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If you’re an ISV in the Microsoft Dynamics community you probably don’t like subscription pricing. You probably feel that under a subscription pricing licensing agreement you are not being adequately compensated for your significant investment and continuing operating expenses.

But you’re also a decent business person and you realize the market is changing. The customers in your market like subscription pricing. It’s attractive to them for a number of reasons. I refer to this as a paradigm shift. To you, it’s a change in your business model. You’re being pressured to change from licensing your software for perpetuity and being paid for that all up front, to licensing on a monthly basis; month after month, after month. It’s a big change.

There are a number of issues with the change. One of the biggest is pricing. How do you properly price your software to make it attractive in the market and also make it worthwhile to continue developing and supporting your product.

This approach to pricing is based primarily on the fact that you’re changing from a perpetual license, to a monthly license, and based on my observations of what’s happening in the Dynamics community.

I have observed some minimum pricing and maximum pricing practices. Let’s take a look at an example:

Assumptions:

The ISV product used to be sold with a perpetual license for $5,000, plus an annual enhancement fee of 20%. And this pricing represented a fair price for your product.

The minimum pricing I see in this scenario is based on a three year payback:

Initial Purchase	$        5,000
1st Year Enhancement	1,000
2nd Year Enhancement	1,000
3rd Year Enhancement	1,000
Total	$        8,000
Monthly (36 months)	$           222

The maximum pricing I see in this scenario is based on a payback of 18 months:

Initial Purchase	$        5,000
1st Year Enhancement	1,000
2nd Year Enhancement (1/2 year)	500
Total	$        6,500
Monthly (18 months)	$           361

In this case, if you’re asking less than $222/month, I think you’re underpricing your product. If you’re asking more than $361/month, I think you’re overpricing your product.

Pricing in any situation is a difficult business exercise, requiring many considerations about your costs, your competition, your product, and your company’s market position.

If you are not already offering subscription pricing, you probably will be in the near future.

If you are already offering subscription pricing, don’t be afraid to change your pricing. It’s a new business model for you, and you can change your mind.

I just think you’re busy and there are a thousand things that seem more important. But when it comes right down to it, making sure your business data is properly backed up is fairly easy to do. Your backup policy should address these basic points:

Back up data and system software/configurations: You’re going to want both the data and the software that makes the data useful to you; should you experience a catastrophic system event.

Daily backups: Yes, do it every day; unless you can afford to lose several days of work.

Monitor and review backup activities: Set up alerts to indicate when your backup process has failed to any degree. And regularly review backup logs. Things can easily happen in your system that will cause the backup process to fail. Changed passwords, system configuration changes, unknown events, etc. can cause your perfect backup process to fail. So keep on top of it.

Periodic off-site storage of backup data sets: Storing your system and data backups in close proximity to your productions systems makes no sense. Doing this makes both your systems and related backup media vulnerable to single non-system events such as theft, fire, flood, earthquake, alien invasion, etc.

Periodic test restores: Most people don’t do this, and that’s a big mistake. They focus on the backup process, not the restore process. Having a perfectly designed and executed backup plan is worthless if the system and data cannot be restored.

Have you heard about the “cloud” yet? If you hang out with people from Microsoft Business Solutions, that’s about all you’ve heard for the past two years. Cloud, cloud, cloud. Got it.

We’ve been hosting Dynamics ERP systems in the cloud since 2000. It wasn’t even fashionable back then. But our customers wanted it, so we did it.

So you can imagine that in 12 years we’ve picked up a lot of knowledge and experience. We recently contributed to a white paper that focuses on the things to consider, from a CFO’s standpoint, when moving your ERP system to the cloud.

The white paper is titled, “35 Questions Every CFO Needs to Ask About ERP Software in the Cloud.” It includes informative graphs and cost comparisons, and covers topics such as these:

• Cloud Definitions
• Potential Benefits of Cloud ERP
• Common Concerns of Cloud ERP
• Compliance Considerations for Cloud ERP
• Licensing Questions for Cloud ERP

You can download it by requesting it here. A link to the white paper will be immediately sent to you.

It’s clearly written and easy to understand. If you’re considering moving your ERP system to the cloud, you will want to take a look at the white paper.

It’s been a long, good week in Los Angeles. We have talked a lot about hosting ERP systems. We have talked to people from all over; a lot from South America, Central America, and Eastern Europe.

Even though Microsoft has been talking about the “cloud” for many years, many people still don’t quite understand what it all means. So we spend a lot of time on education.

Many experienced IT service providers fear a loss of business because of the move to the cloud. I think they will definitely have to change the way they approach their markets, but there is no reason their business should necessarily be impaired. 

Having been on the front lines for the past 24 months, I can tell you with no equivocation, that users want to move to the cloud for these two reasons:

• Reduce hassles of maintaining hardware and software
• Avoid large, upfront investments, in exchange for predictable monthly payments

It’s more than a fad. People are looking to the cloud to host their IT applications; more and more everyday.

Survived the first day of WPC 2011. I was in the RoseASP/myGPcloud booth for 8 hours. We had a good amount of traffic, and I always enjoy talking to partners about hosting Dynamics.

The Keynote Speech earlier in the day was good. Steve Balmer is always fun to see as he stalks around the stage, enthusiastically talking about his company.

The highlight for me was a demo of Bing. Can you believe it? A search site was interesting. It is. Microsoft has joined up with a number of niche content providers to provide personalized and significantly enhance search results.

Tomorrow will require only 6 hours of booth time. Good enough for me.

Case:

Existing customer downsized and lost IT department – (12 GP users/50 Business Portal users)

Actions:

• Moved existing GP 10.0 database into hosting environment
• Upgraded database and users to GP 2010
• Carried over all customizations, FRX reports, and ISV solutions
• Moved licenses from on-premise to monthly subscription pricing 

Benefits:

• Don’t require an IT department
• Users have access to the latest version of software
• No more enhancement fees to pay
• Same function-rich system without additional IT resources

Outgrown QuickBooks/Peachtree? Microsoft Dynamics GP offers scalability, affordability & functionality. Learn more here

Become a dynamic business with Microsoft Dynamics GP and learn why a move to Microsoft Dynamics GP is a smart move from QuickBooks and Peachtree.

Read More…

Linda and I will be joined by two of our hosting customers at Convergence to present, “Ask the Experts:  Travel to the “ERP Cloud” and find out if it is right for you.”  It is part of the DayONE GPUG series.

These are the specifics:

Session:  UBGP19

Room:  A311

Time:  Sunday, April 10, 4:45

More information on GPUG DayONE session.

This session will be held in the Georgia World Congress Center; the same venue for Convergence 2011.  If you’re going to be at Convergence, drop by our booth in the Expo.

We have family office clients who have found Dynamics GPO to be a good fit for their organizations.  Family offices often have competing interests that make it difficult to determine which accounting system would suit the organization best:

• Need to track and manage the accounting for many different types of enterprises; operations, equity, personal
• Need to keep the information secure
• Need to provide high quality financial reporting to owners
• Need to keep it very affordable

Dynamics GP in a hosted environment provides a solution for these competing interests.  The wide variety of functionality available in Dynamics GP means that a family office can track businesses with significant operations, financial holdings, real estate holdings, and personal activities.  The solid financial reporting functionality of FRx and Management Reporter means that a family office can easily provide a variety of different reporting formats to meet the owners’ needs.  The availability of subscription pricing in a hosted environment makes Dynamics GP a very affordable system, from the beginning, because there is no significant upfront licensing fees or hardware purchases required.  Hosting Dynamics GP in a tier-1 hosting environment means that the family office will have dependable and secure access to the system.  Regular data backups, redundant hardware, and a high level of physical security means that the Dynamics GP system will be secure.

If you’re looking for a solid solution for your family office, consider Dynamics GP in a hosted environment.

Hosting complex ERP systems is not an easy thing to do.  Whether you host your ERP system on premise or off site, there’s a lot to do to maintain connectivity, system performance, and provide good security and data backup.  To do all of these things well, you have to know the ERP application very well.

Consider this:

• If the system engineer doesn’t know the application well, the chance that the correct data backups will not be done, the wrong service pack will be applied, etc., goes up significantly.
• If an end user is experiencing a system problem, and the system engineer doesn’t know the system well, the time to resolve the problem increases dramatically.
• If the ERP application is not available because of some unrelated technical issue, infrastructure software problems, loss of power, or network disruption, productivity decreases because the system is not available to use.

These are fairly common issues people experience with their ERP systems.  If you’re considering hosting your ERP application off-site, consider strongly a hosting company that knows the applications well; not someone that’s just running a bunch of machines.