ERP065 - Building an MS Dynamics practice

And it's simple, you need to meet with your customers and ask, so what are you doing for CRM? What are you doing for ERP and when we can get partners to do that, they have, you know, very strong conversations and most of them are coming back with opportunities. Welcome to Evolved Radio, where we explore the evolution of business and technology. I'm your host, Todd Kane. Today on the podcast, I'm chatting with Rick Machin. Rick is a Microsoft Dynamics 365 MVP. Rick has also had a strong history in the CRM and Dynamics world. Now Rick helps businesses and vendors develop their Dynamics practices. In the podcast, Rick and I build on the previous episode growing your cloud business. We chat about the opportunity that's available in building a Dynamics practice, how to do it and the huge impact that it could have on your business. So stick around and enjoy. If you enjoy the show, please consider leaving a rating and review in your favorite podcast app. It really helps to spread awareness and bring more listeners to the show so we can share the message with more of the community. Now, on with the show. And joining me on the podcast today is Rick Machin, MS Dynamics MVP. Welcome to the podcast, Rick. Hello, Todd, how are you today? I'm excellent, thanks. Great. So we're going to be chatting a continuation actually from the previous podcast where we talked to Doug Fiori from Tech Data and gave us some some good info on the ideas of potentially expanding your cloud offering and potentially adding a new business unit for your business around the Dynamics practice. And we talked about kind of this being an extension of the previous cloud offerings that people have now gotten comfortable with. Office 365 and Azure. There's lots of gold in that cloud. And I think this is a great extension that is not necessarily top of mind for a lot of people. I think it's a huge opportunity and I think that you have some great experience working directly with partners and other organizations to really unlock this potential. lays before many IT industry partners, so I'm looking forward to getting into that. Maybe to start, if you could, just give us a bit of background. I think you have a really interesting background and just to give people perspective on where you come from and where you are now in the industry in sort of your experience and now what you're providing. Well, Todd, it's been a long road and the road is mostly paved with CRM. So I'm a business applications MVP with Microsoft, but, you know, you get me outside of the CRM world and my knowledge drops pretty quick. So, I'm a CRM guy. And, you know, that's probably the main the main core product that I help companies with, you know, in the dynamic space. So today, as an MVP. Most MVPs you meet are going to be very technical people and they sit in dark rooms and they code and they put, you know, widgets up on secret websites for people to download. But I'm more of a business guy who ended up with an MVP from Microsoft. So, what I do today is I help partners, established partners. who want to build SI system integration practices or my main focus. Actually, is helping ISVs, independent software vendors. So these are people who are building products that attach to the Microsoft staff. Whether it's to the Dynamics CE CRM side of things or one of the ERP platforms. Whether it's FNO, whether it's business central or one of the older products like GP. So, I help those companies sort of, we'll call it accelerate their business forward and I help them sort of work their ecosystem. Okay, great. Now you're asking me about my past. So I'll go back. It all started with myself being a salesperson working for a company and somebody showed me a piece of contact management software. And it happened to be maximizer out of Vancouver. This is the early nineties. And I said, wow, this is going to save me a lot of time. So I started using it. And then I said, you know what? I should sell this stuff. This is a lot, you know, more fun than selling business equipment. So I ended up hooking up with the Act software program, which was the number one contact manager in the world. And eventually I ended up with 30 employees building add-on applications for the Act product. And well, we sold that company at the end of 99, so that was 20 years ago. And then I sort of played around in the CRM space for a few years until Microsoft showed up with their product around 2004. So I've been involved with the Microsoft product since then. In some different sort of formats in that world. So I've done a lot of end user type projects where I help them with their strategic planning, implementation. So I I kind of stayed independent since I've been in the Microsoft world. And, you know, I'd work with partners on projects, but really the last four years. I've been almost exclusively focused on this practice building. Okay, great. And that's sort of the the primary topic that we're hitting on today. So it's perfect. You know, you you either have this practice and you want to build it out and scale it. Or you don't have this practice and you want to kick it off and and add that business unit and, you know, a pretty wild open revenue funnel as well. I think this is to me, maybe from your perspective being kind of souped in this, that it feels like an established kind of a piece of the industry. But I can say kind of from my perspective, especially working with a lot of the systems integrators and the MSPs of the world, that this is not an area that gets a ton of focus in the IT service and the IT consulting space. So I feel like it there's even if it is an established space and there's lots of partners working in that area, I still feel like it's fairly green field for most of the vendors out there. Would you agree with that? Well, yes and no. So if we look on the ERP, ERP is sort of the accounting, your manufacturing system, warehouse management system. Everybody's got one, right? Whether it's 25 years old or whether they, you know, it's in the cloud, they've got one running their business. So that side is well established. The CRM side, well, somebody has may have got one as well. But they may not be using it to its full extent or they haven't done the work to expand it out to other functionality. So, yes, there's a huge opportunity on both sides. And when I look at the MSPs we work with, the opportunity is really you own these customers today. These customers trust you. Microsoft has this suite of products that you should trust. And it's simple. You need to meet with your customers and ask, so what are you doing for CRM? What are you doing for ERP and when we can get partners to do that, they have, you know, very strong conversations and most of them are coming back with opportunities. Because right now in this world of digital transformation as Microsoft calls it. There's a lot of ERP work and a lot of CRM work going on. So people are looking for trusted partners to be able to help. Yeah, I guess that that's good perspective, right? Because the way I think of the green field is more as the green field opportunity available because it's kind of largely untapped or or a bit antiquated in a lot of cases. Like you said, like they have an ERP, but they probably don't love it. And it's probably pretty ancient and doesn't function in sort of a modern fashion for them. So my view is that it's the untapped potential of the consultative opportunity and the ability to build an additional practice that is more high value rather than just sort of the break fix and the IT infrastructure setup. It's actually business process management and business enablement, which I think is a much higher value for the clients that they the companies are largely, as you said, largely already working with on an infrastructure standpoint. So, let's get into this, I think you have kind of a a bit of a program that you can potentially kind of walk us through at a high level. A bit of a 60 or a 90 day kick start to spin up this business unit and get things rolling. You want to dive into that and see where we should start? So yeah, so you know, we we can first talk about the why. Why do you want to do this? Well, you want to do this for one reason, it makes the rest of your business a little stickier, right? So if I am doing, you know, selling the Microsoft Office to people, I'm selling security software, that type of thing. Well, everything's in the cloud now or most customers are moving to the cloud. So, you know, as a service provider, it's riskier for me. They don't need me all the time because I'm not managing that day-to-day infrastructure with upgrades and things of that nature. So, the role of IT is changing. Therefore, the role of the solution provider is changing. And it's changing away from I'm there to maintain applications and maintain hardware to I'm there to build out business systems. and maintain business systems and that's the big change that the world is kind of going through. In 2020, you know, we got hit with the pandemic. And any company that was stuck with on premise software that didn't scale, that wasn't accessible from the cloud. was in big trouble, right? And they found out very quickly that this doesn't work anymore. So, I think any on premise type applications that still remain out there today. are really targeted for change. And companies are saying, how do we get them out of here? And how do we get them to the cloud? So, that's all part of this dynamics thing. So, one of the slides that I use, I'm doing some work with Tech Data. And one of the slides that I use shows, you know, what we think Dynamics is. And on that slide, I have four boxes, I have sort of sales and marketing. I have customer service. I have field service. And I have ERP, right? Finance and operations. So when people think about CRM and, you know, ERP, that's typically how they think of Dynamics. Well, the next slide is about 30 applications on it. Right? So we get into sales and what do we get into? We get into business intelligence. We get into CPQ systems, quoting systems. We get into PRM systems, partner relationship management systems. We get into sort of customer service, we get into customer service insights. We get into survey tools. We get into marketing and if we look at the marketing tools people use today, there's hundreds of marketing tools out there. So really, you know, there is four main pods, but once we expand on those pods. there's a considerable amount of technology that companies need to purchase for one thing. Build out, have it serviced and have it supported. So I think that's the big opportunity for people. So, if I'm a Microsoft partner today selling office. Why should I go with Dynamics as opposed to another product? Well, so you're interviewing a guy who's who drinks a lot of Kool-Aid, right? From the Microsoft cloud, right? But just to let you, here's our thinking is the whole cloud's connected. Right? So we've got this Dynamics and inside of Dynamics, they've got this thing called Dataverse, which is our common data model that runs across all the Dynamics platforms. And the ones that don't have it are moving in that direction. So now I can take this database and I can build business workflows to connect it to anything. So right now it's connected to office, it's connected to teams, it's connected to finance and operations. It's connected to CRM. So, I'm building a system that one set of data moves across my organization. So as a partner, you know, that's what companies are looking for. So that's kind of the starting point saying why I want to do this. Now, working with Tech Data, you know, we've got a big advantage. Because we're building a P2P network, partner to partner network. So. We're taking partners through a four week program, so every week we come together. And I talk a little bit about the different applications and what they are. Talk about them and how to find the opportunities. Then the second piece of that is some coaching. So we interview each partner to say, okay, where do you specialize? And this became really interesting the first time we did it. Because even as a managed service provider, we're finding, you know, one fellow said, I do mostly real estate companies. The other one said, I do mostly construction companies. Another one said, I do mostly law firms. And I'm going, wow. This increases the opportunity for Dynamics for you. Because you can, you know, not only start to focus on what solutions fit those companies, but you're going to take your intellectual property that you own. Because you know how these companies operate and it's going to give you an opportunity to to scale up in that sector. And possibly build what we call ISV, independent software vendor applications. So if you deal with law firms all the time, after you've automated three or four of these law firms, you can turn around and build an application just for law firms. And this is all a low code engine you're building it on. So it's not like a four year project to build this out, it could be done in a couple of months. And then Microsoft gives us a store called Appsource where we can take that law application, put it up on the store and start selling it globally. Right? So it's a great opportunity. So as we're getting them started, we're kind of, you know, getting them to walk. So we want them to walk through the four weeks, give them some coaching, help them understand and then just go have a conversation with your customers. What are you doing with CRM, what are you doing with ERP? It's simple as that, right? And that will sort to generate opportunities. And I was shocked at the opportunities that started coming back in. And then, you know, a lot of these partners and I and I suggested, strongly suggested they they do it this way. You know, let's find a partner that you can work with. They're not interested in your managed services business at all. They'll let you take the licenses and whatever, they'll come in and do the services and your team can actually, you know, follow the project. Maybe work on part of the project and start to learn the business. And then the next thing you know, well, the next project you may take a bigger chunk of that, then three or four projects down the road. You're actually. has some team members trained and you can get up and actually implement the project yourself. So I like this idea of of kind of learning to walk and then learning to run. And kind of staging your way into this with the sort of the the stewardship of a partner. I think what that leads to around that ISV model. I think where that is really interesting is what that actually sort of provides for your business. One, the size of the projects and the scope of who you can actually sell that model to becomes greatly expanded. Also, I think what people don't tend to consider is this is where Microsoft really wants the partner ecosystem to be. They always say, we'll build 80% of the platform and then the last 20% of the value is delivered by the partners. And you can see them kind of angle towards this around what is the intellectual property that you're independently building. I think that that's really important is if you ever go to sell your business. A lot of what people will look at is what's proprietary, what's different about you versus others. And if you have true intellectual property of something if you've built that truly supports a particular vertical, that automatically accelerates what the valuation of your business is going to be. If people are concerned about the commoditization of industries, this is a perfect way to kind of break out of that mold. And say that we've actually built something of value that is unique and distinct in the market. So we're moving towards that ISV model over time. It's maybe not something that you kind of do in six months, it's maybe not even in a year. But the idea that you're kind of building something of your own that provides independent value in the business, I think is really important in the long term objectives of the companies. And that gets, you know, really interesting when we go into Appsource and see where these companies are. You know, there's a fellow in London selling a real estate application globally. A friend of mine at Calgary sells a health and safety application globally. Right? And they just built it in their home markets, put it up on Appsource and then it goes global. And, you know, what's tremendous about this is you don't have to grow the platform. Microsoft is growing the platform. Now, an ISV told me this morning that he, you know, he saw that in the Microsoft financials that the Dynamics, this is not hasn't been verified. But he said the Dynamics business grew 39% in 2020. Which is pretty significant because it was pretty big to begin with, right? So you're building product, you're building services and Microsoft is really doing the sale. You're doing the fulfillment. Right? It's a really, really great place to be. And a great place to do business. Yeah, because I've sort of described my perception is, and I'll maybe bounce this off you as well, this is a maybe slightly off track, but still relevant, I think. That I really feel like teams is going to become the central hub of most organizations, the way that SharePoint was intended to be. And I think that Dynamics applications being fitted as tabs within teams. is really sort of the future of what this stuff will look like. And I think that that's a huge opportunity. That is really in front of all of those current systems integrators that, you know, first of all, most of them are not kind of leveraging the opportunity to roll out teams and help their clients establish a foothold on teams. And then the foothold that that then gives them is to expand their use of that platform. So my point is, I think you're 100% right. That Microsoft is doing the leg work of just making this stuff more valuable and more useful and largely kind of offering the hand out there and putting it in front of the clients for them to just sort of pick up. But they definitely need some consultative support. But the again, like the more value that you're building inside that ecosystem, you know, the sales work and a lot of the the heavy lifting of the readiness and enablement of that stuff comes from Microsoft itself. So you're really kind of riding on their coattails into the future on this. Yeah, Todd, I think you're right with the teams because if you go into teams. And you look at the add-on applications, what I call the click try by apps, all the major click try by apps. are all building for teams right now. And we're the business applications that come and be and teams is going to be the place where the whole thing connects. And a lot of that connection is going to be done through sort of our calendars and Outlook. So I think we're going to be even surprised as Microsoft people, you know, how fast that's going to grow over the next two to three years. Yeah. So we kind of talked about the how you stage in as an SI, pick up a P2P partner and and work with them. And and start to scratch the opportunity that's available in your current stack. What would be sort of your advice and what's the next stage after that? Like you talked about kind of a a bit of internal training. People pick up more of that skill set. But how do they lean into becoming an ISV, is it is it largely just through that partner training and enablement that they get more comfortable with this stuff? And then they can they can start to do that low code build for specific projects. What would that look like? So there's a whole world within Microsoft and and on partner source. You can go and look at the whole program and they have a learning track. where you can learn about becoming an ISV. And how to get your products built and onto Appsource. So Microsoft's invested heavily over the last 24 months in this program. And there's a co-sell component of it as well. So if you put your products up on Appsource, I think the fee is 10%. If it's downloaded and sold through Appsource. And then if your product's good enough, you can apply it to have it brought up to the co-sell program. And this is where actually Microsoft themselves and their sellers will add you into their corporate deals. If they like your product. So there's lots of opportunity there and then, you know, once you start growing an ISV business. It looks very different than an SI business, a systems integration business. You're trying to get away from services and more on replicating things. Right? How do I replicate my IP, how do I do more training than services, how do I support my clients, all that? So we'll see, and I work with several companies successfully through this migration from, okay, we're an SI partner. We want to become a full-time ISV partner, let's get going. But there's a lot that's still sit in the middle, right? So there's a lot of SI partners that will go down and build manufacturing or law or whatever, and they'll have a set of IP. But it's still surrounded by, you know, a lot of professional services. But I think eventually where you want to go is, you know. the services are done by other partners and you're just supplying the IP. There is an opportunity to be a hybrid organization, but you you kind of feel like the the approach and maybe this doesn't work as well as a Dynamics business unit. Or is it a separate business altogether, like they would be a paired company in some aspect? Like can you expand on that on what the the difference would be from sort of a traditional SI? Do they want to convert to be an ISV for some reason or or is there an opportunity for a hybrid organization with a different business unit inside? A lot of them never really want to get over to to become a complete ISV because they have such a big services business. In Dynamics, you know, we look at anywhere from around $5 to I'll say $15 of services for every license dollar. So if you build out a significant services business, it's pretty profitable. So a lot of them are saying, okay, we're going into manufacturing, going into law, maybe I don't need other partners. Maybe I'll just build out my company. And, you know, some of these companies grow to significant size. You know, whether it's a couple hundred head count or, you know, 8, 10 million, 50 million in revenue, they can they can get there. Yeah. Okay, great. So anything else like maybe the lessons learned or pitfalls to be cautious of as as people kind of make their way into this? Obviously, you know, if they're going to get some support and and some training from someone like yourself. Or the Tech Data partnership, that that would obviously be advantageous. But any anything off the top of your head of pitfalls that people should avoid in in making this transition or or grasping that opportunity? I think you've got to start to think about what your business looks like in general. And how your MSP business is going to be quite different in a few years. A lot of the the folks that own the MSPs are, you know, north of 50. They're starting to think about, okay, how do I transition out of this, retire or, you know. Do I have somebody who wants to take it over for me? So I think, you know, from that perspective, if you're building a Dynamics practice. And we're almost going to get away from the term Dynamics practice, it's going to be a Microsoft business applications practice. Because we got power apps coming on very strong, which is not Dynamics. But built on the same code. So let's say you're going to build this business applications business. Then, you know, it's it's going to look a lot different. You're going to hire different type of people going forward. You're probably going to look for some, you know, young bright people that, you know, want to build business applications. as opposed to people who are, you know, looking to manage a network. Right, it's kind of a different skill set. You know, you're going to have more people working on business process flows. than you are, you know, on your knock, right? So it's it's just going to be a different business that you're building. And you're not going to do it over a year, maybe you're going to do it over three to five years. But I think at the end of it, you'll have a much better business with a much better valuation. Right. Yeah, no, that makes sense. The I think the valuation is a big one, right? Just the you can look at number of contracts that you have under management from an MSP standpoint. And and you can get a pretty good valuation for that. But any type of intellectual property is a is a huge multiplier, right? It just it it's defensible in the market, right? So if you really want to sell for a high value, IP makes a big difference in my opinion. It can be two to five times the valuation. Right. That's amazing. Okay, great. So anything that we haven't touched on before we look to wrap up here? Any any final thoughts? No, well, you know, if people want to get a hold of me and ask about building an ISV business or building an SI business. I'm Rick Machin and I'm on LinkedIn, I'm pretty easy to find. Uh, there's another Rick Machin, but he's a big bodybuilder guy. So I'm not the bodybuilder, I'm the the CRM guy. So, find me on LinkedIn, let me know what you want when you send an invite to me and I'll direct you where you need to go. Right, and you you have a podcast as well, right? Yeah, well, I do a show on LinkedIn called Partner Talks where I interview. mostly Dynamics partners about their business, both SI and ISV partners. So that'd be great to check out, I think, because then you could kind of see, see and hear the experience of some of the people working on that side of the space. So if this is kind of triggered some interest, then then definitely check out the little LinkedIn show you have there as well. There's three that you should listen to, one I did with the partner called Velocio. Which is a big SI partner, so I just published that today. And today is the 29th, we're recording on. Published one earlier in the week from a company called Provance, ITSM solutions built on Dynamics. So for this crowd, this is really interesting. And with Kelly Moody, the president there, we did a nice interview. And then I did one with John O'Donnell, part of the global recruit team for Microsoft on the ISV. That's a long partner talk, they're mostly around 10 minutes. This was 30 minutes with John, so if you check out my LinkedIn page for partner talks. You'll see them there and those three will give you a really good idea of what these Dynamics businesses look like. Excellent. Okay, and I'll link to all of that in the show notes as well. Thanks for your time, Rick, this has been valuable and all the best. Thanks for coming on the podcast. Thanks, Todd.