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By Kati Hvidtfeldt, Principal Program Manager, Microsoft Dynamics NAV, and former US Microsoft Dynamics ERP Cloud Lead

Kati color 2004The cloud is more important than ever before. Despite initial resistance, the cloud business in Microsoft Dynamics ERP has grown exponentially. From non-existence we’ve moved to strong performance, with more than 120 active US partners and 60% CAGR on revenue over the four years since we started.

Because cloud has become an integral part of everything we do at Microsoft, the team has agreed that Microsoft Dynamics ERP in the cloud no longer needs its own blog series. In this final installment of Kati Unplugged, I’ll share my personal perspectives on the journey we’ve taken in the years since I started in my role as Microsoft Dynamics ERP Cloud Lead in the US subsidiary.

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Four years ago, when I was leading Microsoft Dynamics CRM Online sales motion as Senior Director, Microsoft Dynamics VP Dave Willis tasked me with navigating the uncharted waters of ERP Cloud. There weren’t many players in the market at that time. There were some startups and a few companies that were shifting from basic financials to bigger, more complex solutions, but it was really just the beginning of cloud ERP.

Based on lessons I’d learned from my recent experience shipping the first version of Microsoft Dynamics CRM Online in the US, I knew I was in for a bumpy ride. It would be a totally different game and the change in the organization and the culture would be massive. For example, the Microsoft Dynamics CRM Online sales team had become more like consultants than sellers, causing a quick shift to alternative ways to help customers out by publishing how-to videos for their customers. I actually wondered if I could personally make this journey. I suppose my Finnish “sisu” (determination and perseverance) kicked in to help me see it through.

It was clear that we needed to create an onboard path for ERP partners. The laser focus on streamlining marketing and cutting costs of sales cycles was crucial in helping partners succeed in the cloud business. President of SalesWorks Systems George Brown and I prepared to address the partners at the December 2010 Partner Advisory Council on how to become profitable in the cloud.

Uproar at the PAC

In our presentation to the partners we were intentionally provocative. We wanted to drive home the message that the business was going to totally change from the current traditional partner business.

We were very specific in our talking points:

1. Think: Cloud is like starting a new business unit

2. Think: New People

· You will be a hybrid for a period of time

3. Think: 180 degrees different from where you are today

· This is a volume game
· Toss out your old marketing
· Do not reach out to a prospect more than once

4. Think: Investment capital is required

· Internal or externally funded

5. Think: Change management

· People need to make the transition

Across the room, you could almost see the blood pressure rising. Partners didn’t like what they were hearing. They weren’t convinced this was where the market was headed, they didn’t think it made sense and they wanted to know why Microsoft was pushing them there.

The idea of making a transition on this scale was too controversial and didn’t fit into many of the partners’ business models. But our message was clear: There was a rapidly shifting wind in the ERP business that wasn’t being determined by Microsoft. It was being determined by the market. It was clear I had to change my approach.

Onboarding Strategy

Knowing that the market for the cloud would soon start challenging our partners—especially in the SMB space—I needed to act quickly to provide them with a way to respond. Two things were essential for partners to begin adopting a cloud business strategy: they needed professional hosting partners and they needed educational resources.

Early Adopters and Breakthrough Partners

I needed to recruit early adopters who could envision the benefits. I needed someone—even just one partner—who would be willing to change and become a showcase ERP cloud partner.

Although most partners struggled with the transition there were a few who saw the light. One of those first few partners met with me the January after the PAC meeting and shipped a cloud solution that same year—just six months later. On the heels of the economic downturn, the launch was a big turning point for that partner’s business. The partner had to fire people and hire new people with different skill sets to prepare. It was a big overhaul, and although I don’t recommend everyone do it this way, this particular partner has built a strong cloud business as a result.

We started hosting annual structured networking events at Convergence to help partners connect with hosters and develop synergistic relationships. If not for the handful of partners willing to take the risk and make change, we wouldn’t be where we are now.

Cloud Educational and Readiness Resources

At the same time, Pam Kram and I were consulting one-on-one with pilot partners willing to transform their businesses. We looked at all aspects of the business—marketing, sales and services—and recruited Salesworks to conduct cloud workshops and help the partners who were willing to transform.

The Road to Repeatability (R2R) best practices program was born two years ago. We wove in all the best practices from the cloud workshops and the lessons we learned from our cloud consultations. Many of our early cloud partners were part of that first-year R2R program. Ever since we have integrated cloud across the board: from marketing campaigns like Grow Your Business, to partner readiness, to special programs.

We launched the “Countdown to the Cloud” website to provide an easily accessible, stepwise approach to getting partners cloud ready, creating a one-stop-shop for all the various cloud tools and resources.

Looking Ahead

Through all of the bumps in the road, we’ve delivered what we promised when it comes to Microsoft Dynamics ERP in the cloud. We said we would have web clients for Microsoft Dynamics GP and Microsoft Dynamics NAV, and we shipped them. We said we would launch products on Windows Azure, and we shipped for both Microsoft Dynamics GP and Microsoft Dynamics NAV in June. It may have taken a little longer than we wanted, but we have shown our commitment to the cloud and we are there.

There is a great opportunity today for Microsoft Dynamics partners, in both partner-hosted and Microsoft-hosted solutions. Partner-hosted solutions offer a higher level of service and are critical to the cloud ecosystem. For partners going the Microsoft-hosted, Windows Azure route to the cloud, you will become a hoster and will need to update your company’s skill sets. As with our customers, we offer partners various options to embrace the cloud on their own terms, and we hope all partners are seizing the opportunity.

In closing this last Kati Unplugged blog post, I leave with the great satisfaction of knowing that our partners are having real successes in their transitions to cloud, and cloud is truly in everything we do.

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To learn more about how to determine if, when and how to successfully incorporate cloud-based solutions into your business plans, visit the Microsoft Dynamics Road to Repeatability page in PartnerSource. 

Check the Microsoft Dynamics ERP SMB Grow your Business page for resources that demonstrate to customers how Microsoft Dynamics ERP cloud, hybrid and on-premise solutions can benefit their businesses. 

Finally, I recommend spending a few minutes to see with your own eyes what the “ERP SMB Prospect Experience of the Future” looks like by viewing the video located here.