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Microsoft Dynamics partners bemoan 'slow-as-molasses' sales

Microsoft Dynamics partners at Convergence 2009 say the recession continues to hurt ERP sales.

NEW ORLEANS -- The economy took center stage at Convergence 2009 this week as Microsoft pledged to help VARs expedite deals.

Microsoft executives tried to put the best face on recessionary pressures, telling partners there were 600 new prospects at the conference, out of a total 6,500 attendees.

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"That's a high percentage, and if they're here, they're close to signing," said Doug Kennedy, vice president of Microsoft Dynamics partners. "The pipeline hasn't vaporized. It's still there. It's just taking longer for deals to close."

VARs conceded privately that things look bad. Some don't expect improvement until next year, but they said they'll take all the help they can get.

"I'm here working my butt off with client meetings, trying to stay afloat," said one Microsoft Business Solutions (MBS) partner on the Convergence floor who did not want to be identified.

Another partner characterized the deal pipeline as being "as slow as molasses."

John Hendrickson, CEO of InterDyn BMI, a Roseville, Minn. VAR said the mood was fairly good considering the circumstances. Microsoft "acknowledged the economy but didn't dwell on it. People are working to get through this," he said.

Product news at Convergence 2009 was thin. Microsoft unveiled a new update to Microsoft Dynamics CRM Online that will use automation to make it easier for partners to sign up customers and get paid for those referrals to the Microsoft-hosted service. The company also announced some Dynamics CRM Accelerator add-ons and expanded its "Unleash Your Potential" tool. That tool helps enterprise resource planning (ERP) partners go back into customer accounts, assess ERP coverage gaps and even pinpoint underutilized modules and features.

Still, partners were not here looking for new products. They wanted ways to close long-percolating deals, and many brought their customers to meet with Microsoft product teams and executives.

Microsoft is ending its Dynamics zero-interest financing program at the end of March as planned. The company plugged its new Smart Pay plan, which lets customers defer payments for six months, but those deals will accrue interest.

Hendrickson said zero percent financing and similar promotions help spark new business and help preserve deals that would otherwise die. He estimated up to a quarter of his customers used some form of finance package or promotion.

MBS corporate vice president Kirill Tatarinov said the economy is not pushing customers one way or the other when it comes to choosing on-premise or Software as a Service (SaaS) deployment options. Hewlett-Packard execs said last week that lower upfront costs were helping drive SaaS adoption among smaller companies.

"We don't see that preference," Tatarinov said. "We don't see people saying, 'Hey, I wish you had hosted ERP.'"

He also said Microsoft has no current plans to host ERP -- a question the company has wavered on in the past. The company does offer partner-hosted and on-premise ERP software under its four Dynamics brands.

Microsoft is pushing upgrades as a way for partners to keep customers current and also to cross-sell with and up-sell to other Microsoft products.

"Partners should make a concerted effort to upgrade their ERP installed base," Kennedy told "Upgrades are better than migrations, when customers will look at other options."

Another push is to incent ERP partners to sell more Dynamics CRM, said Chris Caren, general manager of MBS. More than ERP, customer relationship management (CRM) is being pushed hard even into the largest enterprises. Microsoft claims 900,000 CRM users worldwide. Microsoft, after a push into enterprise ERP accounts, is back to its small- and medium-sized business (SMB) focus.

Several partners said Dynamics CRM which, unlike Dynamics ERP, is sold through broad distribution, sells well even in the down economy.

This story was updated Wednesday evening with additional VAR comment.

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