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Friday, May 30, 2008

Interview with Microsoft Dynamics Executives

Recently I sat down and had a phone interview with both Klaus Andersen, CVP for Dynamics Sales & Operations and Doug Kennedy, VP of Dynamics Partners Organization. Let me start off, by saying thanks to both Klaus and Doug for taking the time out of their busy schedules to field questions from a Humble Technical Architect.

Below are the questions, and answers from the session:

[Key: KA = Klaus Andersen, DK = Doug Kennedy, Brandon = Me!]

i. Over the next 12-18 months, what are some big goals both of you want to accomplish within the Microsoft Dynamics partner space, and how do you plan to achieve those goals?

DK: We want to expand some of the work that was already started, aligning around verticals by countries and regions for both the ISV and VAR partners. The goals are to align the solutions and services with customer needs for focused verticals and make sure that ISVs and VARs are making it to market with a Certified for Microsoft Dynamics solution. Meaning the vertical solutions have been tested and are clearly ready to address the specific vertical needs of the customer. Microsoft is trying to sit in the customer’s seat, to better understand what, how and why they purchase and then align ISVs and VARs with solutions that that complement the Microsoft Dynamics applications to meet those needs.

KA: The vertical piece is very important. Customers want to feel confident that ISVs and VARs know and understand their business and that they really know how to operate effectively in the customers’ space. So our goal is making sure that the partners know their verticals, and have a clear implementation process that is predictable and repeatable, such as our SureStep methodology.

Brandon: Great points guys! At Sunrise we call what Klaus just mentioned the 'Execution Layer' that is a very important aspect for happy customers. Making sure we can deliver and have a successful go live.

DK: Every customer wants to get to production ASAP. What’s also key beyond the “go live” is making sure that robust and complex implementations are easy to maintain. This is also a focus of the Certified for Microsoft Dynamics program - making sure that offerings from the vertical ISVs complement the ERP offerings and that the integration is tested. (Certified For Microsoft Dynamics is the certification process for ISV solutions that sits on top of the Microsoft Dynamics ERP software.)

ii. What impact do you think these goals will have on the diverse partner space that exists in the Dynamics Community? Will there be a different impact based on the size of the partner?

DK: If you look at the partners today, they come in all sizes. By promoting their unique vertical expertise, the partners can work well together to meet the needs of customers in their vertical in their given region. With the focus on vertical expertise, partners of all sizes have plenty of opportunities because the customer is looking exactly for that specific vertical expertise.

Brandon: Doug, you said a key word there, 'Region'. By 'Region' what do you mean?

DK: A region could be a smaller, focused area of a country, or some other geographical area, but this is more the specific space in which the given VAR operates. What you typically find is vertical expertise and knowledge and localization going hand-in-hand. So for partners, when talking in terms of pivoting around a given vertical, it's more about the depth of the vertical knowledge than it is the size of the partner. You don't have to be the biggest to compete, but having the deepest vertical knowledge for your region is critical.

KA: The vertical guy who understands some form of manufacturing in Ohio is different than the one who understands it on a national level, and even from the one that understands it on the global level. The customer usually dictates what type of partner relationship they want, be that local, national or global level.

iii. Speaking in terms of partners, across all the Microsoft Dynamics brands, what is the most common threaded problem that you see partners facing today? Do you think there is anything Microsoft can / could / should do to help address that said issue?

KA: About a year ago, Microsoft commissioned a study of more than 200 partners to understand what makes a partner more profitable than another partner. What we have seen is that with the Microsoft Dynamics channel, which in itself is very profitable, the more profitable partners focus on their existing customers, making sure they get upgrades, new modules, etc. while still also making new sales. The partners who allowed existing customers to fall off the radar, ended up being not as profitable. So a partner that is balanced on both new and current customers ended up doing the best in terms of being profitable. Another interesting bit, that the survey revealed, was that partners who invested more heavily in marketing versus good sales did worse. Heavy marketing would be spending 10%+ of a given partners’ revenue. The study also revealed that partners who specialize are more profitable that those who do not specialize. Finally we saw that the smaller partners - between 30-40 employees - are more profitable than those that go into 40-100 employees, because of the growth pains associated with getting into bigger and more complex deals, larger projects, etc.

Brandon: So then would you say that the biggest single threaded problem for partners is the lack of focus on existing customers?

KA: There isn’t one specific thing that is a common problem for all partners. The biggest challenge is finding enough trained and certified resources. Microsoft will be churning out another 6,000 to 7,000 certified professionals this year, but even that is not enough.

Brandon: Interesting point, as training focus was lacking, going back 3 years or so, and you can see it picking up. What is Microsoft doing then in terms of working with Colleges and Universities to get them on board for the Microsoft Dynamics products as they are for products like Visual Studio?

DK: We just reviewed our budget for the coming year. As part of our investments, Microsoft will make sure there is appropriate funding for and focus on getting the Microsoft Dynamics products included in what universities and colleges can offer.

KA: Actually three years ago, we [Microsoft] started to focus on this fact and have been working with the Microsoft Dynamics Academic Alliance of more than 1,000 universities worldwide that will be integrating Microsoft Dynamics products into their curriculums or academic research. Ultimately, this helps produce more resources for the Microsoft Dynamics partner space. This team is now under Doug's organization, as a part of our commitment to enabling partners .

iv. What are both of you most excited about for partners and the Dynamics community in general for the next set of Microsoft product releases?

KA: Clearly integration with the stack is very important. I have traveled through the US and European markets meeting with customers, and it's been interesting to hear about customers wanting to follow the stack from the OS all the way to our ERP products. For mid market it's all about the stack, and because of what Microsoft has been doing, partners now have a bigger opportunity with a broader message.

DK: The stack ties back to paying attention to customers; partners need to do that in order to continue being profitable.

KA: What’s interesting is if you go back 3-4 years, all ERP decisions were driven by the CFO or the manufacturing organization of a company. But now the CIO or the IT manager is having a much bigger say in the ERP selection, because they are the ones managing the resources that support the IT infrastructure, which can be complex and often look like “spaghetti”. Because Microsoft offers a full scope of IT solutions, we see IT managers going to the CFOs, etc. and saying ‘take a look at the Microsoft ERP platform, based on the stack integration and because they have the right resources to make it work.’

DK: Basically we stopped turning our customers into systems integrators. Before, the poor customer ended up being the integrator, trying to integrate and connect the “spaghetti” (applications and products from a variety of vendors using a variety of technologies), and that is not the business they are in. By adopting more of the Microsoft stack, the customer is less likely to take on a systems integrator role.

Brandon: So lower TCO / overall stack integration is something to be excited about for the next product releases for both customers and partners. Very good.

v. What are your favorite sports?

KA: I would love to say my favorite sports are team based, but mine are more individual sports like: long distance running, golf and Alpine skiing.

DK: Typically, I am a team sport guy. I like baseball, soccer, hockey, really anything that is team sports. That also reflects that way I like to manage my business organization, as a team.

Closing Comments:

DK: I would just like to say that I am really excited about being here at Microsoft. I had been at Oracle for more than 17 years, and I can say that Microsoft Dynamics is really about to explode... there is enormous market potential for our partners and Microsoft and we are really optimizing on that.

I would like to thank both Klaus and Doug again for taking the time to sit down and have this phone interview. Keep and eye on this blog and my column at MSDynamicsWorld.com for more exciting Dyanmics AX news and information.

Check back soon!

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