Navigating Challenges: Why I Pivoted the Business by Ismail Nalwala

A person's hands on a laptop developing billing and subscription management software.

The Fall of Raftar: Lessons Learned

The first sale is the easiest one! Through a consulting engagement, which landed in my lap, I had solved a problem around sales inventory tracking using RFID for a large medical device manufacturer. I thought I could convert the solution into a product. I used my consulting income, raised money from family, and invested over a year in product development, sales, and marketing. I couldn’t sell the second deal, and after knocking on many doors and attending industry conferences, it became clear that the market was not ready, the demand was low, and the sales cycles were very long. It was time to cut my losses.

I learned a hard and important lesson on having a Go-to-Market Plan with Product Market Fit.

Finding a New Direction

After I shut down Raftar, I was thinking about my next move. In discussions with my brother, Ebrahim, I saw what IOTAP was doing with SharePoint and CRM services. Their website was getting inbound SEO hits. There was demand for the services! I thought this would be an easy choice – if the demand is there, the only thing then is to create a way to win.

We started working together, and I jumped in and started running sales. Because, of course, after my hard lessons with Raftar, I knew what not to do!

This was, however, a completely new world! We were one of thousands of Partners. Microsoft gave us Internal Use Rights (IURs) for products like:

  • Dynamics CRM
  • SharePoint for document management
  • Exchange Office 365 licenses

Hands-on Learning Based on Internal Needs

In 2011, we were still using Gmail. That was the first initiative – we migrated to Office 365. I got into all these systems and set them up and learned the applications along the way! Selling SharePoint and CRM projects was what was paying the bills. However, the project revenue was unreliable. It was relationship-based. It was either feast or famine, and we had a lot of engineers who needed billable work. I did not like doing estimates, tracking hours, managing schedules, and tracking milestones.

The Shift to Recurring Revenue

Microsoft’s cloud product, BPOS, became Office 365 in 2011. Microsoft was recruiting cloud partners. This was recurring revenue.

At a strategy meeting in 2012, we decided we needed to divorce our revenue from headcount. By 2013 and 2014, we had built add-ons for Dynamics and SharePoint. We learned how to license, package, and sell them through online marketing. We built CRM and SharePoint add-ons that you could purchase for a fee of $299 (no subscription yet). We called this collection of products Work 365 Apps to align with the Office 365 brand. This fee, even though small, gave us the most amazing high every time someone bought one of our applications. Meanwhile, Microsoft, AWS, and Google were competing hard in the cloud and Office 365 was gaining traction. Microsoft had one thing going for it: the massive partner channel.

Despite the success in reselling the Microsoft cloud services, our project and services business was bumpy. We had over-hired, and we had resources on the bench. We didn’t have enough mid- and senior managers. Unfortunately, we had to lay off half the team in 2016. Our Glassdoor reviews plummeted. Everyone was under pressure, wearing multiple hats, and under more scrutiny.

Building Our Own Solution

In the meanwhile, a lot of smart businesses were starting to use Office 365. We needed a way to manage this cloud growth. There was excitement, but we still had unanswered questions:

  • How do we scale this recurring revenue?
  • How do we track these seat changes?
  • How do we enable customers to manage their own services?
  • How do we take on customers, both big and small?

Early in 2017, we started to look around for a solution that we could implement to manage Office 365 products. I had a specific criterion in mind for evaluating these solutions:

  1. Have control of the data (our subscription data was going to include pricing and customer data)
  2. Integration into our sales and service management system (CRM) so that everyone could have access
  3. Enterprise-grade security and access control
  4. Include a predictable price (not a fluctuating monthly amount)
  5. Support for multiple regions and currencies (we were operating in the US, UK, and India)
  6. Being accounting system agnostic, because we had different accounting systems for each of the regions

We couldn’t find anything that checked off all these boxes. So, as any good CRM partner does (more on this later), we put our engineers and developers to work on building something for ourselves. After months of planning and development, we built a subscription management application that generated invoices with an e-commerce platform that would provision directly into Partner Center. There was an architectural flaw that we fixed later.

It was exciting – we were launching a Cloud marketplace. We were one of the few that had an e-commerce site to purchase Office 365 products in multiple countries. The idea was simple: use SEO and online marketing to drive traffic to acquire and get new recurring revenue.

At Inspire in July 2017, we showed this marketplace to our Microsoft contacts. Very quickly we learned that customers needed consulting, migration, product guidance, and support. The idea of a marketplace alone wasn’t going to work. We needed to continue strategizing and planning. In late 2017, we had over 300 customers in CSP in 3 countries, and growing every month. Although we acquired only a handful of customers from our online marketplace, our internal solution to manage these customers was working really well. All the data was there in CRM, and invoices were automatically created. We were figuring out billing models, pricing strategies, contract and customer strategies (more on this later). We continued working through our strategy and took inventory of our IP, our processes, and our strengths. Ebrahim had an idea to sell and package our CSP management solution. We had too many open questions. How would we sell to other partners, how would we market it, and what would happen to our current business? And besides, this was our secret sauce. We iced this idea.

Pivoting to a Product-Centric Business

In Jan 2018, I took a call from a service provider who was pitching their CSP management product to us. I got on the call with one of my engineers who was familiar with what we had built internally to see if we could transition away from the home-grown solution we were now pouring resources into every month for development. My engineer and I concluded the call thinking that what they showed us was what we had already built. That was a light bulb moment! We were being pitched a minimally viable solution that we had built. It was not a product yet! I talked to my friends at Microsoft and other Microsoft Partners and confirmed that managing CSP was a pain point. I offered our solution to them to use for free and gave me feedback! I needed to confirm product market fit! At this time, we didn’t know how we were going to price it (more on this later), and we didn’t have documentation, a customer-facing team, an implementation process, or even a name. Remember, we had trademarked the independent site Work 365, where we had SharePoint and CRM apps. This new product would be called Work 365 and we positioned the product on the Work 365 apps website

Leads started to come in. It was still just me that was working through the conversations, confirming the pain points and interest with a PowerPoint deck. We visited Inspire again that year in July 2018. Ebrahim and Yusuf were with me. It was a busy Inspire! I was jumping from one meeting to another, confirming interest from Partners about their challenges in managing Azure and CSP. I had answers for them: best practices and a solution (more on this later). I wanted to prove to the rest of my team that it was time to Pivot again! There was a strong product market fit!

We returned from Inspire and launched version 1.0 of Work 365. We went from a development services company to an IT services company to finally being a SaaS/ISV (more on this later) with a mission around building solutions for companies that had recurring revenue!

Conclusion: When and Why Do You Pivot?

  • What you are currently doing doesn’t feel totally right!
  • You find a product market fit for your services. It’s a well-defined market with a need for your services
  • You have a core team with skills; you need to have the technical and revenue-generating members aligned
  • You can visualize and see a future for your services

Join me next time as I continue to share stories, strategies, and lessons learned from the trenches!

About the Author:

Work 365 is a Billing and Subscription Management application built on Microsoft Dynamics 365 and Power Platform. Our global team is made up of game-changers who bring the unique combination of technical expertise and client empathy, with a touch of nerdy humor. Number-crunchers and technologists at heart, our true passion is helping our customers succeed.