FY10+ Microsoft Dynamics

Partner Strategy Q&A

Overall Strategy
What is changing and how does it impact partners?
The Dynamics partner program is currently undergoing an extensive update to take more advantage of
the significant market opportunity for integrated ERP and CRM solutions. Horizontal solutions have
become a commodity and it is no secret that our prospects value vertically-specific solutions. We have
been talking about focusing on verticals for a number of years, but we are bringing higher levels of focus
and investment than ever.
Microsoft’s strategy is aimed at increasing the scale and productivity of partners. It encourages small
partners to grow and go vertical and it helps larger partners succeed and grow more. The Partner Strategy
supports partners during this transition with program changes and investment aligned with key goals.
Partners that are vertical and growing will receive more benefits and investment from Microsoft. MS will
be more prescriptive and proactive in aligning vertically focused VARs with the CfMD ISVs that can
provide them with repeatable, packaged solutions. By rewarding and investing more in the partners that
are aligned to our goals we can transform our partner channel and more rapidly gain market share.
These changes will have a big impact. Our goals are to:
1) Triple the average customer adds of our VAR partners
2) Triple the number of ISVs and VARs gaining >50% of their revenue from packaged, repeatable
vertical solutions
3) Increase the average operating margin of our partners by 50%

Do the changes apply to both Dynamics ERP and Dynamics CRM?

This applies to both ERP and CRM. There are key differences in the products:
• CRM products are earlier in their life cycle, requiring a higher focus on new partner recruitment in
many areas.
• CRM targets the Core Midmarket up to the Enterprise, which drives requirements for more global
partners and tighter engagement with the Microsoft Enterprise Field sales force
• Microsoft also sells CRM under VL, which drives differences in the sales and fulfillment process
• CRM also has a unique opportunity to be sold as a development platform for custom apps, which
we call xRM.

With that said, there are key similarities that drive natural alignment in the partner program:
1) Customers prefer solutions that are specific to their vertical whether we are talking about ERP or
CRM
2) Both product segments are requiring higher levels of partner sophistication, investment and scale
based on the potential of not only vertical solutions, but also Microsoft stack integration (SQL,
SharePoint, Office, and Outlook). This motivates us to drive our partner strategy and programs to
support a consistent end-game, the support and nurturing of partners driving growth and scale
through a vertical focus.
Why are we making the change
change?
Though Microsoft Dynamics consistently perform
performs better than the overall ERP and CRM market, we are
not growing fast enough to rapidly gain share or defragment the market
market. Research shows that prospects
consider Dynamics solutions as often as our main competitors; however, we do not win substantially more
than any other major brand. Being considered but not winning is terrible. It means that all the money
partners spent on the sales cycle is wasted
wasted.
So we are focused on this key issue – Win Rate. The path to a higher win rate is in selling vertically specific
applications that take advantage of the integration to the rest of the MS stack and our ability to customize
for the specific needs of the
e individual customer. To drive a higher win rate, two critical things are needed:
needed
1. VARs that invest to deeply understand the vertical requirements, processes and business
challenges of the prospects. Our research shows that the Dynamics partners that have done this
are our most successful partners.
2. ISVs that write repeatable, vertically specific code. Customizat
Customization
ion is a key competitive advantage
for Dynamics and a critical source of revenue for our Partners
Partners, but too much customization in the
solution does not scale. It drives the prospect price too high and the implementation cycles too
long.
long It makes
upgrading to
t the
newest version
ver of the
software a high cost
proposition, which
damages our
collective long term
enhancement
revenue opportunity.

We have a lot of
examples
xamples of the right
kinds of ISV and VAR
partners today. – The
issue is that Microsoft
has not done enough
e
to prescriptively align
the best ISVs with the
committed VARs,
drive demand based
on a vertical value proposition and connect the leads with the right partners that can win the deal.
Scale is important. Partners that
hat know the vertical, Partners that know the stack, dedicated pre-sales
pre
engineers and consistent marketing execution all take a level of scale and size.. We are not talking about
growing our average partner to 1,000 people. We are talking about taking our current core partners,
those with 30, 40, 50 people and gettin
getting them to 90, 120, 150 people. Even if a partner already has
hundreds of dedicated Dynamics cs people, there is plenty of market opportunity for larger partners to reach
these same growth rates.
Driving Industry Focus
What are the key changes to the Industry Strategy?
1) Microsoft will be more prescriptive in lining up the best VARs and ISVs – Microsoft will ensure that
the VARs are committed to the ISVs and trained/certified on their solution. We will ensure that
our ISVs achieve CfMD status. You will see this in the Partner Program.
2) Microsoft will be more targeted and hands-on in driving the industry partner ecosystem and in
recruitment to fill the holes in the solution – we have new roles and commitments to make this
happen.
3) Microsoft will ensure that both marketing activity and leads are committed to the VARs that
represent the best vertical solutions.

Partners have been heard “focus on verticals” for years? How is it different this
time?
Microsoft has made significant progress over the last few years in shifting to verticals, with more
vertical marketing content, training and successful partners than ever before. The progress on CfMD
has also been key. The changes we are making bring more training, marketing and staffing
investments than we ever have before. The key addition is validation – we will validate solution
completeness and success, vertical skill levels, marketing spend and commitment and close rate to a
much higher level. The partners that have truly gone vertical should appreciate and benefit from this.

When do you decide to recruit versus working with current Partners?

Our primary approach is growing the partners we already have through expansion of their sales in
their existing vertical(s) and geographic and/or vertical expansion. If this is not feasible, we will recruit
a new partner, but in a targeted way.

How does CfMD fit into this strategy?

CfMD provides validation of the ISVs software, and marketing benefits to the ISV. As we align VARs to
ISVs, CfMD status is a key requirement.

You seem to have a problem with direct selling ISVs. What is the issue?
There is no issue with direct selling ISVs. In fact, in very targeted vertical solutions with unique needs
and potential customers in the hundreds or low thousands, it is probably the best way to approach
the market. We will enable and promote this model as it is truly vertical and very effective. However,
this is a model that does not readily scale for the larger industry or vertical opportunities like
industrial manufacturing, wholesale distribution and specialty retail. We need the combination of an
ISV and multiple VARs to rapidly gain share in these markets.

Focusing on verticals makes sense in the long term. How long does Microsoft
expect the change to take for a Partner?
We do not expect it to happen overnight. Many of you have already moved in this direction. Many of
our most capable vertical partners still get 30%, 40% or even 50% of their revenue outside their core
verticals. Partners are just expected to focus marketing and training investments in specific verticals
and Microsoft will do the same.
Marketing

Why is Microsoft Dynamics changing its partner marketing strategy?

Market research indicates that there is a very large opportunity for growth with the Microsoft Dynamics
solution and that a large untapped market exists for ERP and CRM solutions. In order to more effectively
tap into this growing market, Microsoft will target its marketing investments vertically and prioritize
partners that are strategically aligned to grow the business across key verticals.

What are the primary objectives of this change?

The new marketing strategy is intended to accomplish two primary objectives:
1) Focus marketing investments on vertical market opportunities and high value partners
2) Drive more effective vertical marketing campaigns with partners
To effectively do so, we must make changes to the way we do business today. Below is a description of
the key changes that we will be making to our marketing strategy.

How will partner marketing be different than today?

In order accomplish the objectives stated above; there are several key changes that will have to be made
both from a Microsoft perspective and a partner perspective.
• To drive more effective marketing, the first priority is to focus the vast majority of marketing
investments (both Microsoft and partner) on targeted verticals instead of horizontal marketing
initiatives.
• Microsoft will be focusing partner marketing investments (engagement and funding) towards
high value partners. Marketing investments that are spread too broadly across too many partners
and priorities fail to adequately make the desired impact and fail to reward our highest value
partners.
• Microsoft will be a shifting its marketing investments and tactics to focus on a “With-Partner”
approach and less of a direct “To-Customer” approach. This will allow greater utilization of
partners’ vertical expertise and resources.
• Microsoft plans to implement Partner Marketing Service Bureaus to optimize marketing budgets,
improve campaign effectiveness, and measure effectiveness of marketing spend.
• Microsoft will drive a process that provides more visibility into co-funded partner campaign
success by tracking and reporting on the results of individual marketing campaigns.
How is marketing execution changing?
For improved execution of marketing activities, Microsoft will be building two models for the delivery of
marketing campaigns—the Marketing Service Bureau and the Self Service Model.

o The Marketing Service Bureau is an agency driven model through which vertical
marketing campaigns will be built and executed and a full range of key marketing
services will be provided. The marketing service bureau is an agency or series of agencies
that are chosen by Microsoft and trained and educated on the Microsoft Dynamics
marketing strategy and resources. The marketing service bureau is a “With-Partner”
model because: 1) joint marketing planning with Microsoft is required and 2) lead
reporting is required, and 3) co-funding is associated with it.

o The Self Service Model leverages online self service tools and resources that are made
available to all partners. The purpose of the self services resources is to make pre-
packaged campaign templates and other sales & marketing resources available to all
partners. The service offerings will include brand and logo resources, “How-To” guides
and downloadable campaign templates. No co-funding will be made available, but the
tools are free of charge, easy to use and reduce marketing cost and time-to-market for
Partners.

Agency Driven Model

Partner

Agency Customer Portal Interface

Microsoft

Microsoft Portal Partner Customer

• Central agency/vendor, designated and trained by
Microsoft, facilitates campaign creation and
execution, as well as marketing service offerings
• Coordinates joint campaigns between ISVs and VARs

Marketing Service Bureau Self Service Model

[All partners will have access to basic services that are offered through the Marketing Service Bureau agency
(such as telesales), but the lower tier partners will have to pay full price for those services and engage with
the agency on their own.]
What is the value of the Marketing Service Bureau (MSB) and when is it best
utilized?
Microsoft believes the marketing service bureau model will greatly improve the overall effectiveness of
the vertical marketing strategy by building and executing more impactful marketing campaigns.
1) The model will increase the marketing effectiveness of our top partners by allowing them to more
effectively leverage the Microsoft brand and the marketing expertise of the Marketing Service
Bureau.
2) By managing co-funded campaigns through this model, the marketing investment of both
Microsoft and partners can be more effectively leveraged.
3) Through this model, the powerful brands of both Microsoft and our key partners can be more
effectively leveraged.
4) The MSB can more effectively plan and execute joint marketing activities between Internet Service
Vendors (ISVs) and Value Added Resellers (VARs) in ways that previously were not possible,
resulting in stronger vertical campaigns.

[Important: Please note that the Marketing Service Bureaus will be operated locally, and so actual
implementation times may vary depending on region.]

How will Microsoft determine which partners to go to market with?

There are five key characteristics that define our high value partners or “Go-To” marketing partners.

1. Vertical Alignment: First and foremost is vertical alignment. Partners that are uniquely
positioned to target specific verticals and customer segments are critical to Microsoft’s vertical
marketing strategy.
2. Growth: Microsoft is looking for partners that have demonstrated their ability to grow and scale.
3. Revenue: Partners that are generating significant revenue under today’s model and are
considered leaders in their industry.
4. Strategic Initiative: A given subsidiary may have a key strategic initiative (such as new recruits,
competitive initiative, etc.) that it will be looking to execute with specific partners that
demonstrate high potential, but aren’t yet the high revenue generating partners because they are
new to the business.
5. Marketing Capability/Commitment: Microsoft is focused on working with partners who
demonstrate a commitment to marketing and are prioritizing their resources accordingly. The
following are examples of qualities that might be considered to determine the level of a given
partner’s marketing capability:

Marketing Investment – The Partner is prioritizing marketing and is willing to make the
necessary investments

Resource Commitment – The Partner has a dedicated marketing resource in place

Nurturing Strategy – The Partner has a nurturing strategy in place

Pipeline Management – The Partner is doing due diligence to track, report, and effectively
manage leads

Successful Campaigns – The Partner has a track record of successful campaign execution
For those partners who do not yet have a developed marketing expertise and/or resources, the Marketing
Training Courses of the Dynamics Partner Academy may be utilized to help partners increase their
marketing capabilities.

How will Microsoft support its high value partners?

After going through the prioritization exercise above, Microsoft will be in a better position to focus
marketing investments and support on its top partners. Microsoft will be making partner investments
from a marketing perspective in 3 different areas: co-funding; strategic engagement and planning, and
marketing campaign support.
• Co-funding: The highest levels of co-funding will be made available for those partners
that are deemed most strategic according to the criteria described above.
• Strategic Engagement: Microsoft will be seeking to engage in in-depth, strategic
marketing planning with its highest value partners.
• Marketing Support: Highly customized vertical campaigns will be available to high value
partners, and will be invitation only. Pre-packaged customizable vertical campaigns will
be made available to partners at the managed level, and some level of co-funding will be
made available. And online self-service tools will be available for all partners, providing
basic campaign templates and self-help guides.
[Important: Keep in mind that these will be locally made decisions, and so will vary depending on region.]

How will these changes benefit our top partners?

We expect there to be a number of important benefits to partners that will result from this new marketing
strategy. The primary benefits for top partners include:

More effective marketing campaigns resulting in higher quality leads

Deeper engagement and a higher level of support from Microsoft

Greater alignment and synergy between partners and Microsoft at the strategic Level

Exclusive co-funding and joint marketing opportunities

More cost-effective approach to marketing

First and foremost, the result of leveraging the power of the Microsoft brand, the marketing expertise
of the Marketing Service Bureau, and the vertical expertise of partners, will be more effective
marketing campaigns which result in higher quality leads and opportunities for our partners.

Furthermore, by prioritizing partners and targeting marketing resources, Microsoft will engage more
deeply with and provide greater marketing support to its top partners. As a result of the deeper
engagement and joint planning activities, we believe there will be greater alignment and synergy between
partners and Microsoft at the strategic level, a key ingredient to any successful marketing strategy. And
by identifying and working more closely with the high value partners, Microsoft will be able to ensure that
they receive a greater level of marketing support in the form of co-funding, strategic engagement, and
customization of campaigns.

The Marketing Service Bureau model and the self service tools are designed to make it easier for partners
to build and execute marketing campaigns with Microsoft. We anticipate that this will result in time and
cost savings for our partners.
What will be expected of me as a partner?
The benefits also come with commitments from Partners. In order to effectively execute on this new
strategy, Microsoft will look to partners to do the following:

1) Re-evaluate your marketing strategy - in light of these proposed changes. One of the key
characteristics that define our high value partners or “Go-To” partners is vertical alignment.
Partners that are uniquely positioned to target specific verticals and customer segments are
critical to Microsoft’s vertical marketing strategy.
2) Make necessary changes/investments - to align with the new marketing strategy. Microsoft is
looking to work with partners who demonstrate a commitment to marketing and are prioritizing
their resources accordingly.
3) Engage with local subsidiary - to drive vertical marketing campaigns. Work with your Partner
Account Manager (PAM) and Microsoft Audience Account Manager (AMM) to conduct joint
planning activities and build the marketing plan. We believe that this is critical to the success of
the vertical marketing strategy.

When will these changes be implemented, and which subsidiaries will be

impacted?
The changes described in this section are part of the long term vision that Microsoft has for its
subsidiaries. Since the actual operational elements of the strategy will be owned at the local level, the
implementation of the strategy will vary from sub to sub depending on the conditions and maturity of the
marketing in question. It will be up to partners to engage with their local account representative to better
understand how and when these changes will implemented in their area.

Readiness
Readiness questions cover 3 major areas:
1) The Dynamics Partner Academy for Training
2) An expanded set of packaged partner business systems, which are IT solutions to help run
your business and better integrate with Microsoft
3) Partner Business Consulting to serve as an experienced advisor as you expand your
business
1. Dynamics Partner Academy
What is the Dynamics Partner Academy?
Achieving high levels of profitable growth requires an increase in training and skills across the entire
partner business. In order to better
ter ensure success of Microsoft Partners, training curriculum is being
greatly expanded.. It’s called the Dynamics Partner Academy and there are 7 key partner employee roles
around which the trainings are structured. These include business leadership skills for the CEO, marketing,
pre-sales,
sales, sales, project management and the two more technical roles of covering solution consulting
and implementation. Microsoft is going to provide subsidies for these trainings for qualified partners.
Those partners that qualify for the higher levels in the New Microsoft Partner Network ERP and CRM
Competencies will receive greater subsidies than those on the lower levels. Drivin
Drivingg a Dynamics-focused
Dynamics
curriculum means the greatest ROI and impact for our Partners
Partners,, driving up win rates, profitable
implementations and customer satisfaction.

The Dynamics Academy training looks great for new Partners, but what is the
value for an existing
ing and successful partner?

Every partner has areas in which they could be better. Our Economic Survey and other “best
best practices”
practices
work we do points out areas for improvement in your firm, with the classes serving as “spot
spot training”
training in
the specific areas. People
eople also have turnover and new hires and we look at the Academy as the way to get
new employees up and running and making a positive contribution to your bottom line more quickly.

If a Partner already has a great source of training

training, can they claim the subsidy
su for
training outside the Dynamics Academy?

No. We do not have the resources to validate effectiveness for 3rd party training providers. We will make
the commitment to deliver and monitor the best possible training through the Dynamics Academy. You
are
re free to use other training companies, but certifications in terms of sales, pre
pre-sales,
sales, methodology and
implementation will be based on the content of the Academy courses.

2. Partner Business Consulting

What is Partner Business Consulting?

Partner Business
siness Consulting is a Microsoft Readiness initiative that provides business strategy and
operations support to partners.

What services Partner Business Consulting offers?

Partner Business Consulting provides individualized, strategic business advice to our Partners. Whether it
is hiring /investment options, organizati
organizational structure or M&A strategies, Partners would greatly benefit
from a consultation with someone who has been through the same challenges. Microsoft commits to the
following:

- We will identify and qualify consultants who have successfully grown and run ERP and CRM
VAR and ISV organizations.
- We will ensure that they are fully aware of Microsoft’s strategic direction and investment
priorties, enabling them to ensure they are givi
giving
ng our partners the best advice on maximizing
the business opportunity with Dynamics.
- In select situations, a local sub may decide to help co
co-fund
fund some initial engagements.
Whether or not co-funding is made available, we believe the availability of qualified consultants can make
a significant difference, as we have already seen these relationships pay big benefits in pilot programs in
the US and Europe.

Q: Will all top Partners be assigned a Consultant? What are the requirements for
co-funding from Microsoft?

All partners will have access to the Consultants that we validate, with all business agreements and fees
being a private matter between the two parties. Co-funding from Microsoft is a sub-by-sub decision
depending on available budget and business goals.

3. Partner Business Systems

What is the Partner Business Systems initiative?

In order to manage all of these highly skilled people, projects and opportunities, as well as your
connection back to Microsoft, we will also be releasing an expanded suite of partner business systems
that will help scale and manage your business. They include verticalized ERP/CRM solutions, BI
capabilities, Dynamics business specific KPIs and scorecards, customized reports, and built-in PSM
integration and processes. Both the Microsoft Solution Selling Process as well as Sure Step Methodology
will be integrated into the offerings.
Many of you have cobbled some of capabilities together, but it is incredibly wasteful to have hundreds of
partners creating one-off systems and customizations when all partners need it, so we will either build or
partner with ISVs for the right code and provide the integration with critical Microsoft systems and tools
out of the box. Once again, Microsoft is going to provide subsidies for these systems for qualified
partners. Those partners that qualify for the higher levels in the New Microsoft Partner Network ERP and
CRM Competencies will receive greater subsidies than those on the lower levels.

Q: Many Partners have built their own customizations and applications to run their
business. Will utilization of the new systems be required?

Utilization of the systems will be entirely optional. We are just trying to keep all partners from writing and
maintaining similar code and helping to ensure efficient and profitable operations. You may choose to
implement all or just the parts that make sense for your business.

Engagement
How is the Microsoft Dynamics vision for engagement between
Partners and its Field changing?
1) Implementation of an industry focused engagement model to provide a targeted relationship
approach with high value partners
2) Evolution of the Partner Account Manager ((PAM) role to allow for long-term
term relationships
relationship as a
trusted business partner
3) Refocus of individual field roles to provide partners with increased support throughout the sales
lifecycle
4) Implementation of an integrated engagement model to provide more efficient and effective
support for partners
5) Availability of new systems and tools to enable Microsoft to better view and understand partner
priorities
What does this mean for managed partners?
The Partner’s relationship with Microsoft starts with the PAM. Microsoft sees the PAM as the hub of our
more integrated approach to managing partners. The PAM is at the center of the relationship with
Partners, ensuring that the Partner gets the maximum business value from its relationship with Microsoft,
as well as ensuring that Microsoft drives the needed business results through the Partners. Partners
should view their PAM as a trusted business partner who will work in an integrated approach with PTA’s,
SSP’s, IMDM’s, as well as the marketing and readiness teams to insure Partners are well positioned within
MBS to achieve their goals.

Partners have complained about churn in their assigned PAMs and a lack of
knowledge of the business applications market and the partner business model.
How is Microsoft addressing this?
In terms of turn-over, there is always some level of churn, but we are driving the expectation of longer 4 –
5 year stints to allow time to build trust and knowledge of their managed partners. In terms of building
knowledge and value, we have really focused on this role over the last 2-3 years with additional training
investments designed to help drive true value to your business. We have also increased maximum job
grades and target hiring levels as well as implementing business management and planning tools that
provide a 360 degree view of our relationship with Partners. Through our Partner satisfaction surveys you
are telling us that we have made great strides, but we are not done. Additional training investments are
being made this year to drive additional skills. More tools are being built to drive efficiency and insight.

How is Microsoft staffing and training the field to help target specific industries?

1) Microsoft has created the role of Industry Principles – This is an HQ role staffed by people with a
deep knowledge of the Industry as well as business applications. They set the long term strategy
for Dynamics in the Industries and corresponding verticals, serve as our vertical PR and event
spokespeople and drive our industry and vertical priorities out to the areas and subs. We have
already hired a number of Industry Principles and will hire additional resources this year.
2) Microsoft has created the role of Industry Market Development Manager (IMDM) – This role is
staffed by people with a deep level of experience in the industry, and their key role is to drive our
success in key verticals by organizing a select set of ISVs and VARs, ensuring that the solutions are
competitive, VARs are trained and we are executing marketing campaigns and events to drive
demand. We have already hired these resources in the US and Europe and will continue to add
more in the coming years.
3) Finally, Microsoft will increasingly require industry and vertical experience in our SSPs, the overlay
sales force that supports and works with you in sales situations in larger deals.

Why did Microsoft decide to hire Industry Market Development Managers?

Microsoft has a lot of great, vertically focused VARs and ISVs, but we believe we can play a valuable role in
organizing the partners, both in terms of readiness and training as well as marketing and sales with a
specific focus on customer add and revenue attainment. Microsoft has said “go vertical” for years, but has
never really had an internal resource that could both validate and build the partner’s vertical ability.
Where are the IMDMs located?

IMDMs are based in a time zone, crossing a number of countries or regions. This is valuable as it mirrors
the requirement that our vertical VARs and ISVs drive a wider geographic footprint to capture the most
opportunity with their vertical solutions. Today, they are in place in North America and Europe. We will
add people to these time zones and intend to add additional Time Zones over the next few years.

How should a Partner engage with Microsoft?

Ensure you drive a higher level of business planning with your PAM. Ensure there are clear commitments
on both sides. Ensure that the PAM has all the information about your abilities and investments to be your
champion across other sales and marketing organizations at Microsoft. Ensure the IMDM knows of your
specific vertical skills and investments.

Microsoft has talked about Auto-billing for the renewal of Business Ready
Enhancement Plans (BREP). What does this do for the Partner?

Both the partners and Microsoft spend a lot of time and money ensuring we capture this critical revenue
stream. Auto-billing will allow us to jointly focus on those customers truly at risk of going off the plan
while letting the vast majority of those that intend to re-purchase transact automatically.

Is the move towards auto-billing a move to a direct Microsoft relationship with the
customer?
No. Microsoft is still billing on behalf of the Partner. We are merely taking an operation like billing that
scales very well at a very low incremental cost and trying to make an investment that will bring down the
selling and operations costs of all Partners. This is still your customer, and you still get 65 days after the
end of the month in which the plan is sold to pay Microsoft.

How will partner support & services change?

Partner Support & Services will evolve from a reactive support program to a proactive services program
covering the entire services life cycle: Helping our partners to SELL products using Microsoft technologies,
DEPLOY Dynamics Solutions on time, on budget, on spec and SOLVE their customers’ issues quickly.

MPN Alignment
How will the program changes align to the redesigned MPN?

1) The existing “MBS” Competency will become two Competencies - ERP and CRM, with a
corresponding change in branding. A Partner can either qualify for the Competency or go
further and reach the “Advanced” level. Beyond the naming, the critical change is that the
point system is being retired, and a partner must meet all the specific requirements to reach
“Advanced” or “Competent” inside the ERP or CRM Competency. This allows prospects to
know that the partner is specifically qualified to sell and implement the ERP or CRM solution
they are seeking.
2) The requirements are going up. We are implementing minimum sales levels
levels,, higher certification
levels, more customer references, customer satisfaction surveying and minimum enhancement
contract renewal rates.
3) Although we have not finalized a “cross Microsoft” approach to this, we will be adding
additional, specific recogni
recognition at the Industry level for our Dynamics Partners. You can add
this recognition to your ERP or CRM Competency to get a higher level of differentiation and
endorsement from Microsoft in the market.
4) Some of these new requirements are extended to the entry
try SPA and CSA agreements,
agreements where
we will be adding a minimum sales requirement, a methodology certification requirement, and
an increased number of certified individuals
individuals. Failing to meet any of these requirements means
an inability to renew the SPA or CS
CSA
A agreement. We are also adding a fee for the SPA and CSA
agreements in exchange for unlimited access to the e
e-Learning
Learning courses required to meet the
certification requirements.
5) Finally, for those partners that may not want to meet all of these require
requirements
ments but still may
find opportunities, we are launching a Lead Referral Program that allows any legal entity to
provide a lead, for which they will get a referral fee currently estimated at 5% if the
opportunity closes. This opportunity covers both curren
currentt Dynamics partners that choose not to
invest to reach the minimum SPA and CSA requirements as well as other Partners in the
Microsoft ecosystem, external associations, and anybody willing to meet minimal requirements.
requirements
Why are you adding more certification requirements for Partners? These add costs
and are not recognized by prospects as a significant differentiator.
Certifications and references are the only way that Microsoft can actually validate Partner skill levels and
provide a truly differentiated brand. The branding we have provided in the past has not added value
because too many people had it. “Gold” is not really “Gold” when 70% of transacting Partners have
achieved it, and it can be acquired with a minimum of training and references. It is critical to our mutual
win rate that we make these brands mean something in terms of skill and ensure that prospects are
directed to the partners at the top tiers of our channel.

Why are you requiring the use an Implementation Methodology to reach the
Competency? Do the Partners have to use Sure Step?
The utilization of an industry-standard implementation methodology has proven to increase customer
satisfaction as well as the quality, timeliness and profitability of the Partner’s implementation. The
Microsoft Dynamics team has made significant investments in the Sure Step methodology to ensure that
partners do not have to replicate this expense. Sure Step is available to Partners at no cost, but the use of
Sure Step Methodology is not required. A Partner can use their own proprietary Implementation
Methodology. The testing and certification ensure usage and knowledge of an industry standard
implementation methodology, with no specific requirements for Sure Step usage or knowledge.

Why is Microsoft so focused on License Revenue Growth? Growing License Revenue

at 20%+ Y/Y is very difficult – Partners generally have swings in annual revenue.

Microsoft cares about scale and market share. License revenue is the leading indicator of the health of the
business and the prime measurement for share gain. In terms of the swings from one year to the next, the
training we provide combined with a consistent focus on marketing, dedicated pre-sales engineers and a
professional selling approach will help Partners drive a more consistent level of growth. Microsoft needs a
consistent, achievable level of growth from all of it partners to achieve our growth goals.

Is there enough business opportunity to reach the growth goals?

Absolutely. We can drive a significant increase in our business merely by driving up the win rate in the
deals we are already in! We also have lots of competitors with poor, outdated technology and large
installed bases of customers. Finally, we have a significant number of potential prospects that have not yet
even invested in truly integrated ERP and CRM applications.
Rollout
When will these changes occur?

These programs will take time to roll out and develop over the next 2 years.
Generally, here is guidance and specific actions you can take in the next 12 months:

Partner Actions

Meet with your Microsoft contact to discuss the details of the Microsoft Partner
Network (MPN)

Partner with your Microsoft contact in aligning your Business Plan with your targeted
level and Industry focus in the MPN

For a new or expanded vertical focus, work with your Microsoft contact on local
Vertical Solution Priorities and available CfMD solutions

Connect with your Microsoft Audience Marketing Manager on local marketing
resources and the status of marketing services available from the Marketing Services
Bureau

Ensure your sales, pre-sales and project management people are signed up for the
Dynamics Academy - Available starting in January (depending on your area and sub)

Ensure compliance with the requirement for an approved Implementation
Methodology – Sure Step is available at no charge

If you are an ISV, obtain Certified for Microsoft Dynamics (CfMD) status