? Steve Mordue: ISV Connect ED. Toby Bowers: Oh, nice. I like the play on words there, my friend. You should be in marketing. Steve Mordue: Yeah, yeah. Well, I'm adding an ED to the end of it, but essentially, it's... We don't have a good external resource. I mean, you can go to Microsoft, and you can read all about ISV Connect and just read stuff, but there doesn't seem to be a community for ISVs to compare notes and... Not so much, I don't want to create a place for people to go bitch and complain. I want to create a place where people can go and learn what works, what doesn't, how to be successful, and see if we can nurture some stuff around there. So, hopefully you'll be hearing more about that. Toby Bowers: Well, that sounds intriguing to me, Steve, but yeah, I'd love to learn more. I mentioned one of the other things my team is responsible for is our community strategy. And I know you are an active member of our MVP community, our Partner Advisory Councils, our sort of partner community at large. So I'm all for what you do with that initiative, Steve. I think, to me, community, and I know we've caught up at user groups and things like that. It's just such a great listening mechanism for us. We can do all the research we want, and talk to our field and talk to partners, but that partner to partner community engagement to sort of identify common themes, and then have multiple voices bringing that back to us is just so important for us to be focusing on the right areas. Steve Mordue: Yeah. Toby Bowers: And I'm just a huge advocate. I mean, this is... In my career, I spent so much time out in the field with customers and partners, and I just feel it's so important for us to listen at this point. Again, I feel like we've got the right strategy in place, the right program [ISV Connect] in place. We need to listen to what's working and what's not working, and then act quickly that. So, I love it. I love that you're pulling that effort together, and I'd love to stay connected with you on it as far as opportunities to engage or just understand what you're learning. Steve Mordue: Oh, I'm going to lean on you, buddy. I'm going to lean on you. Toby Bowers: You can lean on me anytime. In fact, I was going to say that. Steve Mordue: One of the things that Guggs did, he kind of disbanded the ISV PAC and kind of went to that broader... But I think you definitely lose something when you've got... It's funny. When we go to any of these events, when there's a room with like 20 people in it, everybody's happy to talk. When there's 200 people, nobody says anything. Toby Bowers: Yeah. Steve Mordue: It's like the group gets too big, and then who was it? Tony. You remember Tony de Freitas? Toby Bowers: Yeah, I do. Steve Mordue: He made a comment on one of my more critical posts recently. And he just said, "Feedback is a gift." Coming from someone who used to be on the inside of Microsoft, I know you guys are desperate for the feedback. I mean, it's all... Give me the feedback, tell us what's working, what's not working. And it doesn't help when nobody says anything or they just complain. Getting that feedback is critical, and that's part of what I'm hoping to try and accomplish here is to help you guys get some of that feedback. Toby Bowers: Yeah. Absolutely, Steve. I mean, we can't do this in a vacuum. It's a new program. It's a new model for us. And so, feedback is critical, and there's multiple ways to get that feedback. The good news on the PAC is we're getting the band back together, so we're sort of re-establishing as we move into this next horizon. But yeah, in fact, I was going to offer, Steve. I think me coming in now, I would love to do this connection with you maybe in a few months as we sort of round out the calendar year to see what progress we've made, and you can keep me honest and I'd keep you honest. And I would love to engage with this community that you're thinking about building. Steve Mordue: Well, I hope that... I had Guggs on about once a quarter to just kind of talk about what's up. Toby Bowers: Okay. Steve Mordue: I definitely feel like you are a person who is more amenable to the feedback. Toby Bowers: Yeah, yeah. Steve Mordue: More interested in hearing it, and will definitely act on it. So, anything else you want to say to folks about you coming in here, and taking the role? I mean, I'm feeling very positive. I think everybody should feel very positive. I think everybody needs to give you a fair chance to take some action, but I'm feeling very confident about it. Toby Bowers: Well, I appreciate it, Steve. No, I appreciate the call, although it was a bit unexpected. I'd just wrap up with my number one job is to deliver value to our partners. That value will come in the form of growth, plain and simple, because if our partners are successful, we're going to be successful with this. So, that's what I'm going to be maniacally focused on for this next six months. And yeah, I look forward to catching up again soon and hopefully talking about some of the mutual successes that we've had. Steve Mordue: Sounds good, man. I'll be pinging you soon. Toby Bowers: All right, Steve. Well, thanks again for the call. I appreciate the opportunity to have a chat. Steve Mordue: All right. Bye bye. Toby Bowers: Bye bye.

Suggestions for Toby Bowers on ISV Connect

I guess it is fairly obvious from my post yesterday, that I am pretty pissed off at Microsoft. I have always been one of those "Don't point out a problem, without suggesting a solution" kind of guys, and I have done my share of pointing out problems with Microsoft's Business Applications ISV efforts. So here are some ideas. Why ISVs? First, why should Microsoft even give a shit about ISVs? Certainly prior to sharing in ISV's revenue there did not appear to be much reason, based on how Microsoft had historically engaged with ISVs. I guess we have to thank Salesforce and their successful AppExchange for Microsoft paying any attention at all. For years I have watched various Microsoft people get up and say "ISVs are critically important to us", followed by very little in the way of tangible actions. Obviously, "We have a marketplace too!" should not be the end goal here. What Salesforce keenly grasped, was that ISVs either generate business they would never have had, or make their platform for the customers they do have, extremely sticky. We know this from our collective efforts to get customers to move away from Salesforce; very often it is some ISV solution they depend on, that is making them stay put. It has gotten easier to be sure, but mostly because of Microsoft's integrations to other Microsoft products being superior. SFDC customers are giving more weight to that now as so many of them have switched to Microsoft 365. On one side of the scale is this fully integrated Microsoft story, and on the other they have the disruption of losing a critical ISV solution for which Microsoft has no ISV comparable. What Microsoft really needs is 10X the number of ISVs they have today! It all costs money I don't recall when Salesforce started AppExchange, but I don't think it was long after they launched the company. I also don't recall whether they took a cut of ISV's revenue when they started, but they clearly do now. It would not have mattered, because at the time, they were essentially the only game in town. 800 lb Gorillas, with triple anyone else's market share, can afford to be demanding of ISVs. I have no doubt that SFDC makes a huge amount of revenue from this motion, not only for licenses that they would not have sold otherwise, but also their ISV vig. I have no idea what they invest in their ISV ecosystem, but I am sure it is not small, because building and maintaining it is not cheap. But SFDC recognizes the value. Up until recently, Microsoft apparently invested the change found in the sofas around campus. I applaud James Phillips and Charles Lamanna for seeing they were not going to win the race with SFDC on Microsoft's trajectory at the time, and pivoting into new ground. The "Citizen Application Platform" is an entirely different approach, but "Citizens" are not going to build robust mission critical applications on Dataflex. Microsoft needs customers on the big money, sticky stuff that ISVs have historically created for SFDC. Cart before the Horse? Guggs apparently realized there was no budget to create this thriving ISV ecosystem that Microsoft would be the primary beneficiary of, and decided ISVs should fund this. Let's think about this for a minute. You have a historically dismal track record for ISVs, you publicly acknowledge that, and step one towards a fix is to ask ISVs for the money to fix it. I had suggested at the PAC meeting where the Revenue Sharing idea was first floated, that maybe they should "prove" success for ISVs first, but I guess they didn't hear me. I am sure that Microsoft has had to spend some of their own money on this effort, as I doubt that the Revenue Sharing income is significant yet, but they need to spend a lot more. And they need to spend it fast and right, otherwise they should suspend the Revenue Sharing for a while until the value for ISVs is there. I can see it! When I throw my head back, and let the possibilities swirl around, I can see success for ISVs, and Microsoft. I know I have been a strong Microsoft advocate in the past, and call me a flip-flopper, but I could easily become one again. Even though SFDC does not have it perfect, I still envy their ISVs today. And, even though he is a egomaniacal as they come, Benioff still let ISVs shine, less concerned about brand positioning, than money rolling in the bank. So, what might I suggest to Toby? Stop Antagonizing Maybe they can't see it. Maybe they don't actually believe that ISVs are critical, or even necessary. Maybe they see us a necessary evil for certain edge case deals. Maybe they see an ISV ecosystem 10X the size it is today as a huge hassle. That would certainly explain things. Or maybe they don't think any of that, and simply don't know what to do to solve the problem. Launching a Revenue Sharing program at this stage, in spite of knowing full well that it was going to piss of the entire ISV ecosystem, does not appear to have been the best first step. If this is going to work, we have to all be smiling the whole way through. No pain, no gain, only works for the gym, Equalize the effort Right now, particularly in Co-Sell, my guess is that 5% of the ISVs are getting 95% of the attention from Microsoft. I understand that's where the quick money is, but that is also short-sighted, scorecard-based thinking. The goal should not make the few large ISVs even larger, it should be to make all ISVs larger. If you want to recruit a lot of ISVs, they need to see that they won't just be given the crumbs left over after the existing large ISVs have had their fill. Kind of like how many organizations and governments have a minority program, where a certain amount of projects must go to a certain population, Microsoft should come up with a similar program for small and start-up ISVs. Engineering I am aware that Toby will not have much influence over what the product teams do, but it impacts ISVs in a big way. The last thing the product teams think about when they create new features is the ISV story... it's more of an afterthought. As a result, many of these features or products are not what I call "ISV Ready" for various reasons. Every product team should have an ISV advocate, from the very first conversation about a new product or feature. I mean there's like 6,000 people in the BAG organization now, surely we can task a few of them with watching out for ISVs. AppSource One of the touchier subjects for ISVs is AppSource. If done right, AppSource could be a primary benefit to ISVs, and draw for new ISVs. I know AppExchange certainly is for SFDC. Unfortunately, AppSource for Bizapps ISVs has become little more than brochure-ware. Poorly built, hard to use, and not promoted nearly enough. I am also aware that AppSource is not "owned" by the Business Applications Group, they only own their own door to it, so again, Toby may have his hands somewhat tied. Supposedly, AppSource has been very effective for Azure, and some of the efforts have been toward trying to copy that success. But the Azure buyer is a completely different person than the BizApps ISV buyer, and AppSource is not giving that buyer what they need. What specifically might I do? First, I would reverse the process. Right now when you enter AppSource, a significant amount of the page is dedicated to showing you a bunch of "Featured" solutions. The problem is, AppSource has no idea what I might be looking for. The odds that I am looking for a solution, that you happen to be "Featuring" are pretty slim. I'm not even sure how these apps got "Featured". I would delete that whole section. The entire focus on the landing page should be helping me find what "I" am looking for. This is an area where Microsoft could actually do something better than AppExchange. Make this landing page into a "Process" that guides me easily to understand what I want and need first. Only then, show me a list of options, limited to that. Once I land on a solution that looks promising, give me the opportunity to book a time on the ISVs calendar for an in-person demo or conversation, not just a generic contact form. Circling back to the "ISV Ready" conversation, AppSource is not ISV Ready. Test Drive is clumsy and largely ineffective. Trials only really make sense for widgets, and there is no way to expire the trial unless the ISV builds that into it. The promised commerce component is nowhere in sight, and even if it was, the churn challenge will be similar for ISVs as it is for Microsoft when customers just try and deploy something on their own, again other than a widget. More important to ISVs than commerce, would be a universal licensing system that we can just plug into. Licensing schemes end up costing ISVs a lot to build and maintain, and customers end up with a different one for each solution they install. Lastly, drop the dime on promoting it. Stop being the marketplace that is down the street around two corners, and be right up on main street. I have more, but that's a good start. Benefits To offset the shock of the Revenue Sharing program there was a promise of benefits. Most of the benefits seem to be targeting new ISVs, and that's fine, but when you look at the costs of an ISV, and particularly those that Microsoft is in the unique position to help offset, there are some obvious opportunities to create value. One of them is IUR. Historically Internal Use Rights have been a benefit of Competencies. But for an ISV, competencies are not nearly as important as they are for SIs. For a short time there was an ISV Competency, that again seemed to have been put together without talking to any ISVs. It was summarily cancelled without any replacement plan. Either this should be reworked and brought back, or IUR should be a benefit of ISV Connect. It is not reasonable to expect ISVs to have to not only pay Microsoft for development platform, but then also ask for a share of the revenue earned as a result of the platform we had to pay Microsoft to use... Pick one! I am aware that IUR is not free to Microsoft, but I did say Microsoft needs to spend some money on this. I think I will leave this here, for now. I am aware that I ruffled a few feathers with my last post, and may with this one also, but to be honest, the survival of my business depends on Microsoft getting this right. I see no upside in keeping quiet.

Microsoft continues inching into ISV Turf

"Microsoft has always been a partner-led company, and we are committed to creating more opportunity for our partners across our businesses." and "This ethos of being partner-led will be there in everything we do". Satya Nadella has said these things, but I am wondering... Lip Service? One of the major factors that brought me to transition my company from a Salesforce Consultant, to a Microsoft Partner in 2011 was the "Partner Ecosystem" story. After almost 10 years with SFDC, during which their relationship with consultants was borderline antagonistic, I was fed up. Microsoft sounded like a breath of fresh air. But their "Partner Ecosystem", particularly for ISVs, has been weighed on the balance... and found wanting. No Bigger Advocate You would be hard-pressed to find a bigger advocate for Microsoft's ISV ambitions than myself over recent years. Having drank the Koolaid and creating I.P back in 2015, as we were all strongly encouraged to do, I had a vested interest in their effort. Many of my posts started out apologetic for my previous encouragement, but ended up positive and hopeful. But, I am starting to lose hope that Microsoft will get it right. Was Saleforce Better? There is no doubt that at the time I came over in 2011 Microsoft's business applications were complete shit compared to SFDC. This was clearly demonstrated by their market share. I took it on as a personal challenge to seek out anyone at Microsoft who would listen, and press annoyingly for change. Over time, my incessant ranting made its way through the grapevines of Redmond, and I was invited to participate in many things. Multiple Partner Advisory Councils, more private phone calls and in-person meetings with Product Managers and leaders than I can count, and an MVP designation. I can honestly say that today, Microsoft has an undeniably better product than Salesforce on every measure other than market share. Not Alone Before I start sounding like some kind of narcissist, claiming to have single-handedly straightened up the leaning tower of Pisa, I was far from alone in this mission. While it is satisfying to see aspect of products or programs that I know I had a direct influence on, many others had similar influence over other critical aspects. Each of us "trouble-makers" have a vested interest in our mutual success. My Biggest Disappointment? Almost every aspect of the ISV effort for Business Applications ISVs has been found "wanting". Up until last year, the various aspects of the ISV efforts have been led by lower level soldiers with little authority, no imagination and no understanding of the ISV business. "Hi, I'm Joe, I'm in charge of this important ISV facet, I just transferred from the MS Paint development team where I have been for the last 15 years. How can I help?" Sorry Joe, but you know less than my dog about this business. Not Guggs Fault After years of watching the revolving door of low-level solders step up to within two feet of their targets, raise their rifles and miss... a General showed up. Steven "Guggs" Guggenheimer, a long-time veteran of Microsoft and self-described "Fixer" was brought in. I first met Guggs at a Partner Advisory Council meeting with about 15 other ISV leaders. He struck me as a no-nonsense guy who planned to get things done. He also struck me as a guy who did not need, or want, our opinions. ISV Connect Guggs' brainchild was ISV Connect. A program developed mostly in the dark, that basically seeks to take a share of ISV's revenue, in exchange for some benefits. It is not optional, it is "Pay to Play". The program was launched in lightening speed with agreements being sent out to ISVs almost immediately who were expected to sign or leave. The minimum tier is 10% of your revenue, in exchange for some benefits from Microsoft that in my opinion are mostly worthless, at least for existing ISVs. If you opt into, and are accepted into, the 20% tier, there was an additional promise of Co-Sell business, meaning Microsoft's own sellers, would pimp your solutions. At a recent Inspire session Guggs, as well as in a few interviews I have done with him,  intimated that some ISVs are happy. I have not met any of these ISVs, and Guggs just announced his eminent retirement. Now what? Back to my post title The Microsoft ISV landscape has become a risky place to be. In order to continue participating, we now have to find another 10% or 20% of margin. For those with paid resellers in particular, this is a huge challenge. If the program was producing 10% to 20% more business for ISVs that would be one thing, but that is not what I am experiencing, nor any other of the many ISVs I have talked to. Another risk is Microsoft's continued encroachment into first-party vertical solutions. If you were not lucky enough to be acquired, like Field One, Microsoft has caused problems for several ISVs as they entered their spaces. Project Management and Marketing are a couple of areas that Microsoft has moved to displace existing ISVs. I was also very suspicious of the entire Accelerators program. Their recent announcement of an Asset Leasing Accelerator sounds pretty damn vertical to me. So what's the play? What is the message we are getting from Microsoft? "Come join our booming ISV ecosystem, where we will take a share of your revenue in exchange for basically nothing, and if you are wildly successful in spite of that, we might just knock you off!" I would like to believe that is not the intent, but as my ex-wife used to tell me, "Actions speak louder than words". Is there still reason for hope? Maybe for a lucky few, but I am not seeing any for the masses at the moment. Let's see what Guggs' successor can do. Update 08/06/2020 I received an email from Guggs after this post went out that included the following: "I’m curious about a few things, but one in particular caught my attention. I can’t remember the time I said the ISV Connect program was “widely successful”.  I’m sure I have almost always said something along the lines of …..some things have gone well and some things we need to do more work on….but can’t ever remember using those words.   I don’t mind you pushing hard on the company or the program, but I would be happier if you didn’t attribute absolute phrases to me unless I had indeed used them….which isn’t really my style." After digesting this, and thinking back, I agree with Guggs, that he did not ever proclaim that the program was wildly successful for ISVs as I wrote above. I apologize for attributing that sentiment to him. He also confirmed in the email that Toby Bowers would indeed be taking over his role as leader of the effort. I have known Toby for probably 5 years now, and hope for the best as he walks into what has been a very challenging issue for Microsoft. Toby has a completely different personality than Guggs, and time will tell if that is more effective at driving the program, and easing the discontent among ISVs. At the end of the day, the buck stops at the leader's desk. To be fair, Guggs came into a pile of shit, and I am aware that a lot of work needed to be, has been, done in the background on his watch. I would like to believe that while ISVs have still not seen the success they should have, Microsoft is closer than before at delivering on that soon. Hopefully Toby can push it over the goal line for us all.

CRM is not just about Sales

"We're not looking for a Sales solution", said the person on the other end of the phone call. I have heard this many times. While those of us in the Power Platform arena know that Sales is only one of the business problems we can solve with the tools today, many still think "Sales" when they hear Dynamics 365. Once more from the top I have previously explained some of the evolution of what was formerly known as CRM, at least as it relates to Microsoft's offerings.... but I will try once more in super-layman's terms. Up until just a few years ago, Microsoft had a product known as Dynamics CRM. It was a Sales focused solution, primarily aimed at Salesforce.com as the market leading competitor. Originally only available as an on-premise product, meaning it was installed somewhere on machines you owned or controlled, it became available as a SaaS offering in 2011. As a SaaS offering, this meant that it was now running from machines that Microsoft owned and operated, and the application was made available for you to use via a web browser. Not dissimilar to how you use LinkedIn, Facebook or even Salesforce. This is essentially what Cloud means. The Salesforce Clouds Salesforce, which also started as a Sales focused Application, although cloud from the very beginning, started to see opportunities in adjacent markets quite a while ago. They created some new "Clouds", there came the "Sales Cloud", "Service Cloud", "Marketing Cloud" and more recently, the "Commerce Cloud". Clearly redefining what CRM, and Salesforce was, to encompass a much broader spectrum of business solutions. Microsoft followed suit. Clouds vs Apps Where Salesforce created distinct "Clouds" for their expansion, Microsoft created distinct "Apps". The difference in approaches is not easy to grasp, but fortunately, it is not important to grasp either. Looking at it from the Microsoft side, their Dynamics application had spread out some to include some post-sale capabilities, primarily around servicing activities. While Dynamics was always highly customizable, it was delivered with a very specific kind of business model in mind. First, it was assumed that you sell things, directly to customers, and most likely those customers were businesses (B2B). It was also assumed that you had some sort of incoming Leads from somewhere, and that your sales process began there. It was assumed that your made contact with these "Leads" to determine their interest, and if interested, you would convert them into "Opportunities, together with an Account and Contact record. While at the Opportunity stage, it was assumed that you would create "Quotes", and in order to create Quotes, it was assumed that you needed a Product Catalog. Once a Quote was accepted, it was assumed that you would create an "Order" and close the Opportunity as "Won". Once the Order was fulfilled, it was assumed that you would want to create an Invoice to get paid. Now that the "thing" has been sold, it was assumed that you would want to offer some kind of post-sale support with Case Management, and of course you would want SLA management for your support staff. Microsoft made a lot of assumptions about how a business would work in their Dynamics CRM offering. In my 20 years in CRM, I never met one that fit. Bending and Molding I am not sure if it was there from day one, or if it came along later, but the XrM capabilities are what made Microsoft's Dynamics CRM a viable product. Dynamics' XrM capabilities were similar to Salesforce's Force.com capabilities. Basically they both gave the ability to customize the offerings... significantly This was a good thing because neither of their offerings fit any customer. The general public was seeing basically Sales solutions offered by Microsoft, oblivious to the fact that they could be completely customized into something totally unrelated to sales. It was even tougher for Salesforce to shake the "Sales" only stigma, since it was baked into their name. You would have thought that Microsoft could have taken advantage of this opportunity, but until recently, the product was lead by a bunch of idiots, who were so focused on catching up with Salesforce, they missed the clear opportunity to just pass them. Back to customizability: over the years, customization became a very big business. Working with skilled Partners, customers were taking the products offered by Microsoft and turning them into completely different things, like Member Management solutions for Associations, or Grant Management solutions for Non-Profits, or Franchise Management solutions, etc, The list is endless of what has been done to "CRM" with the XrM customization capabilities. Breaking shit apart Several years ago, Microsoft embarked on a journey to separate their Dynamics capabilities, first from each other, and then from their underlying platform. It's a long story, that is still ongoing, and I have written about it several times in the past, so I will cut to the chase here. Dynamics CRM is no more, instead we have several Apps that carry the Dynamics brand. Dynamics 365 for Sales, Dynamics 365 for Service, Dynamics 365 for Marketing, etc. Sounds eerily similar to Salesforce's clouds. In the same time frame of releasing these finished applications, Microsoft also made the underlying platform that they are all built on, available as a separate product. Again, Salesforce was there first, with a "platform only" offering quite a while ago. More on that shortly, but Microsoft also kept building on their apps, adding intelligence and a whole slew of capabilities. Sadly, the original  "assumptions" that Microsoft made about how businesses operate, still dominate their offerings, but luckily XrM is still available to make them actually fit. Power Platform Microsoft's "Platform-only" offering is called the Power Platform. Think of it as a smorgasbord of ingredients, but there is no finished stew. If you want a finished stew, then you could look at Microsoft's "finished" apps. But in my experience, all of those required significant tweaks to the ingredients to get right for anybody. "Tweak" is probably not the right word... decapitation is probably closer. This is not a knock on Microsoft's first-party apps at all. As aspirational showcases of modern technology, they are pretty awesome. But most customers I run into have neither the time, patience, budget or need for much of that "aspiration". This customer needs to go straight to the Power Platform. In most of the cases I can recall, we spent more time modifying the first-party apps to fit customers needs, than if we had just started from scratch. So, in almost every case, that is what we are doing today. Long Live the Platform Microsoft's Business Applications Group is on the odd position today of potentially eating it's own head. When you hear them discuss the Power Platform, it is with great zeal that they talk about its capabilities to solve "small" problems. There is clearly a concern about cannibalization of their first-party apps coming from the platform, either by customers or ISVs. While they continue to position Power Platform as a solution to small problems, the only reason it could not solve the biggest problems that exist today, would be artificial limitations that Microsoft may place on it, to protect their first-party apps. As we continue to solve bigger customer challenges with the platform approach, I sense a tightening coming from Microsoft. Is Dynamics 365 Dead? My co-host on our weekly live show, and good friend, fellow MVP Mark Smith, once publicly proclaimed "Dynamics 365 is Dead". This sent shockwaves through the community at the time, (Somehow I even got blamed for it), but he was only voicing what a lot of us were thinking, the day Microsoft made the decision to open the platform. So is Dynamics 365 Dead? That's a good question... I know for myself, a customer has to have a pretty specific need, that is only met by one of Microsoft's pre-made apps, before I would suggest even looking at them. However, Microsoft continues to invest heavily into capabilities and marketing of their apps. I am sure it would be quite a financial blow to Microsoft's Business Applications Group if everybody dropped their pricey apps, and built their own on the inexpensive platform. But I, for one, am mostly suggesting they at least explore just that. Interestingly, I seem to recall Microsoft telling their partners a few years ago, that moving to the cloud was going to hurt partners a bit financially in the short term, but it was the future.

Power Apps - The truth about $10

When Model-Driven Power Apps first appeared on the scene, it brought with it a $40 per user license called Power Apps P2. Earlier this year Microsoft launched a $10 per App "Pass". Clearly $10 is going to get some eyeballs, along with a lot of skepticism about it having a place in an organization that may be paying $100 per user plus. So let's talk about it. "Your going to like it" I believe it was at last year's MVP Summit; there was an off-site dinner for the bizapps crew. I saw Charles Lamanna, Corporate VP of the Low Code Application Platform, sitting at a table with an open seat next to him, so I snagged it. Charles is well aware of our RapidStart efforts, and has been a supporter since I first met him when he came on board the bizaaps team. At some point in our conversation, he leaned in a quietly and said they were working on something: "You are going to like it". He was vague on details at the time, but he clearly understands our RapidStart business model, so I got pretty excited. Announcing the $10 Per App Pass! I had a few "pick my brain" calls with the Microsoft team about the upcoming "per app pass" before it became public. I specifically recall asking, more than once, if they were prepared for "unintended consequences". The problem with "unintended consequences" is that they are not always easy to spot in advance, particularly if you have a filtered view. Microsoft is a technology company, and the Business Applications Group is made up of a lot of technology-minded people. A recurring theme seems to be their inability to view things through a business eye. This is how the Team Member licenses ended up being abused. To a technical thinker the Team Member seemed like a perfect solution to a particular challenge. To the business person on the ether end, it seemed like an excellent opportunity for exploitation. The Scorpion and the Frog There is a classic fable that this reminds me of: "A scorpion, which cannot swim, asks a frog to carry it across a river on the frog's back. The frog hesitates, afraid of being stung by the scorpion, but the scorpion argues that if it did that, they would both drown. The frog considers this argument sensible and agrees to transport the scorpion. Midway across the river, the scorpion stings the frog anyway, dooming them both. The dying frog asks the scorpion why it stung the frog despite knowing the consequence, to which the scorpion replied: "I couldn't help it. It's in my nature." Microsoft often finds itself a Frog, dealing with customer Scorpions. What will a Scorpion do with a $10 Pass? They will seek ways to exploit it. In our case we have taken full advantage, rebuilding all of our apps the be able to run on any license, but in particular, the $10 App Pass. I don't feel like we are exploiting, after all Charles did say I was going to like it. This kind of felt like tacit permission, even encouragement to head down this path. It's a two-way street, Charles also needed some ISVs to showcase this approach for other ISVs to consider this path as a great way to join the ecosystem. Wait a Minute! The risk of cannibalization of the first-party applications was obvious, and not lost on the team. In one of my chats with Charles, I asked about this probability, he said: "I would say we are quite confident on the Microsoft side that the value and the intellectual property and the ongoing services and support and SLAs and integrations that come with the proper Dynamics applications can and will continue to command those prices." But just to be safe, they decided to toss a blanket over a few key entities and restrict them to the first-party apps. At the time there was, and still is, a lot of discussion about API limits across the stack, and the Per App Pass was given a pretty low limit of 1,000 per day. I had not liked the "Restricted Entities" idea from the jump. In that same chat Charles alluded to more Restricted Entities coming, but in a later chat with Charles, he conceded: "restricted entities as a concept are largely antithetical to our common data service, common data model and vision. And they were just like the least bad option to go make sure that we appropriately can license Dynamics apps." I had suggested a different approach in another post: "The real value of the first party apps is in the logic layer, not the data model.". While I'm sure my comment was not the trigger, it is the direction they are now heading. Devilish Details So the "replacement" scheme for restricted entities is still being formed, but basically the vertical fences between certain entities, will pivot to a horizontal line between the first-party tables, and their proprietary logic. Where restricted entities was a quick and easy solution, this one will take a lot more work for Microsoft to execute. It seems proprietary logic is all over and pretty deeply wired. Will this be better? It's hard to say at this point. Where before we had some entities that could not be used, the other ones, that were not restricted, were being used... along with their OOB logic in many cases. So it seems like instead of pointlessly replicating entities, we will now instead have to create all of our own logic, and possibly our own forms, dashboards etc.. But, it seems completely fair to me. No one is entitled to get a Prime Steak for the price of a burger. Burgers So what will this mean for your $10 app plans? Well, Microsoft giveth and Microsoft taketh away. Eventually, you can have a "no cliffs" scenario. The cliff I am referring to is starting with vanilla CDS and building some apps, and then realizing that the first-party apps have a lot of features that would like. Today, you cannot get from here to there without a migration. Not a "cliff" exactly, but definitely a hassle. This path will be cleared "in the fullness of time", where a simple license swap will be all that is required. Today, you can install the first-party schema on your vanilla CDS, it is available here on Github. As of now, even with this schema installed, you do not have a direct upgrade path, but the migration should be easier going from an OOB entity to an OOB entity, than mapping your custom one over. When the path is "cleared" will using this approach today just start working for upgrade later? Good question. So, does the $10 Plan make any sense? Depending on your use case, it is completely viable. We have developed many very sophisticated solutions on CDS with the $10 Per App Passes, even without utilizing all that is available to that pass. Mostly starting with one of our RapidStart accelerators, we have built Project Management applications, Field Service applications, Referral Management solutions, each of which has become an accelerator on their own. What will you miss out on? For many customers, they won't miss out on anything, again depending on your needs. Like Charles said, there is a lot of value in the first-party applications for those that need it. Top Down We started with the premise that many customers just want something simple to use at the lowest possible cost. So we built our accelerators with the $10 pass in mind. You can start with a vanilla CDS, and many do. But many customers already have Dynamics 365, and a significant number of their users are making use of those high-value proprietary features. But not necessarily all of their users, particularly in larger organizations. A significant part of the work we are seeing today is taking certain use cases, building a specific app for those users, and dropping them down to $10 passes, sharing the same data as the first-party users. This tends to be an addictive motion. Is this cannibalization of high cost licenses? Yes, but I would argue that if a user can do their job with a $10 license instead of a $95 license, that makes the customer happier and less likely to consider a change in platforms. Unintended consequences are not always a bad thing.