Executive Q&A: How a CRM firm grows and adapts in Microsoft’s innovation ecosystem

posted in: Cloud/SAAS, Microsoft Dynamics | 0

By:  Dann Anthony Maurno

In 2006, Microsoft partner PowerObjects put aside years of application development business and “bet the farm” on Dynamics CRM.

A lot has changed since then, as Microsoft has adapted the product line and PowerObjects itself went through an acquisition in 2015. But the focus exclusively on CRM solutions, services, support, and education continues at the company, says Senior Vice President and Principal Jim Sheehan.

Sheehan sat down with us to discuss the company’s acquisition, the transition to Dynamics 365, and the role of an executive in the Microsoft partner channel in a time of rapid technological innovation.

MSDynamicsWorld: PowerObjects has kept its CRM identity intact since the acquisition, and its name. What was the strategic importance of that?

Jim SheehanJim Sheehan: The strategic importance was that we had by our own account, and a lot in the industry would say the same, built up the biggest brand associated with Microsoft Dynamics CRM. One of the qualifications I had as part of my vetting process for potential [buyers] was that we would go forward with our name, PowerObjects, for at least some period of time.

And when you’re selling a professional services firm, you’re always only as good as your people. I wanted to make sure that whoever acquired us saw value in that so that we could continue forward.

We had a great strategy [in terms of] working with Microsoft and how to sell in North America. I just wasn’t able to grow it as fast as I wanted, and really wanted to get to the rest of the world a little quicker.

Has HCL taken you global?

Oh, yes. I just got done hiring about 40 people in the UK, and we’ll be looking at the rest of Europe in the next fiscal year. We’ve built a big offshore development consulting arm in India, and we were already in Canada. So that was Step One. Then we’ll look at the rest of Europe and then APAC and South America, and then we’ll have the world covered.

Tell us about the early days of PowerObjects.

PowerObjects’ was started back in ’93 by my business partner, Dean Jones, as a PowerBuilder consulting firm. Dean was one of the world-renowned PowerBuilder developers, so it was PowerObjects because it’s an object-oriented language and Power because of PowerBuilder.

In the 2006 timeframe we really started to search, “What’s the next technology that we want to be known for?”, and we decided that we were going to bet the bank on CRM. It was an interesting platform at the time, in the [Dynamics CRM] 3.0 days, you were able to start running it in a datacenter, so it was the early days of private cloud.

I clearly remember that meeting when the clouds parted and we knew exactly what we were going to sell, what we were going to market, who we needed to hire. We made shift in the 2007 timeframe, and by 2012, we had been named the number one Dynamics CRM partner in the world and have won that award multiple times.

You’re a CRM shop, but with Dynamics 365 are you now in the ERP business? It seems as if partners now have to be one-stop shops for CRM, ERP, BI, analytics, IoT, Azure, etc.

Every dollar on my P&L is derived from touching Dynamics CRM or the CRM workloads in Dynamics 365, 100 percent.

With that said, HCL has some legacy Dynamics AX capabilities, so we’re not without that at our beck and call. But we are looking at applying the PowerObjects business model to an ERP practice. I think I can go out and build a [Dynamics 365 for Operations] or AX practice with sort of the same vigor that we took over the CRM market.

Does the pace of innovation in Dynamics 365 challenge implementers to keep customers on course? It seems new capabilities arise in the middle of implementations.

With cloud-based software we’ve always had a rapid pace of innovation, so that’s not new.

Dynamics 365 frankly caught us a little flat-footed. I think Microsoft could have done a better job of involving the partners in that ecosystem shift. As we mainstreamed the product into Microsoft Cloud and Enterprise, the strategic direction was taken over by a group that hadn’t always been as partner-centric as [Microsoft Business Solutions] MBS and Dynamics was.

By and large, ERP workloads and CRM workloads can take a fair amount of professional services to get up and going, and I’m not sure that everyone understood that as they put together their marketing and sales strategies. They’ve come around, but it happened a little quicker than I thought they should do without involving a lot of feedback from the partners.

But they’re the publisher, and one of the reasons we hitched our wagon to Microsoft is its relentless R&D investment engine. We have to take what is presented to us and figure out how to monetize it.

It sounds as if that pace of innovation has been there all along.

We bet the company on a 3.0 product, which was a pretty risky bet; but it was a great product back then, and Dean and I and a couple of guys thought “Wow, Microsoft just keeps investing and they want  do really well in the market,” and they’ve done that. And the pace of innovation in Cloud and Enterprise is exciting.

The reason that’s so important is that it continues to bring more people into the ecosystem, and continues to make existing customers excited about staying on the software; so I’ve got to give Microsoft a lot of kudos for the investment they’ve made.

It seems a CRM shop was likely best prepared for Dynamics 365’s subscription licensing model.

In the early days, in the 3.0, 4.0 days of the project, we were a large [Microsoft Service Provider License Agreement] SPLA partner. So yes, we were used to hosting the software, we had all the back-end systems to charge people on a monthly per-seat basis and understood the billing mechanisms of that.

With [Microsoft Cloud Solution Provider] CSP there are a few levels of complexity in Tier 1 and Tier 2 support that needs to be wrapped into the cost structure.

But from an operational model it’s pretty much the same, though now I don’t have to worry about datacenters, and I don’t have to worry about the price of electricity because that’s going to impact my cooling costs. I know I’ve got the service in the cloud and I need to figure out, “How do I add value to it and move it out?”

We transitioned most of our SPLA business into CSP, and now our SMB and midmarket teams can only sell CSP and I think last year we were the number one CSP for CRM in the world. I’m sure we’re up there again.

So the newer licensing model hasn’t been as painful for PowerObjects as it might be for a Dynamics AX house.

No. The ERP channel built their business models and sales and presales efforts around 50-, 60-, 70-percent-margin products, and really needed that to make the model work.

We and a lot of the successful CRM partners came at this business from the custom app dev side of the world. There, you don’t make money on the tools, you make money on the professional services. So for us to get anything from a licensing standpoint was new and interesting and we’ve made it work. We just made sure we’ve never become fully dependent on it.

So the CSP model gives u s a way to control that relationship and control that margin on the software piece of it with the customer even more. And I think it’s the wave of the future, for the go-to-market through partners for Microsoft.

And I think you’ll see CSP climbing the ranks of segmentation. Right now it really only makes sense in SMB and midmarket. But as we get better at wrapping our IP and processes into the software, our customer base which is moving upstream into the enterprise, is going to demand to have this on a per-seat/per-month basis from the partner, all in one price.

How about the term “digital transformation.” Does the term have any real importance?

That’s a great headline. We go through these phases where there’s this big catchword or key phrase people try to define the IT industry with. I get it, but it means so many different things to so many different people.

Some think it’s as simple as going paperless. If you had to nail down a definition for all of industry, what would you say?

I come at it from an apps modernization standpoint. How do we take old client/server apps and send them to the cloud?

And you have to start looking at the business model transformation that happens along with it. If you’re going to digitally transform the enterprise, you should look at flexible computing models, paying for what you need, when you need it and not paying for what you don’t need. It’s not so much about buying hardware and software, but about buying outcomes.

But that’s sort of an extreme view. The first step in a digital transformation can simply be somebody stops writing things on a piece of paper and entering that in a system instead.

So we can’t get so tied up on the buzzword that we forget where people are and what are the steps to modernize their businesses.

With all the consolidation in the channel over the last year, what advice do you have for a company putting itself on the block?

Do it for the right reasons. If it’s purely a financial transaction, that’s the owner’s prerogative; but I don’t see those being highly successful.

There has to be a greater sum in the whole versus the parts in order to do it, and that’s really what we strive to do. And largely I think why we’re successful is that I’ve still got the same leadership team as I had 18 months ago when we sold the company. I was actually sitting down with Microsoft last week in Redmond, and they asked “How has it really gone?” and I said “Exactly how we planned it.” I can’t point to another transaction in our channel that has had this amount of success, and I’m pretty close to a lot of them.

I give a lot of credit to HCL who’s living up to their end. We’re up almost 100 percent since they’ve acquired us, so it’s working.

And do you have any advice for Microsoft?

It’s not a new drum for me to beat, it’s the same advice I’ve always given: “Think partner, look at how we can add value together and make sure to leverage us.” It’s a huge, $70 billion organization, and you’re going to have people who don’t always understand the value the partners bring into the ecosystem. And I always try to hold that thought and say “Look at how much more we do together and how much better we are together and how many more successful clients we have together.”

About Dann Anthony Maurno

Dann Anthony Maurno is a seasoned business journalist who began his career as International Marketing Manager with Lilly Software, then moved on as a freelancer to write for such prestigious clients as CFO Magazine; Compliance Week;Manufacturing Business Technology; Decision Resources, Inc.; The Economist Intelligence Unit; and corporate clients such as Iron Mountain, Microsoft and SAP. He is the co-author of Thin Air: How Wireless Technology Supports Lean Initiatives(CRC/Productivity Press, 2010).