Category Archives: MPN

When to Expect the Next Promotion for Dynamics NAV

Just a quick note on when to expect the next Dynamics NAV promotion from Microsoft.

There are 2 main periods during the year where Microsoft will MOST LIKELY release promotions and discounts for Dynamics NAV (or AX and other Dynamics product line). They are:

Microsoft Fiscal Year End
Microsoft’s fiscal year ends on June 30th. They want to drive their numbers up so they can report a strong fiscal year. So look for new discounts and promotions about 2 to 2.5 months prior to June. So look for discounts starting in late March or April.

Calendar Year End
December 31st is another period where Microsoft will have a lot of promotions and discounts. The calendar year end discounts will be released about 2 to 2.5 months prior as well. So look for discounts starting late September or October.

Conclusion
To get the most bang for your buck, I would hold off on purchasing until these promotions appear. Even though there are promotions from Microsoft, there may be certain terms and conditions which will exclude you from taking advantage of the promotion. So even if you waited, you may still be excluded.

Having said that, businesses can’t wait. If you need a module or new user sessions right now; get it. Promotions are nice, but if it hurts your business because other people can’t log in to do their job it won’t make much sense to wait.

Why You Cannot Find a Good Service Based Solution Center

The Conversation
Recently, I had a meeting with an owner of a company that I thought was going to ripe me a new hole. This company originally purchased NAV from another solution center and overpaid for subpar service. Problems steming from wrong advice given to unnecessary modifications causing them delays in their operations. Noting this, they went to another solution center that did a wonderful presentation, but eventually suffered the same treatment as the original solution center that sold them the product. Basically, non-existent support and overbilling.

They eventually found us and after my interview with the owner of this company, I went through our company philosophy, how we approach customers, and what our princples are. We’re able to gain the trust of the owner and we soon put him at ease that we were the people they were looking for.

Then, the bombshell questions came. “Why are there no good company that service Navision (Dynamics NAV) out there?”. Followed by, “why didn’t we buy the software from you?” I have to admit, the 2nd question caught me off guard.

The Industry
It’s really not fair to say only Navision (Dynamics NAV) has this problem. The problem really applies to all of ERP industry, regardless of whether you sell Great Plains (Dynamics GP), SAP B1, Epicor, Oracle, etc. It’s all the same. Why are there no good service companies that cater to existing companies and users?

I pondered the same question. We obviously carved out a good niche providing excellent service to existing customers. It’s not like we’re smarter than other people doing ERP implementations. It’s not like we have more technical abilities.

With all the talk about our how our industry business model is built on having a long customer relationships, why is it that it’s so hard to find good solution centers that provides good service? That makes the customer want to stay with the company for many, many years?

It’s All About the Money
Yeah, you knew I was going here.

When you’re in the ERP or accounting software industry, the majority of the money from a customer is spent in new sales. Consider the following graph:

NewSales

Assuming the customer is purchased the product in 1/1/13 and they went live on 4/1/13. In the first 3 months, the customer will have spent the majority of the total value of the entire implementation. The cost that you would’ve paid to the solution center will include the software license and the initital implementation.

The reason why you see a few bumps in the post implementation support is because after the customer is live with Navision, they will add on modules, users, etc. In addition, every year the customer (if they choose to) pay for the 16% enhancement. Sometimes the customer will even do an upgrade which will require some labor.

You can extend the graph out longer but it’s pretty much the same.

It will take many years, if ever (if the customer is not on the enhancement plan), for a service based company to match the same revenue obtained from a new sale in the first 3 months.

If you were to own a solution center, where do you want to be? Just looking at the graph, it’s a no brainer. To maximize revenue for a company, you absolutely have to focus on new sales and new implementation. Microsoft rewards you if you focus on the new sales. The owners of the company rewards you if you can bring in new sales.

High Risk and High Reward
Make no mistake about it, to focus on new sales is a tough business. You have to hire and manage a sales force. You have to have enough talented manpower to handle all of that new implementation. On top of that, you have to feed these talents even if you don’t make a sale.

So here’s the cycle, the cost of talent is not cheap. In order to feed this talent, you have to focus on new sales and drive in revenue. Basically, you have to feed the machine. This means that if the customer does not spend enough with a solution center that focus on new sales, you will not get the love that you’re expecting.

Because the machine is so costly to feed, if you don’t make a new sale, it does not matter how talented your staff are. You’re going out of business.

You have to focus your best talents on revenue generating endeavors, basically new implementations. For the low money generators, such as support, you hand those off to junior people or cheap resources. Because post implementation support, to most companies, is a money losing operation. Solution centers of a certain size cannot live off of support services.

Refusing to Play the Game
Now to the 2nd question that client asked us “why didn’t we buy the software from you?”.

The answer to this is simple. When you’re buying a new software, you’re mostly buying from perception or the preceived quality of the company that’s proposing the software to you. When you walk into their office, they have a very beautiful office with very beautiful people. When they do their demos and presentations, it’s all done professionally with case studies and well thought out demos of the software. They even have a secretary to bring you whatever you want to drink.

If you were to come to the place where I work, I’ll be pretty embarassed to show you around. It’s a glorified office that’s 200 sq ft. with dirty walls and old furniture. But I can service you some instance coffee or water.

Now if you were a prospective customer and you walk into their office and you come to our office, which one will give you a better perception of credibility?

How I’ve been able to live and thrive in this business is because I refuse to play the game as I explained here.

Conclusion
While I was explaining this to the owner of the company, he kept saying “but this is not right, this is not right!”. Yes, everyone in the world will agree that this is not right. But this is the reality of our industry.

In the end, my response to the owner of the company was this:

1. It’s hard to find a good service company because focusing on service for existing companies is a money losing business
2. The reason why you didn’t buy from us is because on initial look, we’re pretty damn fugly.

Small Partners and the new MPN Requirements

The New Hope:
The new requirement for the MPN (Microsoft Partner Network) have many small partners (including myself) start questioning whether Microsoft cares about them at all. It seems like the new requirements are designed to have one specific interest in mind: to get rid of small partners. From a business perspective (meaning the perspective of executives and/or MBAs with no experience running a NAV business), that seems to make sense. Focus more resource on the top revenue generators in the channel because they’re the one making money for Microsoft, eliminate or reduce the resource that are available for the small partners that produce little for Microsoft.

Doing this, the hope is to drive in more revenue, while reducing overhead and cost. Everybody wins. Yeh!
 

The Reality:
As many of you know, I run a small Navision shop here in Los Angeles, California. Each year, we get 1 maybe 2 new NAV deals. Customers that does business with us, stays with us and continues to invest in Dynamics NAV in the form of new granule purchases and being current on the enhancement plan.

Through the years, I’ve purposely kept my company small. Why? It’s a long list, here are a couple off the top of my head:

1. I’m not interested in headaches of running a large company
2. I’m don’t want to deal with employee politics
3. I don’t like overhead (I believe optimal size of a NAV company is 5 or LESS. One is ideal)
4. I’m not interested in upkeeping a sales and marketing department
5. I want to keep the quality of the products that we deliver
6. I’m not interested in selling products/services that customers don’t need
7. I want to keep the personal relationship I have with my customers
8. I want to keep the personal relationship I have with the people that works for me

And, I believe at the end of the day, the difference in what the staff at AP Commerce brings home now vs. if we were a large solution center, may not be all that different. If there is a difference, I don’t believe the difference is enough to have an impact on our current lifestyle.

Given that, why the bother with the headaches?

The majority of our business is recovering failed implementations and helping customers that hates the system love it again. In another words, we keep customers and business from hating Microsoft for the remainder of their natural life. We make business want to invest in Microsoft again.

Any now they want to get rid of me?

In addition, one of the best developers I know in NAV, Per Mogensen (owner of Mergetool.com), recently came out and started his own company to better serve customers and the channel. With the new MPN requirements, there would be no way for him to do that. This is a monumental loss. Yes. Monumental.
 

The Cleansing:
So this year at Directions US 2010, I had a chip on my shoulder. I couldn’t depend on the Directions committee or the advisory board because the body only consisted of people from large solution centers. They are naturally going to be protecting their own interest.

What’s interesting from the Directions keynote by Michael Park was that they have no intention of getting rid of partners because they realize that partners are the lifeblood of their success. This was all quite confusing.

Since Michael Park was no where to be found after the keynote (I think he sensed I was coming), I had to approach another Microsoft senior manager to get some answers.

The place where I met him (shall be nameless since I don’t know if he’ll get in trouble) was quite noisy. He basically broke it down one of the key intentions of the new MPN requirements:

New Small Partners that Sell – Since the requirements to be a NAV partner is so easy. A lot of greedy IT folks are trying to catch the success of NAV. So they would go into a site, make insane promises just to make the sell, crap out, and dissappear into the night with the customer’s money. While not as big of problem in the US, it’s a huge problem (from what I heard) in Europe.
Internal Companies – Companies with large IT department can get around purchasing a license by certifying their own IT department to become a NAV partner.

In that regards, yes, get rid of those partners. People shouldn’t be selling NAV if they don’t know what they’re doing. Companies should be purchasing license instead of becoming a NAV partner just to get the license.

The third partner they intend to get rid of are what are termed “lifestyle partners“. Unfortunately, he didn’t finish describing what lifestyle partners are. From the few words he described, it seems to fit the description of our company. In another words, partners that don’t really sell. Before I could extract additional information from him, he had to leave to perform on stage (which I missed…).


A New New Hope:

There are flip sides to all intentions. I guess having the barrier to entry into NAV set so low, we’re really allowing unethical behavior to more easily occur. However, there are a ton of smaller partners out there who’s sole purpose is to pick up unhappy customers and make them happy again, and THAT has to translate into concrete dollars for Microsoft.

Make no doubt about it, small partners are an absolute key in the success for NAV. Forget NAV, the whole partner channel. Too bad the MBAs of the world does not understand that.

So I guess there’s really a delima on what to do next. On one hand, you’re risking your lifeblood with this partner “purge”, and on the other hand, you want to protect the credibility of the product.

Sucks to be a Microsoft executive right now.