Over the past several weeks, I’ve received several inquiries around Dynamics 365 what it means for CRM SPLA partners. In this article, we will review the changes and when the changes will take effect.
Dynamics 365 for SPLA
In today’s SPLA licensing model, there are three products available – CRM Essential, CRM Basic, and CRM Professional. All come with different functionality and all come with different price points. Those products will remain up until your agreement expires. As with other products, once your agreement expires, you should report or license the new products. In some cases, you are allowed to downgrade and run previous versions, but you must report the latest and greatest. As an example, SQL 2016 is the latest edition of SQL, but that doesn’t mean you have to deploy SQL 2016; you can run 2012 or 2014 or God forbid 2008. However, once you sign a new SPLA, you must follow the terms in the SPUR at the time of signing. In this example, even though you deployed 2008, doesn’t mean you can license SQL 2008 by processor, you must still report it by core. Dynamics CRM works the same way. With Dynamics, the new products are Dynamics 365 Sales, Customer Service, and Team Members. All come with bells and whistles and all come with higher pricing. If you have an active SPLA prior to the announcement (November, 2016) you can continue to report the old products up until your agreement expires. Once you sign a new agreement, you must report the higher priced products.
What are the options?
I’ve worked with a couple of Dynamics CRM hosters who had their agreement expire two months after Microsoft made this announcement. In other words, Microsoft announced these changes in September (give or take – most widely known to resellers and partners in November) but their agreement expired in October. The poor CRM providers are really in a pickle. Microsoft dropped the bomb on them and two months later their pricing almost doubled! What are they supposed to do? Blame their reseller? Sure. Everyone does. Blame Microsoft? Yes. But that only gets you so far. Cry? Always.
Microsoft made some adjustments and offered “transition pricing”. Transition pricing allows SPLA partners who have an active SPLA prior to November, 2016, the ability to report lower transition pricing up until their agreement expires. The transition pricing is lower than new pricing but still doesn’t offer much of a discount. When your agreement does expire, Microsoft will force you to license the under the new licensing and pricing model.
In my opinion, CRM provider are the old Exchange provider. When Office 365/BPOS came about, small Exchange providers found it very difficult to compete. It wasn’t just from a licensing perspective but also managing and deploying Exchange became too costly. What happened? Smaller Exchange providers are now CSP or out of business. Dynamics CRM is now the old Exchange. Microsoft is not going to lower SPLA pricing for Dynamics CRM. It is not in their best interest to do so. Harsh reality? Yes.
Allow me to put on my Microsoft hat. What do you do? There’s a couple of ways to think about it. On one hand, Dynamics 365 isn’t all that bad. I do think Microsoft rushed to market with the product. I also think there are ways to up sell customers into the latest product. There are opportunities to offer Dynamics CRM and deploy CRM and manage CRM. For many organizations, CRM is the lifeblood of their sales. CRM goes down, it’s bad for their business. In speaking to a colleague, the LinkedIN acquisition makes Dynamics 365 an interesting proposition. If you are able to seamlessly host Dynamics 365 on your platform and integrate their LinkedIN contacts as well, there could be a compelling reason to transition to the latest and greatest.
Ok, now my Microsoft hat is off. I think Microsoft should be more patient and lengthen the transition pricing to make it more compelling for CRM hosters and to their customers. I think service providers are the bread and butter to Microsoft hosted offerings. SPLA is the one program that differentiates Microsoft v. Amazon v. Google. Thirty thousand service providers worldwide who are willing to host Microsoft technology. You don’t want to abruptly interrupt their business. After all, no matter if they get Dynamics from a Microsoft datacenter or from a partner, Microsoft wins. Amazon can’t say the same thing.
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Thanks for reading,