Building support for cloud adoption

For users of IT, cloud entails new ways of thinking about the acquisition and consumption of technology. But if properly understood and managed, cloud’s value proposition — cost savings and business agility — is well worth the effort involved in rethinking the application of technology to business processes. With cloud, though, we’re still early in the game. If a shift towards greater spending on cloud than on traditional infrastructure is expected for around the 2020 mark, cloud implementations currently account for a relatively small portion of the whole in most IT categories, including software. InsightaaS estimates that in 2014, Canadian businesses will spend 11 cents in cloud for every dollar spent on on-premise software and infrastructure, but six years from now, the spending ratio will be one to one.

These market insights inspire a couple of observations: since the ramp to cloud will be rapid and steep, businesses looking to maintain competitive edge will need to engage quickly, while cloud providers looking to take advantage of the anticipated inflection point in adoption will need to ensure they have the resources ready to deliver not only cloud products/services but also the education and support needed to help customers realize optimal benefit from their cloud deployments.

Microsoft has been investing of late in this kind of support. Having made an early and strategic shift towards cloud delivery of its personal productivity portfolio, the company is now focusing on cloud delivery of more advanced business applications — CRM and Dynamics AX, for example, solutions that are also now registering healthy growth (in the range of 30-40%) for the software giant.

From the perspective of the IT user, changes in approach to the acquisition and consumption of IT demanded by cloud have been outlined by Hartco Inc. In the graphic below, the relative degree of difficulty at different stages in the adoption process cycle for traditional infrastructure and cloud are charted.

Pat Waid slides for Mary

Interestingly, at the strategic levels — the three bars to the left of the graphic — there is no difference between inputs to decision making for cloud and traditional infrastructure deployment, and a consultative approach to aligning company need with the right IT solution is required in both cases. However, at the “searching & evaluating alternative solutions” stage, cloud appears to represent an easier propositon for adopters, due in large part to the fact that cloud providers make information and demos freely available on the web, and due to cloud’s ability to facilitate test/dev and even dev/op exercises. At the “selection & commitment” stage, however, cloud adoption is potentially more difficult — while it is relatively easy to acquire a single cloud application, ingrained organizational resistance may be reinforced by difficulty in orchestrating multiple cloud services. In the “implementation” and “solution support” stages, the distinct advantages of cloud over traditional infrastructure are clear since the provider handles maintenance and management.

Doug Kennedy, VP, Dynamics enterprise sales and customer lifecycle management, Microsoft
Doug Kennedy, VP, Dynamics enterprise sales and customer lifecycle management, Microsoft

Both the relative ease of evaluating alternative solutions and difficulties with business grade commitment in the cloud realm — as compared with traditional infrastructure — signal the need for additional differentiation in marketing on the part of cloud vendors. So how is Microsoft working to advance its cloud positioning with advanced software solutions? According to Doug Kennedy, VP of Dynamics enterprise sales and customer lifecycle management, the key is lifecycle support for cloud adopters, combined with programs to encourage the development of vertical specialization and cloud expertise thoughout external channels. Kennedy’s comments on Microsoft strategy stems from a purview that extends across internal and external marketing: manager of Microsoft’s relationships with the large global SIs, such as Avanade, IBM and Hitachi, and approximately 30 ISVs, he also manages 500 of Microsoft’s sales and pre-sales people, in addition to Dynamics’ customer success managers (CSMs) in customer support and services programs.

This last group are an important component of Microsoft’s plan to extend support throughout the implementation lifecycle. As Kennedy explained, until very recently, there was no one within the Microsoft organization responsible for customer “delight” with a product after initial installation. However, the company now has CSMs for Office 365 and Azure implementations and is incubating a similar program for Dynamics within a couple of accounts. In the evolving Microsoft schema, CSMs operate more as the field engineers of old — “account managers that ensure the customer is delighted with the product, as opposed to support providers” according to Kennedy — who may also identify opportunity and alert internal field sales and partners to new customer requirements.

In addition to lifecycle support through the CSMs, Microsoft is also looking to vertical specialization as a market enabler, a strategy intended to capture significant opportunity available in the SaaS world. Techaisle research into buyer behaviours published in December 2013, has shown that vertical applications are expected to grow from usage of 14 percent within the US SMB segment today to an estimated 43-54 percent by 2016 (according to gradual and full adoption scenarios), making vertical software the most common category of SaaS applications.

For its Dynamics AX portfolio, Kennedy noted that the company began to encourage vertical or workload specialization in its partners and its own sellers some time ago: “we have tried to eradicate the days of having a partner play across 17 different verticals and five industries because you’re never going to be successful with that model.” Instead, Microsoft has built its platform anticipating participation in solution development from partners with deep industry experience. Describing the partner value add to Microsoft’s ERP, he explained, “We’re not building the last mile of vertical code. Even in retail or public sector where if you strip back AX, we have a lot of IP for those industries, there’s still a huge amount of functionality that is missing. We are never going to go there because either it varies by country or by tax variance.” Microsoft leaves this to the thousands of ISV partners who finish the last mile of code, translating their own IP into repeatable business, and to the VAR/SI community, who may also finish the code through configuration work on a one off basis for customers. This kind of services work (as opposed to resale) is the primary source of revenue for Microsoft partners, who have the requisite vertical expertise that company sellers typically do not possess.

Though AX 2012 R3 launched as an online solution in 2013, according to Kennedy, ERP has proved a more difficult cloud play than an isolated workload like CRM due to the complexity of the solution and the need for integration with other end user systems. To date, he claimed, the main advance from the perspective of cloud has been identification of specific workloads within ERP that are suitable for cloud deployment. That said, some partners have managed to build and successfully promote cloud ERP based on Dynamics AX — the Avanade offerings in retail management, wholesale/distribution, professional services and manufacturing are good examples.

In contrast, on the CRM side, beyond the introduction of a new marketing component (Microsoft Dynamics Marketing automation announced this spring) to Dynamics salesforce automation and customer care solutions, Microsoft’s big push is to cloud delivery, or CRM Online. For partners, though many use Microsoft CRM as a platform for building industry-specific relational solutions, the primary CRM opportunity is in integration and data migration — to ERP, third-party systems or to new online versions of the product. To support the shift to cloud, Microsoft is encouraging partners to put the appropriate integration and consulting resources in place in advance of anticipated Dynamics CRM (and ERP) growth — a strategy that resonates with the Hartco contention that the need to orchestrate multiple services may impede cloud adoption. But the company’s tactic has not been to form additional relationships, but rather to develop the specialist expertise of existing partners. “Good integrators have always been in short supply, and consultants will always hire in arrears,” Kennedy explained, “so what we’re doing with our partner ecosystem is very proscriptive. We’re saying ‘in airlines, we’re working with you Accenture. We both believe this is the opportunity, please start staffing ahead of the curve. “ In the enterprise space in particular, the company is picking and choosing among partners that will be capable of sourcing the thousands of additional specialists and consultants that Microsoft expects will be needed in this space.

Will lifecycle management, vertical expertise and a boost to integration capabilities be enough for Microsoft to capture the cloud opportunity promised in trending forecasts? While these expanded support and services capabilities map to customer need and preference, the proof is in the putting — or in Microsoft’s case, in the execution of plan. Stay tuned…







Please enter your comment!
Please enter your name here

This site uses Akismet to reduce spam. Learn how your comment data is processed.