Microsoft has unveiled a new pay-for-performance (PFP) rebate model in its Dynamics CRM business, partly in the hope of discouraging SMBs from just dabbling in the business.
The new PFP model was announced at last year's Worldwide Partner Conference but has now finally kicked in this week during the event in Houston.
Doug Kennedy, vice president for Microsoft Dynamics partners, said the new structure moves away from paying resellers a flat rate regardless of the volume of sales and the revenue they bring in, and instead encourages them to commit to the business.
"PFP goes right down the SMB level too, and that was deliberate," he told CRN.
"A lot of small partners are competing with each other... and a fairly large number of them were in the non-growth part of the ecosystem. PFP forces them to look at themselves and see if they are in this business or not.
"Some of them are in it part time, and I do not want those. You are either in or out, so we took [PFP] all the way down [to SMB level]. Broadly, partners applauded it as they wanted to compete against proper competitors, not those who dabble. That hurt our business."
The Dynamics division of Microsoft includes ERP – which already uses the PFP model – and the CRM business, which is now set to adopt the new model.
During his keynote speech yesterday, Microsoft chief executive Steve Ballmer said the Dynamics business was "amazing" and added that it brings in billions of dollars and has one of the most loyal and committed partner bases in the world, despite claiming that it gets hardly any PR.
Microsoft Dynamics partner Ebecs' managing director Stephen Wilson said that despite Ballmer's comments, he feels the business is good at marketing itself to partners, and that with the help of its VAR base will be able to conquer competitors Oracle and SAP in the long term.
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