The Role of the Channel in The Cloud

The role of the Channel in playing in software vendors' strategy in The Cloud is very unclear.

My personal experience at last week's Cloud Computing Forum in Olympia was one of confusion when it came to Microsoft. I got information on both Microsoft 365, the Cloud version of Office, and Microsoft Dynamics for The Cloud. I have even downloaded the Dynamics program and I have been called since installing the trial by both Microsoft and ConsultCRM. Admittedly, Microsoft did back off when I mentioned ConsultCRM but there was no doubt that both vendor and channel were watching who was downloading. It was also obvious that the hosted version of Dynamics and 365 are hosted by Microsoft.

So you have to ask yourself if Microsoft is investing all this money in hosting and marketing to end users what's the point of having channel players in the way of the sale? What value do they add?

In the case of my Dynamics trial I think there is a role for someone to play in advising me how a confusing program works. But given I took a trial with Salesforce.com and within minutes I was working, integrated into Office and had my near 10,000 list of contacts uploaded without a single interaction with anyone, you can see why Microsoft needs to get to a point where the end user performs the sale and the rest is auto-provisioned. There is little room in the world of SME for slicing up the sale to give some margin for just handling the enquiry.

I am told that in the case of MS 365 that Microsoft has had to do a great deal of the running as well as provisioning of the service. Partners have been slow to embrace the product during its beta phase and Go Live is due at the end of June and I know that one distributor has had virtually no sales.

What is going on? How is Microsoft going to solve this and is there a role for channel to play in The Cloud for Microsoft and arguably other software vendors?

For Microsoft, it appears they will be paying a finder's fee to channel members who deliver sales on MS 365. This is mighty precarious as it strongly appears that the contract of sale will between user and Microsoft meaning that in future the channel can be easily hacked out or given nothing for renewals. As one channel player puts it, "We lose control of the client."

So you have to ask yourself, why would a reseller sell MS 365 and risk losing control of the client when they could sell the on-premise solution and get full ownership of the sale?

Again it's an example of a software vendors' lack of strategy and execution in The Cloud. Or it is a warning bell for channel that their future is limited as Cloud adoption takes off?

So the scramble at the show was to interest channel in hosting solutions themselves but there is a problem here. The beauty of Cloud is economy of scale for SMEs and the way it is delivered is for vendors to host the solution with as many users on as possible so that each incremental user uses just a portion of the resources required and forgoes expensive investment in servers and virtualisation at the SME. It's a win-win.

The problem is that if everyone is hosting the same things then the economy of scale gets diluted and pricing will never really get much better. The end user loses out the more companies try to host themselves is my argument. Also, for resellers it would be unclear as to whether they could generate enough sales to make this worth their while. Multiple channels doing the hosting doesn't help the SME and it could be a mug's game for channel at worst, at best speculative for returns.

In all this, where does the distributor sit? There is no stock involved, credit is a new story and Microsoft is generating a dialogue with the end user that argues that resellers should get out of the way. If I were a broadliner, I would be starting to get uneasy about how this all pans out.
Microsoft has argued that one way resellers could keep control of sales is to do Enterprise agreements with large customers. Erm, the big opportunity is in SMEs, guys. The whole point is that SMEs is where the major opportunity lies for The Cloud.

All this points to a cloudy strategy for Microsoft and other vendors. At least Microsoft is doing something is one argument. But the channel must be starting to get worried. It certainly argues that the role of distribution in the future of plain old software sales is limited if this approach goes ahead.

Next up, I will try and tackle the thorny issue of what distributors should be doing.

Comparisons in The Cloud

Hot foot from The Cloud Computing Forum with my free trial of Microsoft Dynamics, I thought I would give the whole thing a go.

So I got my MS Dynamics trial going with a little bit of sweat and some clunky processes of verifications. Finally the beast arrived. Neatly, you can sign in with your MS Live ID.
From there I went about importing my contacts from ACT, my old and tired CRM package. There is a process to follow and I adhered to it religiously. When I viewed my contacts I got loads of blank entries that corresponded to null contacts found in companies. Then you notice that it has picked up first names only for the Full Name. I follow the procedure to wipe out the data and start again. The same thing happened although this time I had carefully followed the mapping of the data columns as per the instructions. I did it again. Same thing.

Annoyed, I turned to Salesforce.com. I signed up for the trial of the Group version although it is arguable that as a small, small company I only needed the entry level Contact Manager. The sign up took seconds and I was provisioned immediately. I pressed the button for Outlook synchronisation and a small program was downloaded and then I followed the steps. Outlook was synchronised with some errors which I manually checked and corrected - that took about 30 minutes in total.

Then I uploaded my ACT from the same file I used on MS Dynamics. It worked. Nothing more to say than this. All my contacts were there as required. I had a little tweaking to do on some accounts where contacts were not assigned but that took about 10 minutes in total which for 9,500 contacts in total isn't bad.

Salesforce allows you to send emails and it records them. But if I am honest that functionality is better in ACT where you use native Outlook and a copy is recorded in ACT. For Salesforce, you have to use its editor and it's not as nice. Plus it makes nothing ad hoc. Even scheduling meetings seems to not affect the Outlook calendar. What this forces you to do is to work entirely in Salesforce and I am a little uncomfortable with this and can see why salespeople rebel against the time taken to do things in Salesforce.

By this time MS Dynamics has been ditched. I can't see where it links with Outlook and although the tabs on the left are good, it is not as intuitive as Salesforce which has everything you need to work a contact or opportunity in front of you.

Then came the price. I could have started on a special offer on Salesforce Contact Manager at £1.20/user/month but I splashed out and did the next offer for Group at £10.20/user/month. The comparable offer on MS Dynamics is one flavour at £22.75/user/month for this month, £29.50 after the end of June.

No brainer - Salesforce wins it.

And here is the issue for Microsoft in The Cloud. Everything is about getting the same product down into The Cloud and amortised on price. There is no understanding of the different needs of an Enterprise of one man or 10,000. The price and product is the same. But the businesses are radically different.

One size does not fit all, sadly. Whereas Salesforce does escalate to a high price, that depends on the user status in a very hierarchical fashion and you go into the realms of unlimited customisation. But for me, Salesforce Group is perfect and I am working happily in it as we speak.

This is where Microsoft's strategy is critically flawed. Businesses of my size do not compare with the likes of BP International. My requirements are simple and limited. Salesforce Group gives me a raft of features perfect for my business. MS Dynamics is clunky and overloaded while making it difficult for a user to get started. I don't want to have to be trained to do something as simple as inputing data, thanks, or importing a .csv blinking file. If that isn't easy, then you are onto a losing battle with SMEs.

Salesforce has cracked it. It worked perfectly on my iPad and I don't have to worry about file management. It also has a custom app for iPhone which works on iPad. Then it has something called Chatter which is free and is an imbedded Twitter type application which allows you to create working teams on accounts or groups of accounts from people within your company or even outside. People then see updates and you can 'chatter' any news or success or share ideas as well. It's a neat function and this works on iPad and my Android too.

The Cloud isn't just about sticking an application in a hosted environment. It's about solutions. Microsoft is using old mentality to try to get into The Cloud. Microsoft should take a leaf out of the books of the likes of Salesforce. To make matters worse, salesforce seemless links into Google Apps which are free.

They are already there and doing it brilliantly. They are the benchmark.