Directions EMEA 2019: Microsoft Dynamics 365 SMB partners grapple with their role in the SaaS ERP economy

If you ask a channel veteran to describe the typical small Microsoft Dynamics NAV reseller of the last decade, you would probably hear about a company that has evolved to operate on five to fifteen new deals a year. Their revenue would be comprised of both upfront license sales and development services, plus support. This firm would likely have little by way of repeatable IP nor much budget allocated to creating and maintaining it.

But the economics of cloud ERP and Microsoft's business priorities are changing, and partners now see a future in which there are fewer opportunities for generous services and greater demand for repeatability. Repeatability also means developing more healthy ISV relationships and paying more attention to stripping away inefficiencies that the old business model may have had.

Slow down to speed up

Microsoft and some in the channel have been preaching the virtues of repeatability, verticalization, and the building of products rather than projects since 2012. But such ideals would have meant change that wasn't needed in the immediate future. Repeatability, in many cases, meant re-organizing the company's operating model to meet an uncertain future and a product that may not have been ready to accommodate it, as one of today's top Business Central sellers explained at Directions EMEA 2019 last week.

If NAV partners have been too constrained by the economics of their traditional model, they now face new complexities that they have little choice but to meet head on. The question is how extensively they will have to transform.

"As the product has enhanced, it has also become more complex," said Christian Sega, managing director of Agiles Group in Germany, and also a committee member of Directions EMEA. "Then all the other topics like pricing, licensing, integration scenarios, Power Platform, CDS, CSP, and more  [add to the challenges that partners face in adapting]."

Partners will also have to shake themselves of their tendency toward customizing each client's system. In the past, NAV customizations could sit in relative safety and stability for years as upgrades were pushed back through the generous five- to 10-year support windows until a time when each client was ready to absorb the expense.