Podcast Transcript: Jeff Edwards & Scott May on Microsoft partner incentives and opportunities with Business Applications

The following transcript is taken from our recent podcast episode with Jeff Edwards and Scott May of Stratos Cloud Alliance on partner incentives in the Microsoft Business Applications space.

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JASON GUMPERT  00:00

Welcome to the MSDW Podcast. I'm Jason Gumpert, editor at MSDyamicsWorld.com. On this episode, I'm speaking with Jeff Edwards and Scott May of Stratos Cloud Alliance Velosio’s Microsoft partner program. Scott has joined us before on podcast and webcast to talk about success in the Dynamics in the Microsoft channel. But this is the first time we get to speak with Jeff Edwards since he joined the team at Stratos Cloud. As so explained, Jeff has a long important history with Dynamics products and with Microsoft. He worked at the company for many years helping shape some of the most important policies and programs related to business applications. This episode is sponsored by Stratus Cloud. And both Jeff and Scott share their views on partner success looks like in today's business applications landscape. There are some attractive incentives from Microsoft and from Stratus Cloud for indirect partners that Scott and Jeff will explain. There are also some important technology advances in the Microsoft channel. And developing vertical expertise also remains an important element of the channel opportunity. Scott and Jeff have some advice on ways partners can accelerate their progress there. We also discussed Microsoft new fiscal year, and what partners should be watching for in July from Microsoft leadership changes to licensing and program updates.

JASON GUMPERT  01:14

All right. Well, Scott May, Jeff Edwards, welcome to the podcast. Thanks for joining me.

SCOTT MAY  01:18

Thanks for having us, Jason.

JEFF EDWARDS  01:20

Great to be here.

JASON GUMPERT  01:21

Yeah, great to have you. And, Scott, glad to have you back. Jeff, welcome for the first time to the podcast. It's been a while since we've talked. Some people might have seen the headline that we had and that was out there that you had joined Velosio and in a new role. So, I guess it's a chance to say welcome back to the Microsoft channel, because you really and truly have been out of the Microsoft space for a few years. For anyone who doesn't know you, can you give a little bit of background on a little bit of your career history and how it fits into the Microsoft channel?

JEFF EDWARDS  01:51

Yeah, sure. I spent many years at Microsoft, approximately 17. I came over in 2000, with the acquisition of Great Plains. So, I'd done about a year at Great Plains before Microsoft acquired Great Plains. So, I do go back a long way. Some portion of that early career was the ERP product management and marketing. But probably the last 10 years at Microsoft was basically doing the global Dynamics partner strategy and programs. So, I ran that effort from a global perspective, started up the original CSP. And in relation to this job, kind of started Master VAR, with both QBS in Europe and what was then SBS and Socius in North America where I got to know these guys, of course. Velosio is a combination of SBS and Socius, and then a number of other firms. So, great to be back. As you mentioned, Jason, I was at financial force for close to three years in the salesforce ecosystem, but the opportunity to come back, and more or less kind of execute what I promoted from a Microsoft perspective on the partner side was too good to pass up. So, great being back in the Microsoft ecosystem. Obviously, lots of friends, I'm still up in the Seattle area. So, I think really driving CSP and transitioning this channel in this company to more pure cloud is a great opportunity. And really, Microsoft has just made amazing progress in the last three years from a product perspective, from a program perspective. So, I think it is now kind of down to execution inside the channel and with Microsoft.

JASON GUMPERT  03:26

All right. Actually, I really look forward to really getting into a few of those details here as we move ahead. And Scott, for anyone who doesn't know you, can you just introduce yourself as well?

SCOTT MAY  03:35

Yeah. Great. Thanks, Jason. And thanks, everybody, for listening. I'm the Director Of Channel Development for Stratos Cloud, and I've been working with the Stratos Cloud Alliance for about the past 10 years. But I too, like Jeff has been in the Microsoft channel ecosystem for about the last 25 years working with SBS Group Associates to form Velosio. And I've been working with partners in the indirect channel model for about the past 10 years, starting out with the master of our program, and working with master of our partners and helping them grow their business. And now for the past three years as Stratus Cloud Alliance as indirect provider, working with CSP partners via the indirect model, and helping them get going, transitioning from on-premise into the cloud. So, again, it's an exciting time. We've got a lot of things going on and it's great to have Jeff participating with us now with all of his experience and expertise to help us and help our partners grow even faster.

JASON GUMPERT  04:39

Jeff, going back to what you said, through describing your role today and how it fits in with the work you've even done in past years, and really shaping some of the strategic direction of the channel for business applications at Microsoft and how that continues. Now, I probably couldn't have described it any better. I thought that was good. And I thought maybe it would be nice to start with the most current, the present, and looking ahead a little bit, and then maybe we'll end up working our way back into some of the recent history as well. But what are some of the new promotions, new incentives that are top of mind for each of you right now that they're important both for Stratus Cloud Alliance and Velosio but also to the partners that you both work with in the channel who work with you, who work with Microsoft right now? What are you talking to them about? What are you either paying attention to or encouraging partners to take part in right now?

SCOTT MAY  05:30

Yeah, I'll go ahead and take that, Jason. I think the first thing is just ensuring what promotions are out there and available, right? Microsoft has so many different programs or manage partner, they got what they call PI or partner investment engine. And you really need to understand which ones fit your go-to market scenario, if you will, and then go out and basically promote it to help you go through and close those opportunities that you're working on. So, here in the fourth quarter of Microsoft's fourth quarter, obviously, since the end on June 30, one of the biggest promotions to help partners is the Enhancement Plan Renewal, via CSP, which we've been helping partners with. That program is really where an on-premise Dynamics client can renew their Enhancement Plan via purchasing CSP licensing and get dual use rights of both their systems, that helps them start their process to transition into the cloud, doesn't force them to have to move to the Microsoft cloud solution at that point. That's one of the things that we're helping partners promote. We help our partners stay abreast of all of those different promotions by having monthly partner meetings where we cover that with everybody, we have partner development managers, that help our partners, make sure they understand what's available and how they can use them on the opportunities we're engaging him with, we communicate that via Yammer partner platform, as well as our marketing programs that we have in our marketing portal, if you will, to help them market those to their existing clients.

And there's also a lot of Dynamics migration opportunities that are out there. So, the EP via CSP, which is the term for the promotion, that's a 60% discount on Dynamics 365 Business Central licenses. There are migration promotions that are out there where clients can get up to a 40% discount for moving over to Dynamics 365 licenses. There are also other programs, there's a Better Together Program where basically packaging up Microsoft 365 along with D365 licenses is available. And certainly, that's what we talk with partners about is really marketing the whole Microsoft Cloud Platform, not just one solution, if you will, but how the whole platform works together from Azure, M365, and D365 combined, and that's what that promo is for.

There's also a promotion out there for Dynamics 365 sales professional or customer service professional licenses where a client can get 100% discount for the first four months of the licensing of those solutions. Those are great opportunities for MSP partners to get involved and sell those to their clients, Dynamics partners that have been doing let's say CRM licensing, an opportunity to go through and upsell/cross-sell. There are customer ad opportunities at this point with Microsoft, where there's different customer ad targets. And if you hit those, there's additional bonus margin that partners can receive for achieving those.

So, we kind of go through and tell our partners, "Hey. Let us know," and we can make sure we're helping identify if there's a promotion that's out there that they can benefit from, or that they can pass along to their clients, obviously, to help them close those opportunities. And we, as an indirect provider, too, we provide incentives to our partners. There are some changes going on within the Microsoft Cloud whether you're a director and indirect partner, and so some partners are having to move to the indirect model. We're offering an incentive to those indirect partners to keep them at our highest partner margin level, to help them with that transition, help them move those CSP licenses, and then they don't have to meet all the Microsoft requirements, obviously. Then we have other incentives for new partners who join us who want to get into D365. We have got a margin kicker on getting their first new deal closed with us within 30 days. For IMA CP partners, we have a promotion, because we're an IMACP sponsor, to start those folks out at a higher margin level. So, there's all types of things that Microsoft is doing as well as we are as an indirect provider to help our partners maximize the return-on-investment margin that they're getting, Jason.

JASON GUMPERT  10:34

When it comes to some of these Microsoft incentives, kind of taking all of them into account or maybe the most important one, what does it say to either view about Microsoft's priorities? I mean, I was looking at incentives. It's one of the clearest ways that they can state their priorities. Is there anything that either jumps out as particularly important or things that that you see shifting?

JEFF EDWARDS  10:56

I would say, it's just super clear, to the cloud as fast as possible. I think the level of ease that's being provided and transitioning from on-prem to cloud, the amount of incentive that goes into getting new customers in the cloud and in the CSP program is really striking as somebody coming back after a few years out. So, through partner with partner model and the amount of focus on the CSP program, both indirect and direct, you can certainly see the emphasis on both transition and new customer purely into the cloud model. And I also think that the effort going back 15-20 years, how do we enable MSPs that traditionally do platform, infrastructure, office to promote and deliver Dynamics, and really, at this point, vice versa as well. Traditional dynamics partners-- how can you deliver more value and get more revenue and share of wallet with the customers by doing Azure, by doing BI? Power platform and Power Apps is the kind of a really new and interesting way to make money from a services perspective, business process automation. So, you see a company like ServiceNow is really growing substantially in the enterprise space. We have that with Microsoft and Power Apps, and the platform as well. But I think, really taking that into SMB in the mid-market as well as a partner opportunity for services, business processes kind of come up and evolve constantly. So, more increased value both in share of revenue for the spend on that, but as well as consulting services and consulting hours that partners can apply to that as well.

JASON GUMPERT  12:40

In your experience, do partners today meet a lot of those incentives? Or do they more need to be sort of sold on the vision of where things are headed in the enterprise space?

JEFF EDWARDS  12:50

I think partners would largely tell you both, right? I mean, there is a transition from a profitability perspective in terms of going from a substantial upfront payment, as well as a larger upfront project to more of an agile approach, and basically, of course, its subscription model. So, anything Microsoft can do in terms of filling that gap, both with a share of the margin on the software and the subscription, as well as creating kind of the buzz in the marketplace, I would say that's another thing over the last three years that is remarkably better, and you look at it reflected in the stock price, right? But Microsoft is certainly seen as a leader in going to the cloud, right? From an app’s perspective, probably a Salesforce and Microsoft race. From a cloud perspective, an AWS and Microsoft race. But basically, Microsoft is at the top of the list, really, in any of those categories. You talk about from apps to infrastructure to security-- which is a big one right now-- to app, to cloud app development and process automation. Been successful and I think we'll continue to be successful and saying, "Hey, this is now kind of a platform battle, right?" People are picking platforms and Microsoft is right there at the top as an obvious choice. And also, from a very long-term perspective, channel friendly and channel reliant, though, I think both of those things, as you mentioned, Jason, is Microsoft at the top of this strategy, seen as the leader? Certainly. Does the channel still need kind of incentives and financial help the financial cut in payment for efforts made because you take that kind of strategic vision and value and landed with specific customers, and the impact is specific to customers, vertically specific, process specific is what the channel is always done and has always been critical on kind of making that vision and direction clear on a customer-by-customer basis. And that cost money at the end of the day, right? I mean, that sales and pre sales and marketing efforts. So, the channel cut to that is both justified, and Microsoft's been doing that for a long time, so they certainly see the value.

SCOTT MAY  15:07

And Jason, one thing that I'd like to add into that, maybe a year ago or a little more, I was getting more questions about, "Hey. Am I going to be profitable and moving this?" And the incentives were maybe a bigger driver, if you will, but now we're seeing I think like 40% growth in partners within CSP from Microsoft over the last year, we're seeing that same type of growth within the Stratus Cloud Alliance. There's lots of validation of the growth of the Dynamics solutions, right? I think in a recent meeting I was on, just for Dynamics 365 Business Central, I think there's now 15,000-plus Business Central clients. So, the market is growing rapidly for that, and partners are seeing that. And I think part of it is, as well, which we help partners with is not only the margin and the incentives, but the ability to do it, and do they have the resources to be able to jump into it. And that's really where we've helped partners get into Dynamics 365 and just the overall Microsoft Cloud Platform by offering them services to support them getting into it without them having to go through and have it all built on their own. Just like Jeff was saying, we, we help with pre sales certainly across Dynamics 365, but also with Azure and M365, and the Power Platform. If a partner doesn't have the resources to be able to effectively implement those solutions to their clients or new ads, then we can go through and provide that to them and it all works through him as a partner. And then some partners don't want to provide the support, we have support options. So, we've been seeing partners that were hesitant to jump in in the last year, seeing the changes in the growth with the CSP and the margins and the incentives, that they're getting off the fence, if you will now, at this point.

JASON GUMPERT  17:20

When it comes to partners that are coming into the CSP fold over maybe right now, maybe over the last year, I imagine they come in with different existing skill sets at different things that they're already comfortable with, that they're good at, but then things that you are also then encouraging them or helping them on board with, are there particular paths or particular profiles that are common that you see? I'm thinking of coming in with a deep Office 365 skill set or a particular maybe an industry focus, but with a focus on other types of enterprise systems, not a Dynamics? Are there particular profiles like that?

SCOTT MAY  17:54

Yeah, we're kind of seeing three main profiles as you're getting at. We're seeing Dynamics partners, obviously, who we worked with a long time that are starting to move. Their on-premise clients into the cloud, obviously, they're working with us. But as Jeff had mentioned before, we're also working with those partners to help them sell across the entire Microsoft Cloud Platform, if you will, right? And so, that's what they're interested in, is getting out of being just myopic on ERP, but also being able to go through and do Office productivity, do cloud with Azure, and really expand their footprint with their existing client base. Again, that makes them stickier with their client, that gives them that opportunity to be even more profitable, and increase their ROI. And then you've got the MSP partners who may have a good base of clients on Azure or Office, but haven't typically gone through and then offering business applications. So, they're starting to see the growth in that, then their clients asking for it. And so, we're seeing partners come on board with us for CSP in that model to go through and kind of the exact opposite, as Jeff was saying, of the Dynamics partner-- they're looking to go through and take advantage of the growth in the dynamics solutions and increase their monthly reoccurring revenue with their existing client base and create that stickiness.

And we always basically talk to partners about making sure that you're talking to your clients about the entire Microsoft Cloud stack, because if you're not, there might be another partner and you may lose your seat at the table with that client. And then we are starting to go through and see what I call competitive, basically, ERP, CRM partners that are seeing the growth. They might be doing a NetSuite or an Intact or even Salesforce. They're starting to see the growth within the Microsoft Cloud Solution Stack based upon the performance, as Jeff had mentioned, of their stock, and then beating their revenue projections quarter over quarter. So, we're starting to see those types of partners get interested in getting into being part of the Microsoft Cloud Platform and not getting left behind. And all of those have what we call a different starting point, Jason, right? And that's kind of where we work with partners to understand where they're at, and then help them get on a partner enablement journey that helps them to go through and expand into those other areas, whether it's D365 for a lot of partners, or whether it's getting into Azure and M365, and the productivity solutions. We've got enablement programs and different partner journeys that we start to work with partners on to get them up to speed in those areas. We've got marketing campaigns and programs that we put together, that they can start using through us to automatically go out and start marketing to their existing client base, which is typically where we start because it's easier to market to your existing clients, and they expand that opportunity. And then we also work with them to then move to starting to generate more net new logos, if you will, and helping them to close those business opportunities as well.

JASON GUMPERT  21:29

I know we have at this time of year with Microsoft's fiscal year ending and the new one beginning, for anyone like the two of you and myself, when you watch and pay attention to what Microsoft's doing, it certainly feels like a new year in a sense in a new sort of a new beginning or reset, or whatever you want to call it. Do you sense that either for your own company or for partners that you work with that it's treated as sort of a new year and a new beginning in that July timeframe? And does that actually help the lead managers/owners to reset/reform their approach, their direction to make some of these changes that you've been talking about?

JEFF EDWARDS  22:06

Yeah, it is the beginning of a new year for Microsoft. There's new leadership, new strategies, they want to make their imprint and kind of go after the strategic direction and execution that's highest priority to them. So, as a channel, as a partner ourselves, where are they investing, what are the messages that they're going to tell, how do we support those messages and leverage those messages and investments to drive our own business? So, not paying any attention to that or not getting a full understanding of where they're going to go, you're just not putting yourself into a position to fully benefit from that. And it's a large machine and an elephant. But when it moves with purpose in intention, we can certainly get some benefit out of that. So, we pay attention to inspire and the announcements that come out of that, and make sure we position ourselves in such a way to take advantage and allow our partners from an indirect perspective with Stratus Cloud Alliance to take advantage of those opportunities as well.

JASON GUMPERT  23:05

Sure, it makes sense. And I do look forward to reconnecting with both of you after Inspire. It is always such an important point in time. I mean, one of the things that comes to mind for me from covering past Inspire events and worldwide partner conference before that was, it seems like it's a good chance for partners to sort of take a measure of people who are, as you said, transitioning into or out of various roles at Microsoft, which is fairly common at the beginning of the year, right? That is when changes tend to take place. And trying to understand how some of those people will work in some of the roles or working towards some of the goals that already exists. Are there any particular things you're looking for either personnel wise, performance and policy wise that you recommend people keep an eye on heading into Inspire?

JEFF EDWARDS  23:48

I'd say with Gavriella moving on, both Nick and Rodney Clark are going to have their ideas on where to take the partner ecosystem, kind of getting Nick Parker as well, obviously, getting their view. I would assume some fairly significant changes there and a new strategic vision, that's a big change, right? Kind of the channel chief from Microsoft. So, really getting there, that sense of where they're thinking to take the channel, and the priorities for them. That's kind of a once every 4 to 6-year change, and we're in the middle also of the transformation of the business from a cloud perspective as well. So, I think this will probably be kind of a more impactful or a more interesting Inspire given the changes in people than we've had for a few years.

SCOTT MAY  24:41

Yeah, Jason, I know there's a new commerce platform that's going to be being rolled out in the first part of Microsoft's new fiscal year and we're one of the pilot partners working with them on that. So, there's going to be changes there, which there'll be new licensing options and changes within the CSP. I know last year they started rolling in on-premise licensing into this CSP model. And I think they'll continue to roll in more of that on-premise licensing to be available through CSP as well. So, again, with the new year comes not only new changes in personnel, but programs that partners are going to have to go through and stay abreast of, and that's one of the things that we do for partners is to make sure that we're staying abreast of those as Microsoft and communicating those changes to our partners so that they can go through and be kept up to speed. And then obviously, working our relationships to make sure that we're maximizing any incentives or program changes and leveraging those with the partners that we're working with. So, we obviously have a very close and tight relationship with Microsoft and continue to evaluate those changes and making sure that we're staying connected, that's going to benefit our partners in the end.

JASON GUMPERT  26:04

All right, excellent. Plenty to look forward to. So, I really do look ahead to compare notes with you once again in not too long, in just a few weeks, I suppose here. Perhaps that's a good place to start wrapping up. Anything else you wanted to call attention to before we wrap up today?

JEFF EDWARDS  26:19

Yeah, I think one of the things that we continue to work with partners on, Jason, and I know Microsoft continues to promote it as well is really going through and becoming industry focused, right? I know Microsoft has its own different industries that they say they focus on, being vertical or industry focused, we see continues to go through and provide benefits to those partners who are able to do that in the essence of increased profitability, opportunities to gain more new client ads, and we're really trying to help partners who want to go vertical that haven't been, right? So, we've also got the relationships with probably 50 plus different ISV solutions that our partners can sell through us everything from kind of what I would call a point solution, like Payroll NOW by Integrity Data, all the way to full-blown vertical solutions, such as for the professional service automation industry. There are solutions that we offer, such as advanced project accounting that allow partners to actually go after a vertical if they want to, and we've got all of the expertise within those vertical solutions to help from a pre-sales perspective to do a deployment solution expertise, if you will, for consulting and implementation. And there's other verticals within distribution and manufacturing that we help partners get into with the expertise that we have. There are also other solutions, such as association management and not-for-profit, then. So, as we bring partners in, not only are we helping them kind of understand the solutions in the Microsoft Cloud stack, but they're not verticalized already, is there an opportunity to help them go after a vertical market, because we just see that becoming more and more important to remain competitive. And most partners that we talked to haven't necessarily verticalized themselves or focused on in the industry. And we think that's important for partners to do going forward to be able to differentiate themselves and to be able to remain competitive in the cloud market space.

SCOTT MAY  28:43

Yeah, I'd add on to that point is my contacts inside of Microsoft. We've talked about being vertically or industry specific as a company for quite a while. And everything I'm hearing is people really doubling down on that. There are industry specific clouds on the Azure side, there's more of a go-to market by industry, the sales teams are being organized by industry as well. So, I think more now, more than ever, Microsoft is actually walking the walk as opposed to just talking the talk. So, if you want to take advantage of the go-to market activities, increasingly, that's going to be aligning yourself to the industry and vertical go-to markets and Microsoft funds and encourages as well. So, if you want to get the tailwind on that, aligning yourself to that model is really critical.

JASON GUMPERT  29:30

Right. And another thing I'm just watching for in the same theme, I guess, is what's the correlation between project success and industry specialization? I think that's more of a long-term question, but in addition to all those things you mentioned, that's certainly something that's kind of on my radar when it comes to deploying business apps from Microsoft.

JEFF EDWARDS  29:50

Yeah, I think you basically sell this describing the business outcomes, and business outcomes are vertical at the end of the day, very different business outcomes. You're trying to drive in a distribution business versus a professional services business. So, you talk about things in those terms and it quickly becomes a vertical conversation.

JASON GUMPERT  30:08

All right, excellent. Thank you both so much for taking the time today. As I said, I look forward to chatting again really soon. Jeff, Scott, really appreciate your time.

JEFF EDWARDS  30:15

Thanks, Jason. Great talking to you, too.

SCOTT MAY  30:18

Thanks, Jason.

JASON GUMPERT  30:19

This has been another episode of the MSDW Podcast. My thanks once again to Jeff Edwards and Scott May for joining me today. To learn more about Stratus Cloud Alliance, visit https://www.dynamics365partner.com, to learn about their partner offerings. If you want to get in touch with me, you can reach me by email: jgumpert@msdynamicsworld.com. We're always looking for feedback and ideas on future shows. You can also follow us on Twitter and on LinkedIn. Until next time, this is MS Dynamics World, signing off.