Microsoft Adds Sales Incentives, Tools For Dynamics Apps Resellers

Microsoft's Dynamics applications business isn't immune from the recession, but company executives are vowing to push ahead with efforts to gain market share against rivals such as Oracle, SAP and Salesforce.com. And the software company is offering partners more tools and financial incentives to do it.

"The going is tough," acknowledged Kirill Tatarinov, corporate vice president of Microsoft Business Solutions, speaking in a press conference at Microsoft's Convergence conference in New Orleans Tuesday. "We're seeing fewer people buying products," he said, with some customers delaying sales and others making smaller transactions. "But our objectives haven't changed," he said, referring to market-share goals.

Microsoft's first priority is working with its Dynamics ERP and CRM applications resellers to make sure customers are making full use of the software they have, Tatarinov said, and to identify new sales opportunities within those customers. But Microsoft isn't backing off from helping channel partners identify new customers for its Dynamics software, even though the recession is making that a challenge. "Signing up new customers in the tough economic conditions is hard. That's what we're seeing in the industry, broadly," he said.

Microsoft is offering Dynamics applications buyers a "Smart Pay" option that allows them to use the software for six months before they have to begin paying for it (interest accrues during the six months). Businesses today are trying to spread out and delay payments as much as possible in an effort to conserve cash.

Another sales incentive for channel partners who resell the Dynamics CRM Online on-demand application: Microsoft is now paying channel partners 18 percent of the first-year subscription fee. (Last year, Microsoft paid channel partners 15 percent of CRM Online first-year subscription fees, but that dropped to 10 percent Jan. 1.) Resellers continue to receive 6 percent of subscription renewal prices.

Microsoft is also offering new Dynamics CRM Online customers an introductory subscription price of $9.99 per user, per month (for five to 20 users for six months), and solution providers who sign up customers for that deal get a $500 payment. "This is a really good way for partners to get customers that don't have CRM," said Christian Pedersen, senior director of CRM product management.

A zero-percent financing deal Microsoft has offered Dynamics customers since November will end March 20 as scheduled, Tatarinov said. "We've heard from our partners that promotion really helped them close deals," he said. Tatarinov said Microsoft is working on additional sales stimulus initiatives for its partners that will be unveiled at the vendor's Worldwide Partner Conference in July.

Microsoft is also playing up the value of its "Unleash Your Potential" customer evaluation tool that channel partners use to assess the needs of customers using Dynamics ERP applications. The idea is that solution providers can ensure customers are getting the most out of the software they have, but also identify cross-sell and up-sell opportunities. Microsoft developed the tool last year and will offer an update next month that partners can use to evaluate new customer prospects.

"We recognized the opportunities we were losing [among] our customers," said Josh Richards, marketing specialist with Merit Solutions, a Dynamics AX and Dynamics GP reseller in Wheaton, Ill. The company has been using Unleash Your Potential since mid-2008 and Richards said his company generates $18 in sales for every $1 spent using the evaluation tool.

At Convergence, Microsoft also unveiled Dynamics CRM Online March 2009 Service Update, the third release of Dynamics CRM applications, and new extensions called "Accelerators" that expand the sales and marketing capabilities of the vendor's on-premise release of Dynamics CRM.

The service update comes with a 99.9 percent uptime service level guarantee and offers new Internet lead-capture capabilities, integration services for linking with third-party applications in "the cloud," and quick-start tools for new customers.

The Dynamics CRM Accelerators for the on-premise version of the CRM application are free add-on modules that include analytics, business productivity, CRM notifications, enterprise search, e-service, event management, extended sales forecasting and sales methodologies.

At the press conference, Tatarinov said Microsoft is in no rush to offer on-demand versions of its ERP applications (Dynamics AX, GP, NAV and SL) as it now does with its CRM software. Partners can host the ERP applications and customize them for customers. "We see that model working quite effectively," Tatarinov said. "That's been our position for, I'd say, two years now, and that hasn't changed."

Microsoft has promoted a hybrid computing model incorporating on-premise and on-demand software it calls "software plus services." But there's been ongoing speculation that Microsoft will eventually offer Software-as-a-Service versions of its ERP applications as it does with its CRM product. Just this week at Everything Channel's XChange Solution Provider conference, also in New Orleans, Shannon Day, Microsoft director of software plus services, signaled that on-demand versions of Dynamics ERP software could be coming late this year or in early 2010.

The state of the economy was a major focus of Tatarinov's keynote speech Tuesday morning. He said changes brought about by the economic upheaval are creating opportunities for businesses. "Embrace this crisis, embrace the change and turn it into opportunity," he said. "It's never going to be back to normal. We need to position ourselves today for the different world that will emerge."

In a sign of the recession, attendance at Convergence this year is about 7,000 (of whom about 2,000 are Microsoft channel partners), down from about 9,500 at last year's Convergence in Orlando.