The following is the second in a series of blogs focused on Project Madeira written by Terry Petrzelka, founder and former CEO of Tectura Corporation.
In my last post, I discussed the potential impact of Microsoft’s Project Madeira on the Dynamics Channel. As a reminder, Project Madeira is a true, on-demand SaaS business solution incorporating Office 365 and comprehensive ERP capabilities based on the Dynamics NAV platform. I wrote that Madeira is a necessary response by Microsoft to the market and cloud competition from NetSuite, Intacct, and Salesforce, and that Dynamics VARs should embrace this new paradigm to remain relevant.
Here’s the thing: the challenge may be even greater than I thought. Microsoft has announced that Madeira will be sold exclusively through the Microsoft Cloud Solution Provider (CSP) program. Since the announcement was made at an Ingram Micro event, who have blogged extensively about it, we must assume it can be resold by any partner who joins the CSP program. This means that Infrastructure Partners, Office 365 Partners, SharePoint Partners and even partners like Dell, Ingram Micro, CDW, etc. will be able to resell Madeira.
My last post detailed the significant challenges a traditional VAR will face in switching to a cloud-based paradigm. These challenges included significant changes in how they market, sell and support customers as well as how they compensate employees, bill, and manage their finances. In contrast, the partners noted above have already made that transition. While they may initially lack the accounting and back-office knowledge to customize an ERP system to meet the buyer’s requirements, the knowledge can be readily acquired by aligning themselves with a select group of partners or acquiring a Dynamics NAV partner. In fact, and even less complicated, I would argue it will be considerably faster and easier for an Office 365 partner to hire a few ERP consultants and start an ERP practice than it will be for most Dynamics VARs to switch to the smaller margins and recurring revenue model that Madeira requires.
Dynamics VARs will have to take action in a non-emotional, logical manner. They need to make clear choices about how they will transition their business. The first choice will be how to engage and get involved in the CSP program. Becoming a self-hosting 1-Tier CSP requires an investment well beyond the reach of a typical VAR. So, for most, the only option is engaging with a distributor like Ingram Micro, etc. However, keep in mind – in my opinion, their programs are essentially self-serve and geared to Office 365, CRM Online partners and provide lower margins than Dynamics VAR’s are used to.
Another option, which I think is more relevant than ever before for Dynamics VARs, is Microsoft’s Master VAR program. At least one Master VAR, SBS Group, has been working for the past several years on its cloud transition. SBS Group’s nearly 100 VARs have a full complement of cloud solutions, a digital marketplace, recurring billing systems, and a help desk to support a cloud-first business model. As a 1-Tier CSP, they enable partners the ability to improve their cloud margins. Additionally, SBS Group has been taking the lead in NAV Managed Services to drive vertical solutions requiring little to no investment by their partners. As a member of the SBS Group Partner Network, all of these are available on Day 1 of joining – there for the Dynamics Channel Partner to leverage immediately!
With Project Madeira and the CSP program, there are a lot of factors for Dynamics VARs to consider. The good news is there is more than one way to transition to this exciting new world of opportunity, and SBS Group can bring you there.
If you would like to learn more, I am offering a complimentary half-hour consulting session to hear about your challenges and share some of the insights I’ve learned from talking to, and working with, scores of partners. Click here to learn more and contact us to set up a time to talk. You’ve got nothing to lose and everything to gain.