In its race to capture the SME market and take market share from Sage Line 50, Exchequer and Pegasus, Microsoft has been working hard to encourage the Dynamics NAV community to participate in a programme called ‘Road to Repeatability’ or ‘R2R’.
The proposed aim of Road to Repeatability is to take advantage of the increasing commoditisation of ERP, encourage partners to create repeatable ‘out of the box’ offerings and rapidly increase the number of, preferably subscription-based, licenses sold.
From a macroeconomic point of view, the numbers seem to add up. With millions of users yet to be reached and hundreds of thousands of small businesses yet to experience Dynamics NAV, it makes sense that Microsoft would want to scale out as far as possible, and as quickly as possible. And with thousands of partners with tens of thousands of sales people and technical consultants between them, it makes sense that Microsoft would want to leverage that kind of reach. What this programme doesn’t adequately address for me, is that for the average NAV practice trading in 2014, this is not the kind of business that they originally set out to win, or the type of projects that would be profitable for them to pursue. If they’d wanted to build a company based on throwing a vanilla five-user accounting system into small businesses, they’d have started off selling Pegasus or Sage Line 50.
Most of the Navision partners that I work with are industry specialists, with incredible domain knowledge and technical expertise. Their consultants are not going to feel intellectually or professionally satisfied in bypassing all of their instincts and interests. Bypassing showing their understanding of the business and the power of the product but instead unwrapping the cellophane from a box and activating a product key. Customers are unlikely to want to pay the day rate that these consultants command, and if they do require additional bespoke work later on, it’s highly unlikely they’re going to want to pay anything near what partners demand if their entry point was £120 per user, per month for the usable vanilla NAV solution. Microsoft counters this by telling partners that they can make up for lost services revenue by developing ever more niche practices, but once again, if the target market is SME then R2R does not make financial sense to a partner who is more at home with customers that require a £1m bespoke construction solution or even a £10k workflow and reporting pack.
So what to do? One partner I have spoken to is trying this low value, high volume sales motion with their new telesales staff. Another is aiming to set up a separate business unit. A third asked me what I thought the investment might look like from a headcount perspective to create a dedicated team so here’s my view:
1 x ERP Consultant to complete the set-up and some basic training.
1 x Salesperson and 1 x Telemarketer
Salaries at approximately £80k p/a
In addition there must be office space, advertising and marketing budgets and I would expect the first year’s investment to be no less than £150k for the most basic toe in the water approach to R2R.
This is just my opinion based on my knowledge of the NAV recruitment market; even allowing for regional variations in salaries it is not an insignificant investment to make. And if you make the investment – how do you get that team up to speed? Microsoft has taken the time to provide content to some of its training partners on R2R which is helpful assuming the training partners and the content are strong enough to coach you successfully through the process.
However for me the real question is: if you’re going down the R2R route, how many of those five-user sales will you need to make in order for that business unit to become profitable? And how long will that take?
Personally I’d like to see Microsoft put a Dynamics NAV basic home accounts offering in with every copy of Office365 – seed the market right from the bottom and get that to bubble up. Make it the finance tool that everyone knows and no-one can do without and allow the partner community to continue their great work in providing innovative solutions that deliver in spades to businesses.
This is just my view but what I’m really interested in, is yours. If you’re a Dynamics NAV partner and you think the R2R numbers add up, I’d welcome the chance to connect.