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Steve reads his Blog

Aug 4, 2018

Dynamics 365 Customers and Partners have had a few changes pushed to them in recent years. Dynamics 365 was evolving at a pretty rapid pace since it hit the cloud, and when James Phillips took over the team, he took both of his feet and smashed the gas pedal. It's like the USS Enterprise when it hits Warp Drive (I get a chill every time I see that).

Trees in the Forest

I have been seeing a lot of posts about the October Release Notes and the #freighttrain of new features coming. Everybody seems to be writing about their favorite new feature(s). Don't get me wrong, new features are always fun, but if you move out of the trees, and look at the whole forest, there is a lot more going on here than meets the eye.

Seismic Shift

I get that "Seismic Shift" is probably an overused term... but I think it is a very real thing that is happening in Microsoft Business Applications... right now! If you have followed this blog in the past, you know that when I get highly animated about something, you probably want to pay attention to it. I said in the title that CDS changes everything you know. But at the same time you have been hearing that, if you know XrM, you already know CDS, and that is completely true. But that is looking at CDS through a specific narrow lens, a legacy Dynamics lens. But if you circle around to the other side of CDS, you can clearly see that Dynamics 365 is really just one door to CDS, of many doors.

A PowerApps Stamp

I was talking to Charles Lamanna recently, the GM for the CDS Platform; I suggested that he had a PowerApps rubber stamp, and that he was stamping "PowerApps" onto everything in sight. He smiled... like a guy with a rubber stamp in his pocket. PowerApps is one leg, of a three-legged stool, known as the "Power Platform", the other legs being Power BI and Flow. Dynamics 365 is not mentioned as a component of the Power Platform. I think in the very near future, the term "Dynamics 365" will actually refer to the First-Party Apps, and those apps will be sharing the spotlight with applications built by others on the Power Platform.

The Power Platform

I know I have mentioned it before, but it was not that long ago that I was told unequivocally, that Microsoft will never release a platform-only license. In order to get CDS, you will need to license one of their first-party apps. In hindsight, I think I recall hearing this from a GM for one of the first-party app teams. Whether he was unaware, or the decision to release a platform-only license, was made afterwards, I don't know. But somebody decided to take a risk and release a platform-only license. What risk? The risk that smart folks might actually build better "apps" than Microsoft, on Microsoft's own platform.

Risky Business

A quote from this 1983 movie was "Sometimes you just gotta say, "WTF". "WTF" gives you freedom". Somebody at Microsoft said "WTF", let them have the platform. At the end of the day, cloud is about scale, whoever has the most recurring revenue wins. If all of Wall Street could only place their bets on one number, it would be growth of recurring revenue. Wall Street does not give a shit about how you get there. Up until now, in the Microsoft Business Applications space, their recurring revenue growth doorway, was tied exclusively to their sale of their first-party applications. Well, they just broke down the doorway... hell the whole wall has come down.

Let's do some Math

Let's say you are a mid-sized Real Estate firm looking for a business solution to improve your sales process for your 500 agents. In your web search you discover this link to Dynamics 365, and click to explore it. Obviously, not wanting to waste your time, you will go to the pricing page first, and see the Customer Engagement Plan at $115/Per user/month. Hmm, that's about $57,500/month (we, as partners, know that is a worst case cost scenario, but the visitor does not). For almost $60K a month, this application must be awesome! So the customer initiates a trial. In their poking around, they are duly impressed with all of the cool features and capabilities, but... where is the Real Estate angle? "RING" There goes the phone, who could that be? "Hello Mr Real Estate CEO, I'm your friendly Dynamics 365 Partner and I see you are interested in Dynamics 365". "Well yes, but where are the features for Real Estate?". "What do you need? We can build anything for you, Dynamics 365 is fully extensible". "Well, I would need blah, blah and some blah to make this work". "No problem, we can build that for you for $100K". "Thanks, I'll get back to you". Back to the web search results, there's another link for the "Acme Real Estate Application". Taking a closer look, Acme is only $75/Per user/month. Hmmm, that's about $37,500/month... let's take a look at this. Wow! This application has been built for exactly what I need... it already has blah, blah and even blah! It says it is built on the Microsoft "Power Platform", whatever that is... I'm Sold! Looking at the difference in cost, you might think that Microsoft just lost $37,500/month ($115 Plan License, vs, $40 P2 license) to an ISV, but in reality, without that ISV solution, that customer was going to another platform. Net gain to Microsoft... $20K monthly recurring revenue. Microsoft has a half-dozen first-party apps that run on the CDS platform. Imagine 500 vertical ISV solutions running on the same platform. Microsoft will take that to the bank all day long.

Transition of Power

Up until now, Microsoft Business Applications success was largely tied to their Partner ecosystem of System Integrators. These are the partners that sell the first-party applications, and then configure and customize them for their customers. ISVs have been around for a long time, but mostly in the role of "Addons" offered by SIs. That wall that Microsoft knocked down, is about to change that. Already there are some ISVs, like us with our RapidStart CRM solution, that are trickling over the transom. That trickle will become a flood, and ISVs will become Microsoft's most valuable partners, in the very near future. According to Mr. Spock, “When you eliminate the impossible, whatever remains, however improbable, must be the truth.”.