10 October 2017
There seems to be a myth circulating that Dynamics NAV generates no Azure consumption. Categorically that is wrong, I have the invoices to prove it. In fact, it uses a lot and I’d thought I explain how that happens, to hopefully kill this fantasy once and for all.
Why does this matter? Well Microsoft have a fixation on Azure consumption this year. Just about every Microsoft employee you speak to has a scorecard - that means they have a big incentive to increase use of Azure.
Addicted to the recurrent subscription drug
Microsoft has joined its partners in understanding how nice it is to start each month with the majority of income generated by recurring subscriptions. Where for us it all been about support charges, they are getting hooked on Azure fees.
It matters to me because technologies that drive Azure will get time, attention and higher investment. I want that for Dynamics NAV and the past few weeks have illustrated that there is some confusion at top levels in MS about where NAV meets Azure right now.
No viable Saas option for the vast majority
So why don’t they rate NAV for this? Well, first they haven’t given us a Saas option that does what we need. Sorry but Financials does not have the capabilities to replace NAV in the mid-market for all be it single digit numbers of prospects. We were waiting for the launch of ‘full NAV’ in the cloud which would have helped but I agree that it’s better to wait till this can have everything we need to succeed with the launch of the product codenamed Tenerife next spring.
Oh, and I’m lucky being in the UK. Only the UK, America and Canada have Financials right now with no plans for any more country launches. That says it all for me. It's going to be put right with the launch of Tenerife for fourteen countries plus W1 in next spring.
Subscriptions did not make financial sense
Second, the price differential between the perpetual licence and subscription has been totally biased in perpetuals favour. When you looking for any new product and have the choice between buying and renting there are a number of factors that influence which way you go. I’d list them as follows in order of priority.
- Do I have or can I get the cash to buy outright
- How many months of rental does it take before I’m paying more, than buying outright
- Will I need this long term, if it just a few months, I’m better off renting.
Taking these in reverse, everyone buying an ERP system sincerely hopes it’s the last one they ever have to buy. When we tell them that we have customers who have been using it for decades (I sold NAV to my oldest customer in 1995!) you see the relief. It not about money, it's about disruption and effort. Changing ERP is not easy and about as close to open heart surgery as a business can go through.
In sickness and in health, to have and to hold, for richer or poorer
It’s like marriage, no one starts out intending to put a new ERP system in more than once. It takes confidence and trust to make the decision to take the plunge. Lots of people get spooked close to the day. Sometimes you work at it hard and it doesn’t work out. That’s especially hard to forgive when your partner is unfaithful. Signing that contract is like the equivalent of saying vows for most. There is no such thing as the equivalent of a ‘quickie divorce' here.
What else do we do with the money?
Factor’s one and two on the list above are more complex but lots of established mid-market businesses have money in the bank not getting a lot of interest these days. In fact, with some banks in Europe you have to pay to keep it on deposit! Do the maths and work out the effective rate of return between buy a perpetual licence and paying the annual maintenance versus paying the monthly subscription. I’ll tell you that until last October, when subscription prices were cut, it was about 34%. Try getting that from any bank or other investment right now!
Licence is one choice, where to put it is a different one (currently)
Acquiring the licence is one thing. Where you deploy it is another. 90% plus of those Perpetual licences sold in the last three years for my company have ended up on Azure. We either create a specific Azure environment for them which we then charge rental and management fees for or for simpler more straightforward ones we put them on a shared environment that we have created.
The customer pays a monthly fee either for their whole environment or per user per month for the shared. They pay that to us as a partner along with the other monthly fees for maybe a NAV subscription, sometimes a CSP licence for Dynamics 365 Sales & Service and often an Office 365 licence as well. One invoice from one supplier, one place to update when someone leaves or joins, one helpdesk to contact when they need help. One throat to choke if anything goes wrong as when we manage it all we have no excuses do we?
Look at partner Azure spend not customers
So people at Microsoft, go and look at what we spend on Azure and how that’s accelerated over the last few years. For Technology Management, the partner I work for, we have an Azure Enterprise Agreement and we are in year three. This year we had used the entire annual commitment of $25,000 in just seven weeks! We get five-figure overage charges about every two months currently.
Over to you Microsoft
I suspect that because of the lack of take up of subscription and with no saas option that the majority of our clients can use, Microsoft doesn't see NAV as helping their hit their scorecard.
What I’m trying to explain is that this is their fault and that mid-market ERP has embraced cloud despite them rather than because of. Sort out a Saas platform that has what they need at a price that makes sense versus the alternative and you’ll see a rapid adaption as you’ve seen with Office 365.
Ball’s in your court Microsoft!