Is Microsoft losing the ISV plot?

microsoft partner logoVia my work email I received an invitation from Microsoft to session called “Ignite your marketing potential with Microsoft”. The agenda for the session was:

  1. An Overview of the Microsoft Marketing strategy in a world of Devices and Services
  2. Campaign Priority – Cloud OS: Azure, Windows Server and SQL
  3. Campaign Priority – Your Complete Office in the Cloud: Office 365
  4. Campaign Priority – Flexible Workstyles : Windows 8, Office & Devices
  5. The value of these campaigns to you?
    • What is the potential deal size?
    • How can Microsoft help you save on producing the assets? A look at brand tools.

This was sent to a representative (me) of an ISV (independent software vendor) that develops enterprise software.

Item 1 might be somewhat relevant to gauge where Microsoft wants to go, but it’s not really that relevant to an ERP company.

Items 2 is relevant, but as I said to a Microsoft VP recently, “if you want your partners to transition to the cloud, what kind of investment are you prepared to make to help us move?”

Items 3 to 5 are basically irrelevant to us.

So my question is, as the title of this blog, “Is Microsoft losing the ISV plot?”  because it seems as though they have become almost entirely B2C and cloud oriented, and have forgotten the B2B aspect.


Responsiveness of cloud-based software

For a while I have been using a web-based service called Mammoth. Mammoth allows you to save text, images and other online content, as well as notes, into a single place for later use. In my case, I use it when researching issues I need to write about, or reference, for my job as a product marketer.

Mammoth allows you to create ‘boards’ which store the content about a particular subject. Boards can be shared so that people in different locations can edit the content collaboratively. A standard board in Mammoth is ‘Talk to Us’, which is shared with the Mammoth support team, and this allows me to address any issues I have with Mammoth online. Whenever I have logged an issue, I get a response via the board usually in a few hours.

In one case, Mammoth made a change to the user interface (UI) which made it look worse for me, so I logged a note on the Talk to Us board. There was a bit more discussion and clarification about the UI issue on the board, but what interested me was that 24 hour later when I logged on to Mammoth, the UI problem had been addressed. The application was fixed and changed without me having to do a thing.

It made me re-evaluate my view of cloud-based services.

  1. A problem with an on-premise application always requires the user to do something to fix it, usually download and install a software patch. With a cloud service, the problem is fixed once in the cloud, everyone gets it at the same time, and new software has to be installed.
  2. A problem with on-premise software is reported either by a phone call or an email, which then has to be discussed and confirmed before it can be transcribed and referred to the software development team. With a cloud service, you log an issue online in one place, the issue can be quickly confirmed and then be relayed speedily to developers.

Imagine if you could do that with enterprise software – ERP, CRM, warehouse management.

  • Customers could report problems so much quicker, and probably have a better support experience
  • No need for each customer to update the software with maintenance releases to fix bugs
  • Customer could log enhancement requests in a more effective way, and perhaps even get previews of enhancements before they go live
  • The development team work on supporting one codebase, in one location, for everyone
  • No need to ship CDs of software around the world

Wouldn’t that world be better? Oh wait, it’s called Software-as-a-Service and it’s here already.

The problem is that while the promise sounds simple and wonderful, the realities of transforming to that promise require major changes in thought, approach and practice – and moreover, for traditional software vendors, major investment expense.

SYSPRO’s cloud strategy and journey

This is an interview that Dennis Howlett of Diginomica did with me about SYSPRO‘s approach and implementation of a cloud solution for its ERP software.

The accompanying article can found here.

Enterprise software is not a commodity

This post was prompted by a recent blog I read – Refuse to be a Cloud data hostage. The point of this article is that businesses should treat their cloud software like a commodity and be able to switch as they please. This stems from the argument by the Chief Technology Officer of Amazon, Werner Vogels, that:

“You should keep your providers on their toes every day. If we are not delivering the right quality of services, you should be able to walk away. You, the consumer of these services, should be in full control. That is core to our philosophy.”

When I read this, the word that stood out was “consumer”, not business. Consumers may have the privilege of being able to jump whenever they want, but my view is that businesses do not, and perhaps should not.

If you’ve ever worked in a manufacturing organisation, you will know that they invest in machinery only after a long evaluation process. Why? Because it is expensive, they may have to make changes to their processes in order to benefit from it, and they have to train staff to use. Then, if they want to keep getting benefit, they partner with the machinery manufacturer to maintain and improve it.

That is what should happen with enterprise software, whether it is in the cloud or not. Enterprise software is not a commodity, it is likely expensive machinery, and should be treated as such. If you think enterprise software is a commodity, then you are going to get very little benefit and far less than you had expected.

Enterprise vs consumer applications

There is a discussion around the Internet about making enterprise applications work more like consumer applications. What the proponents mean is that applications should look like the ones that run on smart-phones and tablets.

While I appreciate the need to re-engineer the user experience of enterprise software, I am beginning to wonder how much of the discussion is really only a marketing or promotional veneer for some people. What I have not seen covered or appreciated are the deep structural issues that differentiate enterprise and consumer applications.

Let’s first accept that the differences between individuals and business matter. Individuals are like a single cell, whereas a business is like a complex organism. A business is a highly complex society, with rules and practices, as well as a body of knowledge made from the contributions of many people. An individual does not have the complexity or the rules but does have a body of knowledge.  How that knowledge is updated is also an important difference. Individuals modify it implicitly through the natural and adaptive process of learning. Businesses have to do it explicitly through periodic strategy reviews and training sessions.

When new or different software is introduced to a business, people not only have to learn how the software works, they also have to understand how it fits into the other processes and operations of the business, so they have to be taught how the software applies in their specific case. The same thing happens for new employees; they just can’t be let loose on the software, they have to learn the rules and practices of the organisation and how the software applies to that.

Now let’s look at the differences between consumer and enterprise applications. All the consumer applications have been written with a single function in mind. This does not apply to enterprise software. When the early enterprise solutions were initially developed, they were done so with the purpose of enabling a specific functionality. There was software for MRP, others for accounting, etc. But over the years, organisations found it easier to use software that combined various functions, and modern enterprise solutions like ERP grew. Consequently, enterprise systems are now diverse, multi-functional and highly complex pieces of software. That presents a problem if you want to make them like consumer applications – it’s like trying to mix oil and water.

I’m not ruling out that a Zuckerberg-like person may one day create a revolutionary user interface and experience for enterprise applications. At the moment I just struggle to see how it can be done.

Approaches to selling enterprise software

In the last decade or so there have been a number of books written, and practices proposed, on how to sell enterprise software. It probably started with the grand-father of business sales techniques, the SPIN methodology. I went through that technique in order to sell a data warehousing solution. (SPIN was an acronym for Situation, Problem, Implication, Need-payoff).

Since then, I have been introduced to the approach of solution selling, mainly because Microsoft adopted that process, and more recently Jeff Thull’s books – The Prime Solution, and Mastering the Complex Sale – which I believe are a more realistic methodology for understanding how to sell complex products like enterprise software.

All these approaches seem to have one central assumption, that selling complex business applications is the same where ever you are. But arising from the sales discussions at SYSPRO’s international executive conference, I came to believe that there is no standard way of selling throughout the world, and that different cultural perceptions and expectations play a large part in the process of how enterprise software is sold.

Three brief examples:

  1. In the UK, business software buyers seem to have arrived at a standard perception of the price per seat at which certain types software should be licenced. So talking about value of a product is waste if your price per seat is higher than the generally-accepted price.
  2. The concept of not devaluing your product in the initial sales encounter seems to have gone out of the window in the US, where even the ERP mega-vendors are coming in at the early sales stage with significant discounts.
  3. In Australia, where large trans-continental distances between a company’s customers and suppliers are common, it is not necessarily the whole product that has value, but certain functionality, like SYSPRO’s Landed Cost Tracking, has a much higher premium in terms of customer need than other countries.

It seemed like the only aspect that everyone was prepared to agree on is that people still buy from people.