Microsoft Dynamics US Industry Summit - Neural Impact · Microsoft Security Essentials Mobile...

#DynStrong | @usdynamicsevent

• Hotel Del Coronado | Coronado, CA

• November 2-4, 2016

Microsoft Dynamics US Industry Summit

Packaging, Pricing and Positioning

Your Cloud Solutions (and IP)

#DynStrong | @usdynamicsevent

Sharka Chobot

About Sharka

Chief Transformation Officer, Neural Impact

30 year marketing executive (Simply Acctg (Sage), Pivotal

CRM, ATI Technologies, Epicor ERP/Vantage Point)

Professor Marketing & Behavioral Science

Advisor to Microsoft & Tier 1 & 2 Microsoft AX/NAV/CRM

Partners: Europe, North America

Creator: CRM Product Category

Creator: Microsoft EIPP Content

Sharka’s contact info:

(604) 987-4275

Sharka@neuralimpact.ca

www.neuralimpact.ca

#DynStrong | @usdynamicsevent

Stop Being Product Driven

Economic ShiftsMacro level economic shifts.

Economic growth

Increase in disposable income

Improving consumer confidence

Unpredictable currency fluctuation

Increasing labor costs

Regulatory ChangeChanges to regulatory compliance

Import compliance

EVM chip & pin requirement

Minimum wage increase

OH&S Legislation

Industry Consolidation

Fewer, larger retailers

Online aggregation

Product/Service

CommoditizationInability to differentiate based

on product or service offering.

Counterfeit products

Commoditization

↑ Marketing Costs ↓ Average Purchase Value

↓ YOY Same Store Sales ↓ Incremental Sales

↑ Inventory ↑ Borrowing Costs

↑ Returns ↓ Differentiation

↓ Gross Margins ↓ Profitability

↓ Working Capital ↑ Labour Costs

↓ Sales/Square Foot ↓ Customer Retention

↓ Inventory Turns ↑ Merchandising Costs

↑ Leasing/Real Estate ($) ↑ Discounting/Matching

↑ ↑ Online orders

Competitive PressureChanges in competitor behaviour/new

entrants.

New online entrants

Heavy discounting

New specialty entrants

Free/expedited shipping

New loyalty programs

Click & Collect

New products

Changes in Customer

BehaviorChange sin Consumer Behavior

On-line shopping/research

Declining brand loyalty

Fast-Fashion (value orientation)

Off-price shopping

24/7 support expectations

Show-Rooming

Changing demographics (baby

boomers/millennials)

New payment forms (smartphones,

PayPal)

Online/social feedback

Supplier ChangeChanges in supplier behavior or business

models

Adding new channels/retailers

Opening direct retail stores

Longer order lead times

Shorter selling “seasons”

Expanding product lines

#DynStrong | @usdynamicsevent

Microsoft Social Engagement

Collect club mentions and other data from Twitter, Facebook, and other social media sites

Fan Engagement PlatformCaptures and stores every interaction with a fan, including mobile check-ins at the club’s stadium, online fan profile updates on the club’s official website, and online merchandise purchases.

Azure aggregated data into social segmentation of the individual fan

Extended Video PlatformAzure Media Services, App Service Media Player, SearchNew and past video of Real Madrid matches

.Customer AppNET Framework + Microsoft Visual Studio 2013 s on club’s players and games

March 14, 2016

Microsoft Office 365

Microsoft Dynamics CRM Online,

Power BI

Azure

Real Madrid C.F.

450 million fans around the globe,

with the Microsoft Cloud

Integrated Industry Solution

#DynStrong | @usdynamicsevent

Low Cost, Low Risk Development Strategy

Need Minimum

Feasible

Concept

Lo

w In

vest

men

t

Minimum

Viable

Product

MVP

Hig

h In

vest

men

t

Full

Product

#DynStrong | @usdynamicsevent

What is in an MVP?

Emotional

Reliable

Pretty Much Usable

Basic FunctionalityNot the MVP

Emotional

Reliable

Pretty Much Usable

Basic Functionality

This is the MVP

#DynStrong | @usdynamicseventSource: Retrieved Mary 2016, Copyright of each respective owner.

https://azure.microsoft.com/en-us/marketplace/

#DynStrong | @usdynamicsevent

1998

Billion

Zappo’s MVP Start…

Requirements Design Implementation TestingRelease +

Maintenance

• Root CauseAnalysis & Insights

Understand

Persona +

Problem

• Build SolutionBuild Minimal

Viable Product

• Test Assumptions, PIVOTTest &

Pivot

• Root CauseAnalysis & Insights

Understand

Persona +

Problem

• Build solutionBuild Minimal

Viable Product

• Test Assumptions, PIVOTTest &

Pivot

Farmer: perishable inventory – 7 weeks “mobile bazaar” text messaging based marketplace.

#DynStrong | @usdynamicsevent

50% of Features in New Releases

are Never Used!!!

#DynStrong | @usdynamicsevent

Changing Business Model

Services Revenue

80%

Reactive

Services

Recurring

Services

One Time Implementation

Product Revenue

20%

IP Revenue

Ongoing

Recurring

Product

Revenue

Up Front

Perpetual

Licenses

#DynStrong | @usdynamicsevent

#DynStrong | @usdynamicsevent

Current Services by REVENUE TYPE

ONE TIME

#DynStrong | @usdynamicsevent

Client is Managing Less and Less…

IT is

Outsourced

IT is

Virtualized

#DynStrong | @usdynamicsevent

Innovate Services

CRM Online

Packaged IPAverage Revenue: $2 - $5K3

Margin: 65%

• Industry-specific Workflows• Function-specific Workflows (e.g.

HR, Procurement)• Mobility Solutions• Office Connectivity & Other Plug-Ins

& Add-ons• External Portals for End Customer

Information• Pre-Configured Dashboards

Managed ServicesAverage Revenue: $2-$5K3Margin: 45%

• Reporting & Analytics• Online Training & Self-paced

Learning• Support Services• Social Listening and Sentiment

Analysis

Build long-term, value-added services for sales productivity

Par

tner

Rev

enu

e

Project ServicesAverage Revenue: $2.5-$15K3 Margin: 35%

• Solution Analysis, Scope, & Design• Integration and Data Migration• Cloud Readiness Assessment• Deployment• Business Process Transformation

Capitalize on themarket opportunity

Source: The Future of Corporate IT, 2013-2017 2. CEB Survey of 165,000 employees 2012 Survey on Self-Service BI and Analytics, Unisphere Research 3. MDC Research, Microsoft Cloud Profitability Scenarios May 2015

#DynStrong | @usdynamicsevent

Shift from Time & Materials to Packaged Solutions

Customer

• Customer Risk

• Length of Decision Making

• Cost Over Run Risk

• Time to Deploy

Packaged Solutions“Out of the Box”

Time & Materials

Internal

• Cost of Selling

• Length of Sales Cycle

• Cost of Development

• Labour Intensity

• Time to Implement

#DynStrong | @usdynamicsevent

Fallacy: High Utilization is Good

High utilization rates have serious negative side effect

As utilization delays lengthen dramatically

Unpredictable - Not like manufacturing with few surprises and orderly work

5% more work can increase time 100%

#DynStrong | @usdynamicsevent

#DynStrong | @usdynamicsevent

TARGET Industry Revenue Portfolio Future

MS Online Service Marketing Rebate or Discount for Selling

ERP Online

Customer

Engagement

Solution

Online

Microsoft

Security

Essentials

Mobile

Device MgmtPortals Office 365 PowerBI

Non Strategic Project

Services

Data

MigrationDeploymen

tIntegration

Configurati

on

Customizati

on

Managed Services

Help DeskOn Demand

Training

Packaged Vertical Industry IP

Industry-

specific

Workflows

(e.g.

compliance

, food

manufactur

ing)

Function-

specific

Workflows

(e.g. HR,

Procuremen

t)

Mobility

Solutions

3rd Party

Add-ons-

(ISV

MS Office

Connectivit

y & Other

Plug-Ins &

Add-ons

External

Portals for

End

Customer

Information

Pre-

Configured

Dashboard

s

Industry

Related

Content

High Value Professional Services

Strategy

Advisory

Cloud

Transformation

Business

Impact

Workshop

High Value Strategic

Professional Services

Social

Monitoring

Sentiment

analysis

Optimization

Services

Benchmarking

Service

Commoditization

Differentiation

20% One time 80% Recurring

#DynStrong | @usdynamicsevent

Lifetime Value Model Changing

#DynStrong | @usdynamicsevent

Service

High Risk

Intangible

Product

Low Risk

Tangible

Trust

#DynStrong | @usdynamicsevent

Uncertainty

Confident Decision

#DynStrong | @usdynamicsevent

TRUST

= Belief

Reliable

Benevolent

(Caring,

Compassionate)

Honest

#DynStrong | @usdynamicsevent

Trust & Transparency

#DynStrong | @usdynamicsevent

One Fixed

Out of the Box Price

is NOT an OPTION!!!

#DynStrong | @usdynamicsevent#DynStrong | @usdynamicsevent

#DynStrong | @usdynamicsevent

Quick Start

• Out of the box vertical IP

• Minimal Integration

• Not touch email and self

service support

• Minimal implementation

services

• Defined single import

• $25,000-$75,00

Switch from

Competitor

• Out of the box vertical IP

• Conversion services

• Defined integration

• Defined number of support

hours per month

• Fi# of Days of Training

• Defined data imports

• $75,000-$250,000

Complex Legacy

Environment

Custom Solution

• Out of the box vertical

Extensive legacy system

Integration

• 24x7 senior dedicated

support resource

• Extensive Implementation

Services

• Lots of Training

$250,000-3 million

#DynStrong | @usdynamicsevent#DynStrong | @usdynamicsevent

Pricing Models 1. Perpetual License

2. Consumption – usage based on criteria, pay as you go

3. Tiered – scalable, pay based on levels criteria

4. Freemium– capacity, feature, time, use case

#DynStrong | @usdynamicsevent

User Based Pricing

#DynStrong | @usdynamicsevent

Customer Niche

#DynStrong | @usdynamicsevent

What is the

JOB your

Product

is being

hired to do?

Persona Packaging & Pricing

#DynStrong | @usdynamicsevent

$319 $345 $389

Pricing Bias

#DynStrong | @usdynamicsevent

Fries with that?

Default

Blog: http://neuralimpact.ca/blog/default-options-going-increase-revenue/

#DynStrong | @usdynamicsevent

Centre Stage Effect

Valenzuela and Raghubir (2009)

#DynStrong | @usdynamicsevent

#DynStrong | @usdynamicsevent

Package up Services

http://thenextweb.com/google/2013/02/21/google-debuts-four-tiered-247-support-for-its-cloud-platform-services-prices-start-at-0-to-400-per-month/

#DynStrong | @usdynamicsevent#DynStrong | @usdynamicsevent

#DynStrong | @usdynamicsevent

Software, Wholesale Distribution, and Manufacturing

NetSuite

NetSuite

OneWorld Pricing

Starting from:

$499.00/month

31% Year-over-

Year Increase in

Q4 Revenue of

$206.2 Million

#DynStrong | @usdynamicsevent

Add Ons

http://www.powerobjects.com/powerpacks/powermap/

#DynStrong | @usdynamicsevent

Free Trial – Limited Time

#DynStrong | @usdynamicsevent

Storage, # of Users

Limited Capacity Based Freemium

I2GB

Storage free

Incrementally

price 10GB -

$10 per

month under

“Pro” plan

Enterprise

sales of 1

TB+

Negotiated

Basis

#DynStrong | @usdynamicsevent

Certain Features Locked

Feature Based Freemium

#DynStrong | @usdynamicsevent

Vertical Value add FREE Forever Applet

Free Value Forever

https://www.quickenloans.com Copyright of respective owners.

#DynStrong | @usdynamicsevent

Scarcity & Loss

#DynStrong | @usdynamicsevent

Highlight Strengths

What You Care About US Comp 1 Comp 2

Expertise an focus on your

Industry

100% Manufacturing 5 different industries Horizontal

Years in Business 25 6 8

Locations we Serve New York, LA, London New York LA

Integration with your Existing

Industry’s Specific Legacy

System(s)

Out of the box Pay Extra Pay Extra

Total Cumulative Years Experience

in your Industry

CEO – 15

VP Sales – 10

COO – 12

Staff - 140

TOTAL: 177

Limited Limited

Complex Legacy Integration Tools

and IP (SAP)

Yes No No

#DynStrong | @usdynamicsevent

Competitive Pricing Comparisons

Source: http://roseasp.com/wp-content/uploads/2014/11/GP-vs-Intacct.png

#DynStrong | @usdynamicsevent

Revenue Stats

#DynStrong | @usdynamicsevent

Bundle: bundle different services and

package them as one offer

Incent: leverage information of usage and

consumption behavior to incentivize

uptake of new services

Reward: give limited period bonus

services once certain criterion are met

and/or usage levels have been reached

Inform: send near real-time notifications

of key account activity or critical usage to

clients

Satisfy: deliver unbilled usage information

or enforce credit limit checks to avoid bill

shocks

Upsell Strategies:

Benefits to Offer Customers

#DynStrong | @usdynamicsevent

Questions?

#DynStrong | @usdynamicsevent

Sharka Chobot

Sharka’s contact info:

(604) 987-4275

Sharka@neuralimpact.ca

www.neuralimpact.ca

Conduct a Mini Digital Emotional Engagement

Assessment of YOUR website Online Now:

http://www.neuralimpact.ca/industrysummit