Born in the Cloud firm: Moving to O365? You're too late

Microsoft partner claims traditional channel partners who are just coming round to the idea of Office 365 have missed the boat as margins have shrunk

If you're a reseller which is just thinking about moving to Office 365, then you're too late, you've missed the boat, there is no money left in it. That's the opinion of Steve Mordue, founder of Microsoft Dynamics CRM partner Forceworks, who said that partners looking to move to the cloud now will have to focus on a much wider range of products than just the productivity suite.

The Florida-based firm, which does business in the UK, describes itself as being Born in the Cloud and Mordue insists that other firms which want to get into the space will today need to do a lot more than his company did when its journey to the cloud began.

Forceworks started life as a Salesforce CRM partner, hence the name, but later switched its allegiance to Microsoft and sold its Dynamics CRM and Office 365 services instead.

Mordue said that as it started selling the kit, it noticed a distinct difference in the duo's popularity.

"Office 365 was really taking off - partners were signing up left and right," he said. "So few had started down that CRM path - we knew we were early, but we thought there would be a flood of them behind us, but there really wasn't. We thought it's in our interest as a partner that there are more partners - more partners means more noise, which means more customers. We were comfortable about the competitive aspect but there needed to be more noise about the product."

To that end, Forceworks abandoned Office 365 and focused all of its energy on CRM, eventually transitioning into an ISV.

"We dropped Office 365 because we weren't doing anything any partner couldn't do, and focused heavily on CRM Online and really focused on building a toolset and a methodology any partner could use to sell CRM Online and get it out to their customers," he said. "It wasn't something they were going to learn. We had to make it easy for them to transact. We became an ISV. We came from a customer-facing partner and turned into an ISV - it has been an interesting learning experience."

Late to the party?

Mordue said that this has been foundational to the company's success and warned that other firms travelling down the well-trodden path towards Office 365 might be in for a shock.

"We see lots of new partners today starting up Office 365 practices, but they are almost too late to just start that," he said. "They have got to be thinking ‘I have got to come to the market with more than this'. We got out of Office 365 because we couldn't see a point of differentiation that mattered and it was too price-sensitive. You need to be looking at Azure and CRM Online. Even these products one day will suffer the same fate - every partner will start selling it and the margins will go away. Then you have to think what will happen after that. You need to stay at the early stages of these products because at the late stage, there is no money left."

Florida-based Mordue warned that the commoditisation of Office 365 is even more pronounced in the US than in the UK, but that British partners ought to take note.

"The US is hitting these speed bumps first, but the UK is in the car right behind us," he said.

"It's ironic because the partners that have waited the longest [to move to Office 365] are probably the most risk averse. But in order for them to make the jump now, they have got to take more risk than we did. They have to take on so much more than just office 365 now just to establish themselves. The more products you launch with, the more risk you're taking, and the irony is that they were risk averse to begin with."

This article forms part of CRN's Born in the Cloud series, which puts the spotlight on resellers that focus solely on selling cloud services. If you describe your company as a Born in the Cloud partner and you would like to take part in the series, please email [email protected].