Thursday, January 22, 2015
1ClickFactory originally thought of an upgrade on a subscription program in early 2011. Back then, we already believed that the market would slowly move towards a subscription model for software licensing, so we created an upgrade subscription offering that would support that trend and offering.
In 2013, when Microsoft released their first subscription license model for Dynamics NAV, it very clearly proved the direction – Dynamics solutions would move to a subscription model.
In 2013, Microsoft released their first subscription license model to selected Dynamics Partners. Today more and more Partners can offer Dynamics NAV licenses on subscription. It became a powerful opportunity for Microsoft and Microsoft Partners to add new customers that are looking for Cloud or subscription-based ERP.
What is an upgrade subscription? How can an upgrade subscription complement a Dynamics solution on subscription? Basically, the upgrade subscription is a means to fix the price for maintaining your customers’ solutions into the future. Typically, for customers on perpetual license an upgrade price has 3 components:
2) Technical Upgrade (can be fixed through 1ClickFactory Upgrade Subscription)
3) Implementation of the Upgrade
With 1ClickFactory Upgrade Subscription service partners can fix price for a technical upgrade (technical conversion of the object customizations from the current solution version to the new version released from Microsoft). 1ClickFactory upgrade on subscription service deliverables typically include
- New object structure (FOB file format).
- Tools to perform data migration of test database (including updated Microsoft Upgrade Toolkit or other data migration tools).
- Backup of upgraded test database.
- Upgrade implementation guidelines that lead the Partner through the upgraded solution implementation steps and data migration process, and lists issues that the Partner should plan to resolve.
Upgrade Subscription Model: Value to the Partner
The upgrade on subscription model enables Microsoft Dynamics Partners to ease the burdens they face with their existing customers base, including:
- Helping their customers to gain more value form their BREP and overall investment in ERP.
- Collecting predictable recurring revenue from upgrade service subscriptions.
- Delivering predictable, more affordable upgrade costs that make upgrades easier to sell.
There are many other benefits Partners can reap with the upgrade subscription model – click here to learn more.
At 1ClickFactory, we view upgrade on subscription as a natural addition in Partner support offerings for their customers, especially selling to new customers that uses Dynamics NAV licenses on subscription (Note: Upgrade Subscription pricing is very compatible with overall Dynamics NAV on Azure and Office 365 offering). Upgrade on subscription also gives a Partner a proven option to take your existing customers into the future through small cyclical upgrades as with Microsoft moving Dynamics NAV to a 12-month release cycle, the traditional way of upgrading may no longer be an attractive and affordable solution.
Upgrade Subscription: Value to the Customer
What does an Upgrade Subscription mean for a customer? For customers that are buying Microsoft’s subscription license, the Upgrade Subscription is an easy way to get a pay-as-you-go price for current and future versions that are released from Microsoft. Through utilizing this service, customers can very quickly and accurately calculate the Total Cost of Ownership (TCO) of the business solution, especially with the infrastructure on a subscription model as well (e.g. Microsoft Azure). There are a number of other benefits included in 1ClickFactory’s Upgrade Subscription Service for Dynamics NAV for customers.
Upgrade Frequency: Dynamics NAV vs. Dynamics AX
Our subscription concept differs with Microsoft Dynamics NAV and Microsoft Dynamics AX . With Microsoft Dynamics NAV, we offer upgrade subscriptions for all future versions. With Dynamics AX, 1ClickFactory currently only offers subscription for CU releases, in between the main releases from Microsoft. Having said that, it is our long-term intention to offer the upgrade subscription service for all Dynamics AX releases from Microsoft.
Customers that have been on Dynamics products for a length of time may find the upgrade subscription model hard to believe and understand, given their past disruptive and expensive experience with upgrades. 1ClickFactory performs more than 100 upgrades per year, primarily implementing the Dynamics NAV yearly releases from Microsoft, which are often smaller, easier and less expensive upgrades than those spanning many years and many Microsoft releases.
Therefore, one of our recommendations is for customers to plan to make smaller and less disruptive upgrades once a year. For customers that are not ready to move forward with that plan, we can also build an upgrade subscription plan to allow the customer to do an upgrade every 3 years. For Dynamics AX, the CU releases are often important as they include bug fixes and therefore should be implemented by all customers.
In the Future…
Upgrades should become more affordable for customer, which will encourage them to stay on the latest technology and upgrade more often. Microsoft is releasing more and more tools to ease and automate the process of upgrading, bringing down the price of upgrading down over time.
At 1ClickFactory, we have been reducing the price for an upgrade year-after-year, developing semi-automated upgrade tools that automate most time-consuming and costly parts of an upgrade. Based on this and our own inventions, we have been able to cut 50% of the costs associated to upgrades since 2010, showing that we can fulfill our statement of direction, as an Upgrade Factory, to make upgrades more affordable for end-customers.
This price will likely decrease over the next 4 years as well. As this happens, we will also decrease the price of our upgrade subscriptions (even for the customers / partners that have already bought the subscription from us).