With Directions EMEA 2018 coming to an end, there is no doubt that the single biggest theme continues to be the transformation to the Cloud. But in the words of Marko Perisic on the last day of Directions EMEA: “we’re on the verge of something big” – which illustrates very well the atmosphere at this years’ event.
Microsoft launched the first version of Dynamics Business Central in April and it does seem like now is the time when things will start accelerating. Since launch, more than 100 functional changes have been added and with the Fall release Business Central (BC) will be the only version developed and NAV’2018 becoming unavailable as of April 2019. BC comes with different deployment options, locally (On-Prem), Hosted (own datacenter or on Azure) or in a SaaS model. Although BC can still be deployed On-Prem it is expected that customer demand and Microsoft will both drive the SaaS model. Therefore, a lot of sessions were focused on that model and the consequences for the partner community.
Most sessions talked about the cloud transformation from a technical perspective with the subject such as how to convert the existing add-ons to Extensions and how to publish on Appsource. Within QBS the amount of trainings on how to program Extensions soared over the last 6 months. More recently we see a lot of demand on training and workshops on building Apps and also a lot of partners went through a validation workshop to see what it takes to publish their IP on Appsource. All proving that partners are preparing for the Cloud and BC from a technical perspective.
Less attention was given to the Business aspect of cloud transformation and the sessions that did address this, were only half full (at best). This is particularly worrying because the transformation to cloud is very disruptive for the current business model and way of working. A few samples to illustrate this:
- Financially moving to cloud requires a substantial amount of working capital to carry the necessary investments and deal with the cash flow impact arising from the shift to recurring revenue. The most important metrics is Customer Lifetime Value (CLV) vs the Cost of Acquisition leading to an average payback time. Research from Dana Willmer showed that currently this is between 12-18 months. In other words, the best partners earn back the acquisition of a new customers in 12 months hence need capital to finance this. And this is calculated from the moment the deal is closed, not taking into account the current, lengthy, sales cycle (60% of the sales cycles last between 60-180 days).
- Marketing needs to invest in creating a high volume of inbound leads. Increasingly potential buyers collect info online and are already more then halfway through their buying cycle and collected more then 60% of their knowledge before they become visible to the seller. To facilitate the buying process and make sure prospects show up at your doorstep, marketing skills such as online marketing and content management become increasingly important. The question is to what extend the average Dynamics 365 BC partner can acquire and maintain these skills within its own organisation?
- Sales needs to ditch the old Solution Selling approach as most buyers, when they show up, already decided they want to buy and that it will most likely be Microsoft. Hence sales needs to stop taking the buyer back few steps in the buying cycle by re-qualifying what prospect already committed, i.e. taking a cloud solution from Microsoft. Instead they need to focus on making it a smooth buying process within a limited amount of time. New skills and methodologies need to be acquired to be able to efficiently land a high volume of deals.
- Consultancy is currently aimed at optimizing utilization while the new business model is aimed at optimizing the deployment with processes and tools. Research from Dana Willmer presented at Directions showed that the average deployment time per seat with BC is now down to 4,6Hrs with, in Europe, an average deal size of 1-4 seats. These deals are economically not viable unless you have a very efficient deployment process.
The message is clear, transformation to BC/Cloud requires more then going to DLP or the “Ready to Go” portal from Microsoft and consume the online content and e-Learnings. Many questions arise but as with any journey, no matter how long, the best advise is to just take the first steps and gain experience. We invite you to have that dialogue with us, directly with one of our Account Managers, through our bi-annual meetings at QBShare or through our social media.