Moving applications to the cloud, while it has its setbacks, could prove to be more cost-effective for many businesses. The entrance of Microsoft into this space with the launch of several datacenters throughout the United States and the world and the Azure cloud platform on which it is moving many of its applications, including Office and Dynamics, worries competitors and rightfully so.
Depending on whom you ask, Microsoft Dynamics partners should worry as well. Many of the Dynamics applications are now available on the Azure platform, including now Dynamics AX, and Microsoft is aggressively enticing end-users to move in this direction. For partners, particularly ones who have been in the Dynamics space for a long time, this is an uncomfortable shift: on-premise deployments meant revenue streams through hardware, software, and services. If an end-user prefers the cloud, the infrastructure revenue disappears, and with aggressive up-front pricing of licenses in the cloud, software revenue starts to evaporate as well. While this is great news for end-users, it is startling for partners. The fact that Microsoft sees itself as a “services company” and the recent cuts in some cloud partner margins outside of Dynamics have led some analysts to speculate whether a Satya Nadella-led Microsoft will eventually start offering services directly to end-users.
While the extent to which the sky is falling differs by the storyteller, Dynamics partners must acknowledge that their role is changing. Their ability to deliver customization and implementation services efficiently and quickly will be tantamount to remaining profitable in this space. In looking at our future as a Dynamics partner, we are willing to step to the plate and adapt.