Back home from Directions USA for a few days now. Normally this is where I write a wrapup of some kind like I did in Vienna or like Alex Chow did.
But honestly I think it is time to write up something more than a wrapup of an event.
In Vienna the title “IN Office 365 and ON Azure” was new and people need time to digest new stuff. Since Vienna I presented “What’s new in Dynamics NAV 2013 R2” for all Dutch partners and some customers. I noticed in Nashville that many people had started thinking about the impact of 2013 R2.
Microsoft shipped 2013 R2 last sunday (October 6th) meaning everyone has access to the bits now. Therefore I was not surprised to see some interesting threads on Mibuso when I came home with titles like “NAV 2013 R2 from Awesome to Crap!” and “Microsoft has gone barking mad…“.
The market is changing. having worked for endusers, partners (both VAR and ISV), freelance and being linked to Microsoft I think I know the change and the market better than anyone else so let me give my opinion.
After reading this, you may choose if you want to be “IN and ON” or “OUT and OFF”.
Before defining a changing market we first need to describe the market as it is today.
Currently there are roughly 98.000 companies worldwide using Dynamics NAV. Of these companies 99.9% use a database with customisations done and 95% are different from all other NAV systems.
This was and is where NAV is strong.
This is a market of undocumented customised solution. It is a market of slow growth. As a consultant you can easily stick to one single enduser for a decade or longer. Simply because the real added value is knowing the customer.
In the current market there is no repeatability
Add-On’s and Verticalisation
This problem has been with us for more than two decades. I still remember my boss comming back from some Navision meeting (we’re talking 19′s here) where they introduced “Verticalisation”. The message was: Go vertical or die. Before that Navision Solution Centers were focussed regional. This was the time before internet, email and rdp.
During the next decade I helped building a handful of vertical solutions and during my freelance years I worked with and met many many more.
If there is one thing I learned about vertical solutions that succeed is that it needs dicipline. Worldwide there are only few vertical solutions that are trully successful.
So what happened to the rest? For NAV 2009 Microsoft had a database of thousands of registered add-ons. Imagine a number of 5000 (which is not the real number, you’ld be stunned if I put that online which I won’t). Let’s say of the 98.000 customers half use an add-on the add-ons that are successful are only implemented 10 times in a period of over a decade. That is one implementation per add-on per year.
That’s not doing repeatable business. And this is what Microsoft realises.
So let’s say we have an ambition of making NAV grow double digits to half a million companies using the software in a few years.
We cannot grow the channel double digits.
I’ve been to countless meetings and presentations about successful sizes of NAV businesses. Endless theories of which sizes work while making a profit and people having fun. NAV partners have problems growing. Some succeed and most of those are (what a coincident) the partners that have a successful repeatable business.
On top of that we have a combined issue of ERP not being sexy and NAV being a strange animal in the hurd of ERP applications. To be successful in (traditional) NAV you need to be an accountant that can develop software or an engineer that understands business processes.
Only the partners that are successful in repeatable business can make their companies attractive enough for people to join them and start working there.
So I’ve done my best in describing our current situation and I am sure many of you will recognise this. So how do we move this thing forward.
The new Market
I think there is nothing better than this video that demonstrates how customers change in buying software.
Personally I do not think it is that new. When I had to buy a new ERP system back in 1995-1997 when we ended up buying Navision I already hated salespeople using BANT (altough I learnt wat this is only this year).
When I investigated I had to move around and visit events to see what software is out there and then make up my mind.
What changed us is a new generation (my generation) and internet.
Internet changed and will continue to change the way we do business. For my freelance business I don’t run a server anymore with exchange and AD, instead I use G-Mail (sorry microsoft), Azure and Skydrive. (Guess I’ll have to move gmail to O365 now )
The Classic (Old) Market
Does that mean that the old market no longer exists?
No. They are just different markets. The thing is that Microsoft tries to serve both markets with the same software.
With the current software (2013R2) we can still develop and implement the way we did in the last 20 years. We just need to realise that this market won’t give us double digit growth figures, and the latter is what Microsoft wants us to do, or at least have for themselves.
So what about NAV 2013 R2
With NAV2013R2 Microsoft did a major investment in making NAV more than ever ready for the cloud. They solved two very important issues needed for this
In ERP 2013 everything is about cost of ownership. In smaller repeatable implementations companies are not going to spend 200.000 euro’s or dollars on infrastructure, installation, conversiontools and training. They want it now and try it out for three months for free befure they subscibe. They want a wizard that helps them get started in 6-12 steps.
With powershell it’s possible to start up new tenants without IT people. With SCOM it is possible to monitor the health of a Multi Tenant environment on management by exception bases.
This enables partners who invest in this technology to host a website that offers subscriptions and trials without interferance of them anoying sales people. By looking at what people do when they subscribe you can actively support them. And when you support them they are already in. A whole new concept of sales. What my generation wants.
When the primairy focus of NAV was doing one-of projects in 1995 Navision decided to on purpose ship software that was not usable. Partners had to finish.
Well yes, ofcourse this leads to 99,9% modified systems if Navision does not even ship with a decent sales invoice layout.
In NAV2013R2 this is starting to change with the MiniApp and Cash Flow.
During all these years with Navision I’ve never seen Microsoft ship software that is so usable out of the box. Especially the MiniApp is so usable that any 1-3 user company could start invoicing and banking with it in a few minutes.
We should expect to see more of this in future versions.
What does Microsoft do wrong
So if this is all so great, why do people start being confused or even angry.
In my opinion Microsoft is not telling a complete story to their partners or community and there is lack in guiding the partners into this new world.
What they don’t say
First. No one tells partners that this is optional. Yes, if you want to stay close to Microsoft, if you want Microsoft to think your partnerbusiness is important to them you should go with them.
But if you want to continue serving midsized busineses with customised solutions, no-one is stopping you. Everything Microsoft changes to NAV is done with tying not to break anything for the classic experience.
No, you cannot register an bunch of objects as add-on just to get a lower price on objects. But this was never what the add-on program was meant for in the first place. One should not tell a potential customer you sell them an “add-on” while you only sell one a year. That is not fair to customers.
Yes, Microsoft should change object pricing. 150 euro’s for a table in SQL Server is completely rediculous. This needs to be adressed and adressing this would solve the problems that some partners have with the classic model.
What they don’t do
Why is Microsoft hiding MiniApp and not barking around with it? Not in Vienna, not in Nashville was there not a single word about it except in my sessions.
The MiniApp is the future for NAV from a functional perspective. It is they new way all partners should look at their software and change it accordingly.
Product Change Guiding
Within the Road to Repeatability program that Microsoft offers their partners there is only marketing content, no product content.
What do they think these marketing guys will sell? Air? Cool Stories? The “add-ons” we did for 20 year?
Every single partner needs to rethink the way they do product development. They need to relook at their vertical market and on the way that their customers want to use the software in the future.
We should see MiniApp’s for all vertical solutions that are successful and for many new ones. This is a business opportunity, not a threat!
Time will tell how this will work out. Some people will leave the channel and some customers will leave NAV. Some of both maybe shoud have never been in.
New people will come in. NAV will be cool again. We need apps and interfaces. We need C# and internet people to come in and help us to make NAV sexy for small business owners.
Partner Ready Software
Within PRS we are trend-watching this as we have done in the last 3 years. Back in 2011 we started talking with partners about this changing market from a product perspective and we started talking with Microsoft about this from a development perspective.
As I say in all my presentations, it is so easy to ask for a new object designer. But is intellisense going to support us in this new market? No. Off course it will be cool but we need to focus on merging horizontal solutions with vertical solutions, implementing hotfixes and extending the application with flexible interfaces.
This is what we will keep focussing on.
Join us in Antwerp or ping us for more information.