July 2014’s Microsoft Worldwide Partner Conference in Washington DC had some great advice from Microsoft partners on their strategies – and the challenges they face – in delivering .NET, cloud-based computing services.
First, the challenges. There is the perpetual challenge of getting customers already invested in hardware and software to be proactive in moving off of their existing platforms. Customers tend to be happy with the solution they have, and don’t always see the value in changing technology. The fact that in the cloud software updates can happen at any time (instead of timed to a service pack install) can be stressful for users accustomed to finding that one button in the same place every day.
And of course, customers continue to be worried about the security of their data and question the benefits of an IT solution that requires recurring charges instead of an upfront investment. Speakers Loryan Strant of Paradyne and Alex Brown of 10th Magnitude both talked about user culture (even within IT departments) that is resistant to the technological change involved in a move to the cloud.
For the ISV, there is the formidable challenge of moving to a new business model, one that focuses on creating and maintaining ongoing relationships, rather than on delivering a project. This can be especially difficult for the sales team, who are not used to selling a service. The shift in the way of doing business was a major theme at the WPC. “If you can’t adapt and you can’t evolve, you can’t compete with the other competitors in your space…you’re not going to survive,” said speaker David Geevaratne of New Signature, Microsoft’s Partner of the Year for 2014. “It’s a harsh reality. We thought we could ramp up our cloud sales in six months….It took us two years.”
Nonetheless, the speakers talked of embracing the new opportunities that have arisen for ISVs out of the disruption caused by the cloud. The tricky bit has been finding a way to market managed services to their customers along with their IT solution. Before the cloud, application services was about large projects. Now it is about creating a relationship over time, wrapping support and managed services into smaller projects that contribute to the bottom line in a slowly growing trickle of recurring revenue, instead of a large scale project.
This new relations provides an opportunity for ISV’s to take a supporting role in keeping their clients abreast of new functionality. David Geevaratne mentioned an informal metric at his company: “If a customer has to ask about a feature before we tell them about the feature existing…that’s a problem, that means we’ve failed.”
Other benefits to ISVs include the move to a global business model. David Geevaratne, for example, spoke of how the cloud is the perfect solution to enable New Signature to employ teams that work remotely. Other speakers described cloud project teams as smaller and more agile; allowing quicker scaling, faster growth and ease of global reach. And many speakers talked of how a recurring subscription model make earnings more predictable.
Nintex co-founder Brian Cook pointed out another benefit: when you take away a focus on the technology, it frees developers up for more interesting, potentially profitable work, by “look(ing) for those solutions that you keep repeating, that customers keep asking for.”
Not all Microsoft partners made an immediate leap of faith into cloud computing. Nintex’s transition model in 2009 was to keep a foot in both camps by delivering on-prem and cloud solutions. Andre Brunetiere of Sage, a provider of accounting services to small and medium sized businesses, spoke of a similar evolution that offered a choice of cloud or on prem deployments.
However, partners who report success with their new model, like David Geevaratne, credit their early adoption of cloud-computing as a reason for their success. In his talk, Alex Brown pointed to a recent study that showed cloud solutions drive more revenue per employee and bring in more new customers than on-prem solutions.
So, is the move to the Cloud worth the effort? The consensus is: it’s inevitable. The cloud is here for good, and businesses that don’t find a way to take advantage of it will be left behind, quickly.
The full Worldwide Partner Conference lectures are available on the 2014 WPC site, and additional videos and other content will be added throughout August.
