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The Death of Reason: Dynamics AX and Enterprise Agreements–What Next?
Источник: http://thedeathofreason.wordpress.co...se-agreements/
============== At WPC2012, Microsoft, to the thud of jaws dropping and the jackhammer staccato of CEO hearts, announced that Dynamics AX would be sold under Microsoft Enterprise Agreements. In addition, any customer on an EA that already owns AX can place maintenance payments on the EA. The program starts September 1 2012. For those of you unfamiliar with EA’s, you can look here. In essence, it’s a three year contract with MS to license large amounts of software at a rather significant discount. Although technically sold by a partner (in this case a Large Area Reseller), the majority of the work in doing an EA is done direct by the Microsoft Enterprise sales team. Given that much of the partner channel’s financial model is built off the sale of software directly to the client for a fairly decent slice of margin, this has two immediate effects:
Will Microsoft truly sell direct to the Enterprise ERP customer? To some degree. However, let’s not forget that MS does not already have a competent group of direct ERP salespeople. The have good some good technical specialists and some good channel sales people, but they have very few that can actually pursue a lead to closure. To build that team, they’ll have to hire competitively against the partner channel and the main software competitors. And, they’ll have to pay out the wazoo to do so since these are scarce resources. Given that, I assume they will focus their attention on the very largest of opportunities worldwide, rather than trying to close very deal. If they sell direct, will they do all the demo work? Good question. One assumes that if they act like SAP, they would close the software deal and walk in a systems integrator. But they are chronically short staffed in these areas. So we have to assume they can’t serve the entire sales cycle for all Enterprise deals and will instead depend on partner relationships where a) the deal is off their critical radar or b) the deal is driven by a vertical solution the partner has tied up (like process mfg or distribution). The fear here is that AX will be just like CRM – the partner still carries the majority burden of lead generation expenses and gets almost nothing in software margin in return. If they sell direct, what happens to services? In case you missed it, Microsoft Consulting services is enjoying yet another rebirth in ERP (and in CRM). They are focused on building massive amounts of staff in ERP and CRM, most of the ERP staff being AX. The SSP’s in the region have a good size commission in their plan for bringing in MSC, so I assume they will. However, like the sale side of the house, MSC can’t get to every deal, so I think they’ll focus on the top global opportunities. Where they don’t have vertical expertise, given my past experience with them, they’ll either fake it and fail or find a partner to provide staff but project manage everything under their paper. The big problem here is the SSP’s – with them being comp’d on bringing in MSC, they, quite rightly, will probably introduce every deal to them. Hopefully, MSC will pick and choose and they SSP will then take it to a partner, but, again based on past experience, I think it more likely that MSC will talk to them, set expectations and then the partner will get involved. The customer will be confused, the partner will feel pressure to match whatever MSC said, then MSC will want to manage the deal sub-contracting work to the partner under their paper. This way, the claim the top line revenue and expand their reach, but don’t really have to fight the hard battle of hiring qualified staff. Are we going to lose maintenance dollars? Yeah, probably, for any customer that is already on EA and owns AX. Is all we have left small deals? Hell no. There is plenty of moving room in the market for everyone. However, I do think it will be easier to fly under the MS radar or outside their flight path than to try and compete in the same market. Specifically, if you have defendable space in a vertical, have your own IP, and/or service a geographic territory that in which MS isn’t interested, you have a better chance of being unaffected. Is MS really serious about this and about selling direct? To answer the first, yes. They aren’t turning back. To answer the second, we’ll see. My fear is that someone up the executive chain had this conversation – “Look guys, we did the same thing with CRM. The partner channel bitched about the margin cut, but still went on absorbing the majority of the direct sales expense via SE’s and Pre-sales demo resources. They’ll do the same thing with AX, we’ll just have to suck up maybe a quarter of confusion. Frankly, the partner’s are so addicted to the business model that they don’t have a choice. So, don’t worry about this. Things will be fine, we’ll give away less margin, and our sales will continue climbing.” I can’t claim that conversation happened. I just fear it did and this is the mindset underlying the strategy. —- Overall, if my guesses are right, here’s what I recommend:
Filed under: Managing Microsoft Tagged: Dynamics AX, Enterprise Agreements, ERP ![]() Источник: http://thedeathofreason.wordpress.co...se-agreements/
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