Don't make the recurring revenue mistake that Microsoft, Symantec and HP are making

Every day lately it seems that partner programs that OS-Cubed and other small IT business vendors participate in are moving to partner program models that emphasize new sales over recurring revenue.  Recently HP, Symantec and Microsoft have all moved their programs over to this model. In an environment where you have one-time license sales this makes a tremendous amount of sense. In an environment with ongoing recurring revenue it's just stupid.


The big companies are reimbursing partners more for a new sale than ongoing ones, trickle off or eliminate the revenue sharing as a recurring revenue relationship ages, or de-level long-term partners who have high client loyalty over partners who have high initial sales.  I will posit here that they are applying the logic that you use for "new packaged license sales" to a recurring revenue model in an inappropriate and in the long term damaging way.  As software developers or entrepreneurs designing your new recurring revenue product - don't make the mistake that these big companies with their old-fashioned views are making.


These big vendors are pushing recurring revenue models as their preferred licensing method - that part of the formula they get. I certainly understand the desire to grow your market.  But understand that the major incentive that small resellers have for getting a recurring revenue stream is the same one you have for selling them - that is that it's constant, steady cash flow.  And cash flow is very important in a reseller environment.  It makes both the selling company and the client more stable and allows them to adjust license quantities and capabilities on-the-fly.  Because of this new model clients have the ability - at any point, on any given month, to "just say no" and switch to another vendor.  Keeping the customer happy, and satisfied at all times is what keeps those customers as customers. They can easily just change providers if they become dissatisfied, with almost zero capital investment on their part.


And who keeps them happy and satisfied? Their reseller in general - not the software vendor with their overseas based technical support, and their inadequate and out of date forum which they provide as a substitute for an actual curated and current wiki or knowledgebase. When your product screws up, the small reseller is the one that makes it so the customer never knows.  They deal with your tech support from India. They navigate your forums and separate the wheat from the chaff.  If a customer had to do that they'd fire you in a second.  Small business resellers are your face to the customer.  The end customer mostly doesn't care if the product they're using is one brand or another - it's the product that the small business IT provider told them was the best, and if that reseller changes their mind they will change in a heartbeat.


So why - in this scenario - would you not do everything you can to both reward the provider for their ongoing support and reselling of your product AND do everything you can to support the ones that do it best - small, personal companies who emphasize long term loyalty over new sales? 


I don't understand this logic, but several companies - Microsoft, Symantec and others have hopped on the bandwagon of "we will reward new sales, but your revenue for the ongoing revenue stream will decline" or worse yet  they take benefits away because despite having a large ongoing revenue stream you're not adding new customers at a breakneck pace. 

In recurring service sales ongoing revenue is everything.  You want to bring customers in and keep them there.  If someone does a new sale, the customer stays for a year and then leaves - you have lost!  Realistically you should be rewarding partners for the longevity of the relationship, not the new sales.  You should increase revenue sharing based on how long term the sale is, rather than punishing partners for not bringing in new clients at a ridiculous rate.  It takes a certain amount of time to make back the expenses of a new sale.  If on the other hand you bring in a new client and they stay for years - that's an overall win, as well as a potential to leverage that relationship for additional products and services in the future. And in the long term it's what will make your product and recurring revenue sale successful.


I am convinced that these short-sighted vendor partner moves are indicative of how successful these companies will be as long term revenue generators and ultimately as SaaS providers.  If you cut out small dealers, and emphasize new sales over overall volume and long term customer satisfaction your recurring revenue stream is destined to go from a flood to a trickle. It's quarterly tactical thinking, not long term strategic thinking. Because customers can easily choose a new provider now with zero capital investment in licensing.  And your vendor may be the one recommending it because you didn't have the vision to continue to reimburse them for recommending and supporting your product.  Recurring revenue sales are NOT the same as one time license sales. The sooner these big companies realize it the better.

Microsoft Multi-Authentication Has Improved

And you should be activating it

As more of our life goes online, we expose ourselves to more and more risk of compromised accounts. More people are placing their eggs in a basket in the cloud in hopes of better disaster recovery and better accessibility. As a result information that we once would have kept only on our own PC is now becoming accessible to anyone if they get the "keys to the kingdom" - our password.

Microsoft's multi-authentication (hereafter referred to as Multi-Auth) is designed to make this a less likely occurrence. The idea is that you set your account up so that in order to access the account via the web, or an application - the sign-on has to be approved by you on a separate device. Once you sign on once - the approval can be remembered - or you can tell it to forget that approval and once you sign off a new approval needs to be generated to let someone back in. This allows you to more safely access your account from a variety of places.

In order to do this you need one of the following secondary authentication methods:

• A smartphone with a multi-auth application on it
• A phone of any kind that can accept text messages

By far the easiest is the Multi-Auth app. Microsoft has a different solution for multi-auth on private live accounts (like for Hotmail and Xbox) and for business accounts (like Office365 and Azure). While there are two different apps - they work the same. You can set them up in 2 modes - in one mode you simply need to approve access by hitting Verify. When you go to login a code will display on the screen that should match the code in the verification. The other mode displays a constantly changing number (every minute or so a new number is generated). You type the multi-auth code into the browser when logging in. I prefer the "verify" method because it actually messages my phone if someone tries to login to my account. I like getting this notification and I like not having to type extra characters. The other method is marginally more secure.

If you don't have a smartphone or you don't want to install the app, you can instead have Microsoft text you a message with a code you'll need to type into the browser to log in.
In order to use Multi-Auth, my recommendation is that you take a further step - make sure your phone is loaded with activated software that lets you wipe it remotely. That way if someone gets ahold of your phone and figures out your lock screen password you can still wipe the phone and prevent access to your account. Be sure that you also have a "back door" to allow you into your account if your phone is lost. In most cases when you turn on multi-auth the system will provide you with a secondary password to access your account. Make sure to save that in a safe place.
Now multi-auth does have it's drawbacks. Some apps won't support it. In the "Live" version of multi-auth (the one used with OneDrive, Xbox, and Hotmail) xbox365, Microsoft's online account settings, and other capabilities don't support multi-auth (though that number is shrinking as things are re-factored). So you have to create a one-time password to be used just with that app. Generally this will be a long string of characters which you type in instead of your normal password. You can deactivate one-time passwords individually, thus if somehow one of your accounts is compromised, the device is stolen, or you just don't need it any more you can deactivate that one time password. This involves extra steps - you need to go to your account on a web page, generate the (usually long) one time password, then type it into the add-on app or device. The question is though - would you rather go through a little extra work on initial setup? Or would you rather deal with the potentially bad consequences of someone compromising your password?

It's also not perfect. In recent months it's gotten better, but in some cases on some apps I've had to re-generate and re-enter one-time passwords (you can't look them up again once you've generated them, unless you keep them in a document offline - which I do not recommend). When moving from one phone to another you have to re-connect to a new version of the multi-auth app (a pain but only takes a few minutes of setup time).
Many other mail and authentication systems are going to multi-auth including gmail and even the
king of being compromised - yahoo. My recommendation is to investigate multi-auth and if you feel comfortable with the steps involved consider activating it on all critical accounts that are linked to cloud mail or files.

Microsoft significantly changes Office365 licensing

Microsoft, as Microsoft is want to do, has again changed the rules for Office365 licensing

This has ramifications for both existing and new clients

In a move that has both advantages and disadvantages for consumers of Office365 products, Microsoft has shuffled the licensing for Office365 significantly, introducing a new product mix, and changing the way existing product mixes work. This has ramifications for both new and existing customers so best to be sure you understand it.

First the good

Increased max count

In the old office365 world there were small business licenses up to 25 users, and midsize business up to 150.  These numbers have fluctuated and changed over time and the result has been very confusing.  They have done away with this distinction now.  All businesses up to 300 licenses can purchase the small business line of products. This makes it much easier for a company to carefully craft a set of licenses that meets their needs, and opens up the market for the less expensive licenses for many midsize businesses who could not utilize them in the past due to cost constraints of the more expensive midsize and enterprise business license.

Mixing and matching

In the old Office365 world you could not mix and match small business, midsize business and enterprise licenses.  This caused untold consternation when you exceeded the max licensing, or needed a product for one or two clients out of your install with more advanced features. This is no longer the case - you can now mix and match both small/midsize business and enterprise licenses. They have removed the Small/Midsize division and made ONE product line called "Small Business" and ONE product line called "Enterprise".   Companies cannot own more than 300 instances of a Small Business license, Enterprise licenses are unlimited in the number you can buy.  So you can now mix and match and choose products from any of the business lines as needed, as long as you don't exceed the max license limit in any one line.  This is a real bonus as they have also changed the way offline office works so that in some cases you may be required to purchase enterprise licenses now.

License office without email

Some businesses wanted the ability to license MS office on an ongoing basis without paying for an email box. They might already have an internal email server, or are using a different product for email.  You can now - through office365 acquire an office license without online storage or email accounts.  This allows companies doing mass deployments of office upgrades, or those that don't need email to take advantage of licensing office through the cloud.  Remember that each of these licenses allows 5 installs!

More office options

In the old world you either got offline office, or you didn't and if you did get it you got the whole shebang - the full office professional with all the bells and whistles. This was different from their normal process of selling office in that they had tiered the product - with a lower end offering that didn't include Access and InfoPath, and a higher end offering that included these products. The good news is that they now offer an office small business and an office enterprise - distinguishing these products from each other. The bad news I will cover in the next section.

1TB of storage in the cloud

Microsoft now offers ALL office365 email users 1TB of offline storage. That's 1000GB of storage in the cloud PER MAILBOX. That's an unprecedented amount of space, which any user uses. At the $5/month $60/year level you can't even buy that much storage from Amazon Web Services or Azure for a year - without the mailbox.  It's a bold move and one that may spell (for professional use) the end of products like Dropbox.

Buy Office365 from a reseller and use a PO rather than a credit card

You can now buy all but the Kiosk licenses (see below) from a reseller as an open office license. These licenses get applied to your online account, and must be re-purchased each year from your reseller - unlike the credit card accounts they will not renew automatically.  Resellers must be Microsoft Cloud Authorized resellers (Like OS-Cubed, Inc.).

The Bad News

Microsoft has made full office more expensive

If you need all office has to offer (including Microsoft Access) you have no choice now but to buy the full enterprise office at $20/month. They have replace the $12.50/month slot with the small business office which does not include MS Access. Now a lot of clients don't need Access so their price won't change they will just lose the ability to run Access on their machines. But for small business or midsize business clients who do need MS Access on their workstations they are looking at a rather hefty $7.50/month additional charge per set of 5 licenses to use this ability.  This amounts to an additional $90/year to get ONE new office app.  For many clients this is no big deal, but for those that use Access it could get quite expensive. If you had the full 25 Office365 pro plus licenses and need them all to have Access you're talking an extra $2250/year.  That's not chump change for a small business.  Note however that even at $240/year it's still an incredible deal.  You are getting full blown Microsoft Office with 5 licenses to install for the price of less than one over-the-counter license.  You are in addition getting the full-blown all access Microsoft sharepoint, 1TB of storage, yammer, lync, etc.  This is still an awesome deal. It's just too bad that they decided to screw the high end of existing small business subscribers to set it up this way.

Microsoft is not honoring their initial commitment to clients

Once your current subscription runs out - you won't be able to just renew it and continue to enjoy it's benefits.  You will have to purchase one of the new licenses and either suffer a downgrade of office without Access or pay more to get an enterprise pro license.  This sucks.  I think Microsoft should have continued to honor their initial sales of office365 pro to small and midsize businesses as long as they continued to use them.  If they want to buy NEW licenses - sure put them in the new pricing scheme. Why does this suck (beyond the obvious additional expense)?  Office365 was sold with the express idea that it would give you a predictable monthly outlay for your needs.  And then they went and removed that benefit by changing the pricing.  If they can just change (upwards) the pricing any time they want - how is that predictable? How are companies to trust them that they won't increase prices again?  I think this was a very bad move on Microsoft's part. We'll see if outcry from customers as their contracts come up for renewal pushes them to modify this policy.  The bad taste left in people's mouths from having to pay more feels a lot like a bait and switch technique.  One even wonders if attorney generals might end up getting involved.

The breakdown:

Here is the new (simplified) table of options available from Microsoft

Office small business (limited to up to 300 users):

Business essentials (no offline office, 50GB mailbox, 1TB storage, online office): $5/month
Office365 business (No mailbox, 1TB of offline storage, Office small business (no Access), no lync): $8.25/month
Business premium (50GB mailbox, 1TB offline storage, Office small business (no Access): $12.50/month

Office Enterprise (unlimited users):

Office Kiosk K1: 2GB mailbox, no offline storage, no access to sharepoint: $2/month
Office Kiosk K2: 2GB mailbox, No offline storage, Access to sharepoint, access to office online: $4/month
Office Enterprise E1: (No offline office, 1TB Storage, sharepoint, Lync, etc): $8/month
Office Enterprise ProPlus: (No mailbox, Office pro subscription with access, no offline storage, no access to sharepoint, no lync) $12/month
Office Enterprise E3: (Full office pro, 50GB mailbox, 1tb storage, access to sharepoint, lync,
yammer): $20/month

When will this affect me?

If you are a current subscriber and your yearly renewal is after October 1, 2015 you will be forced to renew under the new licensing.  Any renewals in this next year will include your old licensing. If you renew after that date you will be forced into the new licensing. If you are a small business expiring just after that date and Microsoft Access is important to your business you may wish to look into renewing early so you get another year out of the license.

If you are a new subscriber you can no longer get the old licensing plans.  You must choose one of these options. 

Summary

As you can see if you need offline Access expect to pay $20/month after your current subscription expires.  I haven't explored it yet, but it's possible if you're a small business you could buy a $5 business essentials account (for up to 300 users) and a $12 Office pro plus account (remember you get 5 installs per account) and get similar functionality for $17/month.  The only downside would be missing some esoteric and infrequently used functions such as voicemail integration, forensics and other high end exchange functions. 

What would you say to $2000 worth of software for $150/year?

Microsoft Office365 will give you $2000 worth of Office licenses for $150/year. 

With their Small business Microsoft Office 365 premium plan you pay no upfront licensing costs, $150/year and get 5 copies of Office 2013 pro (or whatever the current version of Office is).  You also get 1TB of storage for files, and a 50GB mailbox with full calendaring, web mail, mobile mail and outlook support.  You get the equivalent of GoToMeeting in a professional web meeting format, with audio, video, screen sharing and session recordings (Lync).  You get secure instant messaging.  You get online web versions of Word, Excel, Powerpoint and OneNote.  It works in IE, in Google Chrome, Safari and Firefox.  It works with your full Outlook, or with third party email clients.  For $150.   You get your OWN email domain with your own domain name. You get sharepoint online for internal communications. You get a website in the cloud if you don't already have one.  All bundled into ONE product at a ridiculously low price.  To put this in perspective for the full retail cost of 5 copies of office professional 2013 you could instead get all of this for the next 13 years and 4 months.  And that's not even counting the mailbox and mail, the web enabled versions, the 1TB of storage or the 50GB mailbox.  Did I mention all your mail will be virus and spam filtered?  No? Well it will be.

Seriously if you use Office AT ALL this is a no brainer deployment.  Don't need more than the 5 copies of office?  You can mix and match with $60/year mailbox and web only accounts.  Over 25 mailboxes - the same thing is $15/month/mailbox for midsize businesses (though midsize business doesn't have a mix and match option).. 

Need even more flexibility for licensing and email options for $20/month/mailbox you can mix and match enterprise plans that range from $2/month for limited email only to the full $20/month for Office365 Premium.

Contact OS-Cubed today to learn about how to get Office365.  I seriously want to save you tons of money, and we are experts at deployment/conversion.

OS-Cubed, Inc. Announces Microsoft Silver Partner and Microsoft Cloud Accelerate Status

Rochester, NY, USA— February 24, 2014 — OS-Cubed, Inc., today announced it has qualified as a member of the Microsoft Cloud Accelerate program by demonstrating its ability to meet Microsoft’s customers evolving needs in today’s dynamic cloud marketplace. To qualify for the Cloud Accelerate program, partners must successfully demonstrate their cloud services expertise through rigorous sales and technical assessments; and ensure the highest quality of services, Microsoft requires customer references to demonstrate successful customer implementations and satisfaction.  OS-Cubed, Inc. is also a Microsoft Silver Competency qualified partner.

OS-Cubed, Inc. formed in 2006, is a development and managed support services company specializing in Microsoft technology based software and infrastructure.  The company provides services to a wide variety of clients across the region and the country.  With dozens of company’s email and cloud services under management – Microsoft has recognized OS-Cubed’s expertise as one of a select few who provide services at the highest level.  Approximately 1000 resellers in the entire world qualify as Cloud Accelerate partners.

 “Joining the Cloud Accelerate Program showcases our expertise in today’s cloud technology market and demonstrates our knowledge of Microsoft’s Cloud solutions,” said Lee Drake, CEO.  “Our clients expect the best support, and the smoothest migration when they move their email infrastructure to the cloud, and OS-Cubed, Inc. has provided that from the very inception of the program – even participating in the beta release of Microsoft Cloud Technologies”.

“Converting to Office365 and cloud technology from our old e-mail platform was one of the smartest decisions we’ve made as a medical practice.” said Laurie Amico, office manager for AAIR, PC. - an OS-Cubed customer.  “We rely heavily on e-mail communication for our growing practice of 5 offices, 10 providers and 70 staff members.  We have close to 100 e-mail accounts and I needed a more efficient, cost effective way to be able to manage that and add new accounts quickly.   The transition went smoothly and the platform is everything OS-Cubed said and more!”
Microsoft Silver Competency partner OS-Cubed, Inc, located at 274 N. Goodman St, Suite A401 in Rochester, NY provides development and technical support services for clients across the US.  In addition, they are experts at development for DotNetNuke, an open source, Microsoft technology based web content management platform.  Among the hundreds of sites under development by OS-Cubed are www.thompsonhealth.com, www.lasermax.com, www.spectracomcorp.com and www.frameofchoice.com. OS-Cubed recently completed major migrations of email  and files for companies such as Allergy, Asthma, Immunology of Rochester (AAIR), and ATD Precision.

2012-2013 - A banner year for OS-Cubed, Inc.

The last year has been an amazing one. OS-Cubed has:

• Produced a dashboard for sales performance for a major national firm using MS-SQL, office applications, and automation scripts
• Assisted with building web based administrative tools for an enterprise print management dashboard using C# and .Net
• Implemented a major new ecommerce site using DotNetNuke
• Created dozens of brochure sites using DotNetNuke
• Created custom product choice wizards for 2 international companies for their DotNetNuke site - one of which has gotten national recognition and will be featured on their distributors and resellers websites.
• Hosted over 100 websites for clients - without a single failure or downtime beyond normal maintenance.
• Provided hosting services for a web based human resource career application co-developed by us that services tens of thousands of employees world wide for a major international firm
• Installed hundreds of new machines at client sites
• Implemented virtual servers
• Supported users
• Created an application to manage bar code inventory items and update their status in a proprietary ERP system
• Assisted in implementing a HIPAA compliant EMR system
• Protected thousands of users from viruses
• Migrated hundreds of users to Office365 and Google Apps in the cloud
• Implemented a complete redesign of a major medical information website
• Implemented a successful prototype of a fashion website for an entrepreneur who has since leveraged that with major funding
• Implemented sophisticated SSL and remote access for multiple clients
• Managed technology transitions and expansions for dozens of local clients
• Assisted multiple not-for-profit boards with their websites
• Helped organize and handle technology for the Eyes on the Future Event
• Helped an organization with limited funds continue to support their 60 workers with very old technology

What can we do for you?  Let us know what kind of problem you have to solve and we'll help you solve it.