The Partner Opportunity For Microsoft AI Business Solutions

Opportunity Overview

The trends discussed above have increased revenues across AI Business Solutions, both in terms of total revenue potential (i.e., what partners are offering) and the expected revenue associated with the likely bundles of services that customers are buying (attach rates applied).

The expected services revenue opportunity is $103.75 for an SMB customer on a three-year journey. Core Microsoft 365 and core Dynamics 365 solution areas represent the largest share of the expected revenue opportunity, while AI solution areas are growing the fastest and driving partner expansion. For example, partners are doing much more agent-related work year over year.

Forrester also broke down the expected revenue opportunity into four service areas: deployment, advisory, solutions development, and managed services.

• Deployment services. Deployment services are the typical entry point for new customer engagements. These services include workshops; proofs of concept; pilots; and initial setup, integration, configuration, and data migration. The market trends discussed previously are increasing customer demand for new deployments of AI Business Solutions and creating additional partner services opportunities during and after deployment.

• Advisory services. Advisory services often lead or run alongside deployment services. Partners can also offer these services to customers with existing deployments. These services include upfront strategy and planning; center of excellence (COE) setup, governance, adoption, and enablement; business process optimization; and change management. This work frequently leads to ongoing revenue opportunities such as continued training and governance support.

• Solutions development services. Solutions development includes resalable intellectual property (IP), sold either as standalone offerings or used to improve the efficiency of deployments and managed services. It also includes custom solution development and advanced integration work such as building custom apps and agents. Building agents is the largest growth opportunity.

• Managed services. Managed services offer scalable, predictable, higher-margin recurring revenue for partners and happen after deployment, advisory, and solutions development. These services include solution support and enhancement, monitoring and reporting, ongoing advisory services such as governance and training, and ongoing development through factory approaches (for example, identifying use cases and building solutions over time). Long-term client relationships also lead to other sales opportunities across solution areas.

Overall, services for SMB customers tend to be more prescriptive and out of the box compared to services for enterprise customers.

In addition to services, CSP partners also have a software resale revenue opportunity. This includes the margin partners make when reselling both licenses and consumption. It does not include promotions and incentives because they can vary quarter to quarter. The licensing and consumption margin revenue opportunity is $26.30 for a customer with 300 knowledge workers on a three-year journey. Forrester referenced related Total Economic Impact case studies for each solution area to guide user count, license, and consumption estimates. The ratio of total services revenue to licensing and consumption margin revenue is 9:1 (4:1 expected).

Microsoft AI Business Solutions Practices: Good, Better, Best

The Microsoft partners Forrester interviewed were diverse in maturity, scale, customers, geography, and offerings. The total and expected revenue opportunity ranges from good offerings to best-in-class offerings delivered by more advanced and mature partners. Examples include:

• A good partner may deliver deployment services, basic advisory services such as planning, and limited solutions development, depending on the solution area. The focus is on aligning customers with the right Microsoft solution and deploying it to support their business outcomes. Additionally, CSP partners will resell the Microsoft solutions to customers.

• A better partner may also deliver additional advisory services, such as governance and change management. It may also provide expanded solutions development. Furthermore, when serving smaller businesses, partners will provide basic to full support. Smaller businesses have a greater need for managed services than enterprises because of the difficulty hiring and retaining IT resources. At this stage, the partner relationship becomes more strategic.

• A best-in-class partner delivers all the above, plus resalable IP such as agents, and it builds custom solutions and integrations. As a partner offers more services and develops an ongoing relationship, its revenue opportunity increases and it retains the licensing revenue.

Based on these definitions, the following tables and chart illustrate the good, better, and best expected services revenue opportunities per user per month by solution and service area.

Note: These tables and charts do not include licensing and consumption margin revenue. They only include services revenue.

The expected revenue opportunity varies across partner types, driven by the breadth of services offered, with more mature partners selling a fuller range of offerings. The opportunity also varies by the solution areas a partner serves and many other factors.

Readers can also calculate deal sizes by multiplying the expected revenue per user per month by the number of employees and 36 months. For example, a good partner serving a new customer with 300 knowledge workers in the Microsoft 365 Copilot solution area ($2.05 per user per month) could recognize an expected revenue opportunity of $22,140 over a three-year customer journey in addition to licensing and consumption margin-related revenue.

Forrester recommends that readers apply their own estimates within the framework to assess their organization’s partner opportunity.

Microsoft 365 Copilot And Copilot Chat

Microsoft 365 Copilot and Copilot Chat are two of the newest solution areas for partners (“Microsoft 365 Copilot” is shorthand for both offerings). Microsoft partners help customers deploy, adopt, and measure their use of the AI solution. Demand for AI has expanded the partner opportunity, with Microsoft 365 Copilot serving as an ideal entry point. Partners are deploying Microsoft 365 Copilot more frequently and taking on more adoption work. They expect continued growth as businesses invest in training, change management, and related services.

Microsoft CSP partners also sell customers the licenses needed from experimentation through full deployment for all employees. Demand for licenses and services have both grown.

Microsoft 365 Copilot connects with other AI Business Solutions areas, creating upside for traditional Microsoft 365, Power Platform, and Dynamics 365 partners. Partners can also expand from AI to those other solution areas in logical use case progressions.
 

• AI interest is driving deployments. Microsoft 365 Copilot engagements typically begin with a workshop, followed by a proof of concept and deployment. However, partners may join the customer journey at different stages: Some customers may deploy to all users upfront, while others take a phased approach. Demand for Microsoft 365 Copilot is strong and growing as smaller businesses see Microsoft 365 Copilot (including Copilot Chat) as a secure entry point to AI. In fact, 88% of survey respondents at partners serving sub-2,000 employee customers reported increased sales opportunities for Microsoft 365 Copilot in the past year.⁷

• Smaller customers need AI guidance. Advisory services for Microsoft 365 Copilot include strategy and planning, data compliance and governance, adoption, and change management. Compared to other solution areas, Microsoft 365 Copilot requires more training and change management and often leads to ongoing engagements as it evolves. Deal sizes vary based on client budgets and Microsoft funding, but partners remain flexible in sizing advisory services to meet client needs. Looking ahead, partners are optimistic about continued growth. One partner noted: “It is a growing business because everyone is talking about AI. Everybody wants AI, but customers do not know what to do with it.”

• Solutions development services. Customers can require custom development and integration work to connect solutions with Microsoft 365 Copilot. However, most solutions development work related to AI is agentic and is therefore categorized under the Agents solution area.

• AI adoption is an ongoing exercise and is being delivered as part of a managed services model. While still early, managed services offerings include usage dashboarding, ongoing adoption services, and user support. Adoption is an ongoing effort due to the evolving technology. Partners expect this service area to continue to grow.

Agents

Partners in the agentic AI solution area help customers build, adopt, run, and manage AI agents. They most often deliver this work using Copilot Studio. Some partners may also leverage Microsoft Foundry. Businesses are now interested in adopting agents, building on top of the Microsoft 365 Copilot opportunity. Partners also expect advisory and managed services to grow with the introduction of Agent 365. Agents interface with every other solution area, enabling partners to upsell and extend the revenue opportunity.

For Microsoft CSP partners, this opportunity also includes selling customers Copilot Credits and Azure consumption. For many partners that did not previously have an Azure practice, managing consumption revenue is a newer focus in addition to license-related revenue. Partners recognized how the services they deliver could drive increased consumption margin-related revenue as they help customers better leverage agents.

• Increasing business interest in agents bolsters deployment services. Deployment services for Agents include workshops, proofs of concept, and Copilot Studio setup. Partners reported that customers are ready to build and adopt agents, driving more of this upfront deployment work. Of partners serving customers with fewer than 2,000 employees, 82% of survey respondents reported increased Agents sales opportunities in the past year.⁸

• Advisory services for agents are essential. Advisory services for Agents are similar to those for Microsoft 365 Copilot, including building COEs, running training, and setting up governance. Currently, customers rely on advisory services to help employees learn how to use, build, and manage agents. Looking ahead, partners expect to do more business process optimization with agents and governance-related work such as with Agent 365.

• Agent building is quickly growing. Most of the Agents opportunity comes from building agents. Partners build agents using Copilot Studio or Microsoft Foundry, depending on the scenario. Partners report increased investment in building agents and expect this trend to continue. Partners shared examples of projects that charged thousands of dollars or more per agent. Pricing varies based on complexity, required integrations, global deployment, and compliance requirements. Partners are also still determining the best pricing models for these services.

• Managed services will grow for ongoing agent development and governance. Partners are beginning to provide ongoing advisory and solutions development services for agents. These services help clients design, build, and run agents over time. This can include factory-style approaches, where partners continuously build agents for customer use cases. Partners anticipate that governance as a service for agents will grow in FY 2027 as customers deploy more agents and require stronger management capabilities. Interviewees expressed optimism that Agent 365 will enhance this revenue stream. Survey respondents echoed this with 80% of those at organizations serving sub-2,000-employee customers reporting that they agree or strongly agree that Agent 365 will create new services revenue opportunities.
   

Low Code (Power Platform)

The Power Platform revenue opportunity includes all low-code partner work related to Power Apps, Power Automate, and Power Pages. (Copilot Studio is in the Agents solution area.) Partners told Forrester that they view the revenue opportunity holistically and by service area, rather than by individual solution area, because their offerings are often platformwide (e.g., COEs) and typically draw on multiple Power Platform products for customers’ use cases. This view aligns with Power Platform’s development into an AI application platform and an AI agent platform where apps, agents, workflows, and data come together.

For CSP partners, Power Platform also presents a licensing and consumption revenue opportunity. Similar to Agents, Power Platform’s extensibility drives an increased revenue opportunity for licensing, consumption, and services as customers leverage more of Microsoft’s AI Business Solutions and Azure.

Partners said key growth drivers included expanded low-code adoption and increased Power Platform demand and AI. Overall, they are optimistic about the revenue opportunity not only from AI but also from core low-code.

For more details on the Power Platform opportunity, please reference The Partner Opportunity For Microsoft Power Platform.

• Deployment services opportunities are increasing. Power Platform engagements often begin with envisioning workshops and discovery sessions, identifying challenges and pain points. This leads to proofs of concept followed by deployment. Microsoft supports its partners in this early work and provides funding for these engagements, helping partners progress and win deals. Interviewed partners said this funding helps remove sales hurdles, unlocks opportunities, and drives revenue. Deployment services attach at a high rate, with overall opportunities growing due to the trends discussed previously.

• Advisory services have risen in importance. Partners said advisory services have steadily become more important, and customers today are more willing to pay for them than in years past. To recognize the benefits of low-code platforms, customers must plan, establish governance foundations and best practices, and train their teams. Advisory services include COE setup, governance, and adoption and enablement (e.g., training, building with clients, etc.). Partners also deliver advisory services flexibly, including supporting customers that previously undertook low‑code work and now need help adding governance, activating citizen developers, or rebooting their efforts.

• Core low-code solutions development services are growing. Building apps, automations, and pages with Power Platform is the core revenue opportunity for partners, and demand is increasing. Partners shared numerous examples of customer challenges and creative solutions that delivered improved business outcomes. Deal scope varied significantly based on the complexity, number, and scale of use cases, not simply the number of employees. Another factor partners had to consider was the extent to which smaller customers would do this development in-house, particularly for less complex use cases, or outsource it. Partners emphasized that while agent-related work is expanding, apps, pages, and automation remain in strong demand. With Power Platform’s evolution, partners are infusing AI into the apps and automations they build for customers.

• Managed services, including factory approaches, are significant. Managed and ongoing services represent an important part of the revenue opportunity. These services include support and enhancement for developed solutions, as well as ongoing advisory (e.g., governance, COE management, and adoption and enablement) and continued solutions development such as factory approaches. Partners described factory models where they work with customers to identify and prioritize use cases and then iteratively build solutions. Deal sizes varied depending on the number of use cases and their complexity. Factories typically lasted multiple months, and partners shared that they did renew over multiple years, depending on the customer.

Secure AI Productivity

Secure AI Productivity is the broadest solution area and the core of Microsoft’s productivity story. This includes the various Microsoft 365 SMB SKUs such as Business Standard and Business Premium, SharePoint, and Windows 11. More SMBs are also moving to the Enterprise SKUs for the enhanced capabilities around security and compliance and features such as Teams Phone. Secure AI Productivity includes a range of security and compliance solutions, varying by SKU, and AI Business Solutions partners are increasingly expanding their capabilities in areas such as identity management and data governance/protection to support Business Premium and E5. This growth in security capabilities is a necessity if a partner wants to fully support their customers on an AI journey.

Secure AI Productivity is almost always the starting point for new customers, even if AI is the catalyst for the sales conversation. Many of the other solutions areas such as Converged Communications and Cloud and AI Endpoints are a natural extension, either as part of the SKU or add-on license. For existing customers, a large sales motion is the Business Standard to Business Premium or E3 migration, which creates a lot of new partner opportunities. Looking to the future, partners are optimistic that smaller customers will move to E5 or even E7 for enhanced security and compliance capabilities required for the effective management of AI.

• Deployments size varies greatly between entry level and advanced SKUs. Because of the breadth of solutions that make up Secure AI Productivity, the full deployment at a new customer can take a relatively long time. Furthermore, the constant addition of new capabilities means that there is always more that a partner can do in future phases. This is especially true for Business Premium and when an SMB moves to the Enterprise SKUs. Initial deployments range anywhere from a couple of weeks to several months. Deployments typically begin with a set of workshops to conduct requirements and gap analyses, and almost all workshops move forward to full deployments. There is also renewed interest in cleaning up existing SharePoint Online deployments because they are a primary repository for Microsoft 365 Copilot; if a company is still on-prem, it needs to migrate to the cloud to take advantage of AI.

• Advisory services are increasingly important as companies try to maximize the benefits from their investments. IT organizations at SMBs are very often understaffed and are increasingly being asked to do more with less. This is leading to vendor consolidation by adopting features already being paid for in the various Microsoft 365 SKU. Achieving the desired benefits requires a range of advisory services, including planning, training for IT teams, and change management in terms of business process redesign and end-user training. Partners also report that customers are more willing to pay for advisory services because of AI’s disruptive capabilities and the potential for large-scale benefits. Across all areas of Secure AI Productivity, these advisory services are worth approximately 50% of the deployment opportunity, and partners typically lead these efforts because customers do not have in-house capabilities or spare capacity.

• Monetizing in-house IP is the largest component of solutions development revenue. Partners continue to create IP that fills the white space around Microsoft’s productivity solutions. These can be features that business users interact with, automation tools for IT organizations, and IP used internally by partners for processes such as SharePoint migrations. Partners reported more success transacting in the Microsoft online marketplace compared to previous years, and this was more pronounced in the SMB space than enterprise because the IP typically does not require customization. An emerging area of interest is creating more value in SharePoint with agents and workflows.

• Secure AI Productivity is where broad managed services typically attach. Because of small IT organizations, SMBs undertake considerably more outsourcing than enterprises. This includes keeping-the-lights-on and evergreen services, business user-support at various tiers of service, and basic-data-security managed services in support of AI adoption. The latter category is growing and requiring additional investment by many partners. Some partners said that they will only take on a new customer if it purchases managed services. One interviewee said: “A typical managed services contract for an organization with 50 to 100 employees is around $6,500 per month. Almost every customer who buys the licenses from us also attaches managed services.”

Converged Communications

Converged Communications includes everything within the Microsoft Teams solution family — Teams, Teams Premium, Microsoft Teams Phone, and Microsoft Teams Rooms along with the related Microsoft Places. Because Microsoft Teams Phone and Teams Rooms are often served by specialized partners and have different market dynamics, each of these solution areas is discussed separately.

Microsoft Teams

Microsoft Teams is closely related to a customer’s Secure AI Productivity journey, although its decoupling from the Microsoft 365 licenses means it is treated separately. Teams continues to be the place where work gets done, including interacting with genAI and agentic AI solutions. For this reason, Teams has become more important to both SMB customers and the partners who serve them.

• Almost all existing Microsoft customers are already deployed on Teams. Therefore, most deployment work is related to updating how Teams is used to integrate AI into the flow of work. These are small but important projects as enablers for larger-scale AI work. If it is a net-new customer moving to Microsoft, there is still some setup work to be done. Teams Premium adoption in the SMB space is low, and partners do not see that changing much.

• Teams governance is still in high demand. Partners continue to do work around Teams governance and have incorporated aspects of AI governance into these offerings. Advisory services also include training and change-management services on the use of AI within Teams.

• Solutions development primarily consists of building Teams applications. Power Platform is the most common development tool for building applications and custom workflows. The value and attach rate for these services are considerably less than with Enterprise since SMBs are more likely to use out-of-the-box solutions or customizations/configurations sold by partners as IP.

• Managed services is excluded here to avoid double counting. Because Teams is so closely related to Secure AI Productivity, Teams-related managed services are bundled into those offerings and excluded here.

Microsoft Teams Phone

Forrester interviewed a wide range of partners about their voice offerings, including telcos and more generalized productivity partners. All of them spoke about how AI is increasing and changing the type of work that they do, especially the deployment of voice-related agents. Some partners reported that their more traditional voice work and associated revenues are decreasing because of the reduction in the number of phone calls being made. One partner explained: “Traditionally, 30% of employees were enabled for voice. That has been trending down, and it will probably be closer to 10% soon.”

That said, partners still see migration opportunities from legacy phone systems, and more often, moving from other cloud-voice vendors to consolidate onto Microsoft. This is especially true if a customer is considering Microsoft 365 E5, which includes Teams Phone, but since Team Phone is not included in Business Premium, it is a harder sale. Partners also said that there continues to be a close relationship between Microsoft Teams Phone and Teams Rooms, with each driving opportunities in the other area. (Business Central opportunities are discussed as part of the Service solution area.)

• Deployments are of short duration, with the goal of getting customers to managed services. Teams Phone deployments typically take two to eight weeks. Setup makes up approximately 10% to 30% of the total deal value, although some partners have moved all upfront costs into a managed services model.

• Advisory services consist of planning work and change management. Voice continues to be fundamental to business processes and business productivity, and there are now more ways to communicate than ever before. Perhaps more importantly, the increased use of AI agents as part of voice solutions is creating new advisory opportunities. This has resulted in advisory work to redefine the role of voice in the workplace. Training remains the large part of the advisory opportunity. Overall, advisory services are worth 25% of deployment revenue.

• Partner-built IP is the largest component of solutions development. SMB voice deployments do not typically require much customization, and integrations use out-of-the-box connectors. Partners are selling IP that they built for streamlined management and to fill feature gaps within the Microsoft solution, both bundled into their offerings or sold separately. There is new interest in voice-related AI agents, and partners are beginning to build some of these.

• Managed services revenue, including calling plans, represents 40% of all revenues. Partners have a wide range of offerings, from basic support managing moves, additions, changes, and deletions (MACD) to full outsourcing. With voice now being part of digital IT rather than a completely separate technology stack and skills base, IT organizations that use external managed services want voice bundled into that outsourcing. That said, the trend of fewer calls being placed is, in many cases, reducing calling plan revenues. Partners are hoping AI-related managed services will help make up for these reductions in the years to come, but it is not clear if there will be a level of adoption and complexity to warrant significantly higher managed services prices. One partner with very mature SMB voice managed services receives approximately $10 per user per month for its top-tier service for a 500-line organization, including IP and upfront deployment work. In the long term, their margins are 70%, and 90% of customers renew.

Microsoft Teams Rooms And Microsoft Places

Microsoft Teams Rooms has also benefited from the rise of AI. In order to fully take advantage of AI in meeting rooms, both the software and hardware solutions need to be improved. A counterforce to the AI-related growth is the global increase in hardware and labor prices. Generally speaking, partners said that these cost pressures have not resulted in smaller budgets; rather, fewer rooms are being upgraded. This has also put downward pressure on profit margins. Microsoft Places is less important at smaller organizations because of simpler floor plans and fewer meeting rooms, and the revenue opportunities are relatively small. That said, the post-COVID-19 return to office and hybrid working have led to increased interest.

• Rooms that support the use of AI result in increased deployment revenues. Bring-your-own-device (BYOD) rooms are common in the SMB segment, but AI-optimized rooms require better hardware as well as better room design/construction. This has resulted in higher-end buildout projects and larger deployment revenues for partners. Another AI-related trend is an increase in the number of rooms, but the average size is smaller. These are less costly to build out than larger rooms, creating some downward revenue pressures. Partners are trying to keep these upfront costs as low as possible to win downstream managed services contracts. Microsoft Places deployments are comparatively much smaller, with most of the work consisting of mapping out offices.

• Advisory service opportunities are very small. Advisory services consist mostly of creating templated room designs that reflect best practices along with creating training materials for using rooms. Because of relatively simple and out-of-the-box deployments, the need for advisory services is negligible.

• Hardware is the lion’s share of solutions development revenue. Hardware prices have increased because of global inflationary forces and the aforementioned need for better hardware in support of AI. Per-room hardware for a basic room can range from $5,000 to $10,000, and margins can be as high as 25%. Partners are also selling their own IP for more efficient room management, including scheduling and remote diagnostics. Partners are increasingly incorporating AI agents to improve efficiencies and provide better service.

• Managed services are growing in popularity as meeting rooms become more critical. Per-room managed service prices vary widely depending on the service level required and typically ranges between $50 and $150 per room per month. More basic rooms are at the lower end of the price range, with remote troubleshooting and a set number of hours of on-site support. More inclusive contracts include quarterly or annual room inspections.

Cloud and AI Endpoints

The Cloud and AI Endpoints solution area includes partner services for cloud PCs, virtualization, and endpoint and device management. These services support solutions such as Windows 365, Azure Virtual Desktop, and Intune. Interviewees noted growing Intune adoption and increased customer migration from other vendors’ virtual desktop infrastructure (VDI) solutions. In addition to overall momentum, Windows 365 deployments are attaching more frequently as Windows 365 Reserve and Windows 365 Link strengthen the value proposition and expand potential customer user bases. Partners are optimistic that Windows 365 for Agents will drive growth, especially in advisory services. This solution area also connects with Secure AI Productivity and broader security offerings.

CSP partners also benefit from selling the solutions to customers. They earn a margin on the Windows 365 licenses and on the Azure Virtual Desktop consumption. Partners aim to attach managed services and offer ongoing value to customers to retain this recurring revenue stream.
 

• Windows 365 is deploying more often. Microsoft partners deploy Intune, Windows 365, and Azure Virtual Desktop. These engagements often start with an assessment or workshop, followed by a pilot or proof of concept and then full deployment and rollout. Project sizes vary based on customer complexity, size, use cases and personas, global scale, and prior state, such as whether or not Intune was already deployed.
  Deployment demand was stable or growing as customers faced rising costs from legacy on-prem VDI. Many are shifting to modern cloud endpoints to optimize costs and consolidate vendors and tools. An interviewee summarized: “We are having a lot of conversations with customers around what they have today on-prem. There are customers that are not happy to continue to be on-prem. Especially with the changes in [competitor’s] organization and price increases, the customers are just tired, and they are looking for other solutions.” As a result, interviewees noted that Windows 365 deployments are increasing as Windows 365 Link and Windows 365 Reserve strengthen the value proposition and expand user bases. One interviewee said, “With Windows 365 we are seeing a greater quantity of opportunities coming in.” Partners also expect Windows 365 for Agents to drive future growth, alongside factors such as AI compute requirements, scenarios where employees need to run processes with laptops closed, and more. An interviewee said, “Windows 365 for Agents will grow in the future.”

• Partners expect Windows 365 for Agents to grow advisory services. Microsoft partners offered adoption and training, change management, communication, strategy, and other advisory services to customers deploying endpoints. To advise effectively, partners needed to understand businesses’ existing endpoints, use cases, personas, and goals. This work took place both during initial planning and future phases. An interviewee said: “Those customers want that partnership. They want that advisory that you are there and you could help them across the board.” Looking ahead, partners also anticipate growth in advisory services tied to Windows 365 for Agents.

• Solutions development services are stable. Partners commonly use IP to streamline the delivery of cloud and AI endpoint services. Some partners also sell their own IP, although it attaches less frequently. They also perform custom integration work for more complex environments.

• Managed services are the largest part of the opportunity. Post-deployment, Microsoft partners sought to attach managed services for Cloud and AI Endpoints. These offerings included managed Intune, Azure Virtual Desktop, and Windows 365, along with device management, monitoring, and support. Attach rates and revenue varied based on the solutions deployed, the number of users, the level of support needed, and broader Microsoft 365 and managed services usage. One interviewee summarized the value: “If everything plays right, an engagement could lead into managed services. Our ultimate goal as a company is to be able to turn every customer into managed services because recurring business is valuable.”

ERP

Forrester defines ERP as “a modular, interoperable software suite that is evolving beyond being a system of record to become an intelligent orchestration engine that delivers financial control, operational resilience, and strategic insight through integrated, cross-domain process execution.”¹¹ In ERP engagements, partners help businesses customers transform finance and operations using Dynamics 365 Business Central. Microsoft partners also help large enterprise customers by leveraging Dynamics 365 Finance and Dynamics 365 Supply Chain Management, as discussed in the accompanying case study.¹²

Interviewees said business demand for ERP, and Dynamics 365 Business Central in particular, is strong. Key drivers include AI, cloud adoption, and customer growth. The services mix has been shifting, too. To support smaller businesses, partners have been aiming to deploy faster: increasing business process optimization advisory, starting to deliver prebuilt and custom-built agents, and growing ongoing services for development and support. Overall, partners are optimistic, particularly because customers of all sizes see strong synergy between AI and ERP.

Interviewees said ERP often enables growth in other solution areas. They spoke about how Dynamics 365 Business Central projects often involved or led to Agents, Power Platform, Sales, and Service work.

CSP partners also recognize revenue from reselling Dynamics 365 Business Central including the Premium, Essentials, and Team licenses and earning a margin. Many interviewees said that their organizations avoided discounting these licenses.

Forrester calculated the ERP opportunity per knowledge worker to align with other solution areas and presents the data on a per-user basis. However, partners said that employee and user counts matter less for ERP, Sales, and Service than it does for non-Dynamics 365 solution areas. For example, an interviewee said: “For ERP, it could be a 20-person company that needs Dynamics 365 Business Central for every user. It could also be a company with 1,000 employees that also has 20 users for the finance department.” Instead, partners consider client and project complexity when evaluating ERP revenue opportunities.

• Businesses see value in deploying ERP for AI and want to move more quickly. To deploy Dynamics 365 Business Central, customers use Microsoft partner services such as workshops and setup; proofs of concept; initial integration, system configuration, and data migration; and rollout. Interviewees said their organizations are seeing strong demand for Dynamics 365 Business Central deployment services. They attributed this demand to AI, the shift to cloud-based business applications, and customer growth. They also said customers understand the value of data and AI with ERP and see clear benefits in leveraging a single platform.
  For smaller customers with up to 50 users, total ERP project deal sizes regularly range from $100,000 to $500,000 (including deployment, advisory, and solutions development), though interviewees provided higher and lower examples. When deploying Dynamics 365 Business Central, many partners aimed to accomplish this more quickly to accelerate time to customer value, managed services, and licensing revenue. Partners shared unique engagement examples for smaller projects including packaged preconfigured engagements to reduce costs and complexity and engagements that built deployment services into ongoing managed services costs without upfront project fees.

• Business process optimization is valuable for smaller businesses. As a core part of an ERP project, partners provide upfront strategy and planning, training, change management, governance, and related advisory services. Partners also help customers adapt and optimize their ERP-related business processes. Smaller growing businesses see value in adapting their processes to leverage Dynamics 365 Business Central following best practices as compared to extensive customizations that might lengthen the deployment timeline. An interviewee said, “Advisory is where we differentiate ourselves.” Interviewees said advisory services always attach, but the scope varies. They estimated that strategy or training components often constituted anywhere from 15% to 30% of ERP projects for smaller businesses.

• IP has an outsized influence on the ERP opportunity. While deployment services are part of every ERP project, businesses regularly require extensions and more advanced integration work. For smaller businesses, this work is typically less as a percentage of a project as compared to a more complex enterprise. For example, one interviewee said that a Dynamics 365 Business Central project may have two to three integrations compared to 15 or more for an enterprise ERP project. They estimated that this work might be up to 40% of an ERP project for a smaller business compared to up to 60% for an enterprise. Many partners discussed aiming to reduce customization and extensions during initial deployment. Instead, they are increasing advisory work to help customers adjust business processes rather than technology. This approach also enables faster deployment and creates opportunities for solutions development through ongoing managed services. It also leads to faster license revenue.
  Beyond deployment-related development services, partners continue to build IP to accelerate deployments and migrations, deliver greater customer value, and win more deals with demonstrated technical and industry expertise. Partners leverage subscription models, charge one-time fixed fees, and otherwise bundle in the cost of IP into ERP projects. An interviewee explained the value of this IP: “We do not have a Dynamics 365 Business Central customer that does not have our IP. The main driver is the industry-specific vertical functionality that we have, and if we did not have that, they would not contact us.” Interviewees also told Forrester that they are now building and creating agents as a part of this work and that they expect this to grow.

• Managed services are and will be even more important. Post-deployment, partners provide ongoing management, business process optimization, and continuous improvements, including AI agents. This represents a shift from earlier business models that focused primarily on break/fix work and updates. One interviewee said: “In Business Central, we find that our managed services work is about 60% net-new projects and 40% support. Customers tend to have a lot of post-go-live requests for new development. So we have really put a big emphasis in the Business Central practice about being good at that and having the bandwidth to be able to do that.”
  Another interviewee said: “It is a huge deal to us to provide a cradle-to-grave relationship with our clients. … Support is a misleading name. Within our support billable hours, about 10% is break/fix and 90% is incremental continuous improvement work.” Partners are also successfully attaching managed services for Business Central customers, and some will not take a deal if a customer is not planning to purchase managed services. An interviewee asserted, “If they want to be a customer with us, they have to buy managed services.” Deal sizes varied based on the scope and complexity of the ongoing work, and many partners offered standard-sized packages for smaller businesses.

Sales

Partners in the Sales solution area help businesses transform how they target, acquire, and retain customers by improving sales and marketing functions. They do this by providing delivering a broad range of services for Dynamics 365 Sales and Dynamics 365 Customer Insights. This solution area is growing as businesses grow and adopt AI in sales. It also now includes building sales and marketing agents on both a project and ongoing basis. Partners are optimistic about future growth and innovation in this solution area, particularly around agents.

Sales also integrates closely with other Dynamics 365 solution areas. Interviewees noted that Sales deals in particular often lead to Services projects. One interviewee explained that if smaller customers have a propensity toward Microsoft, they will usually go all in, even if it is done in a phased approach over time.

CSP partners also resell these solutions to customers and earn a margin. An interviewee said: “If we sell a new engagement, we typically also sell the licenses. We have a big role in selling them because the customer wants to know which kind of license they need and how many.” Interviewees’ organizations valued this recurring revenue stream and aimed to both deploy quickly and deliver ongoing services value to maximize this revenue stream.

Forrester calculated the Sales opportunity per knowledge worker to align with other solution areas and presents the data on a per-user basis. However, partners said that employee and user counts matter less for ERP, Sales, and Service than for non-Dynamics 365 solution areas. Instead, partners consider client and project complexity when evaluating Sales revenue opportunities.

• Businesses want to deploy Sales with AI to grow. Deploying Dynamics 365 Sales and Dynamics 365 Customer Insights often includes proofs of concept, pilots, deployment, and rollout. Deployment includes setup, initial integration and system configuration, and data migration. Businesses view these solutions as a part of their growth journey and see AI as a means to accelerate and increase value. As with ERP projects, Sales projects varied widely in duration and size, depending on business complexity and prior states. As a rule of thumb, Sales projects were typically smaller than ERP projects and comparable to or smaller than Services projects. Interviewees shared example Sales deal sizes ranging from $200,000 and up (including deployment, advisory, and solutions development). Many partners were aiming for faster deployments to speed scaling, time to value, and time to license revenue. One interviewee shared an example of leading with a prepackaged solution to accomplish this.

• Businesses need Sales advisory services. Businesses typically need advisory support before, during, and after Dynamics 365 Sales and Dynamics 365 Customer Insights deployments. For partners, this includes strategy, change management, training, and related advisory work. AI has increased demand for these services, and customers are increasingly willing to pay for them. Forrester modeled total Sales advisory services at approximately 20% of the initial project deal size.

• Partners are building CRM-focused agents. When deploying Dynamics 365 Sales and Dynamics 365 Customer Insights, businesses may need custom development and advanced integration. This custom development increasingly includes CRM-focused agents. Some partners now offer prebuilt agents as standalone IP alongside apps and accelerators. An interviewee explained how this work was evolving: “We build the agent for the customer. The other work is fine-tuning, maintaining, and improving the agent.”

• Managed services are the target. After deployment, partners provide ongoing services, from basic support and periodic updates to continuing enhancements. This includes building new CRM-related agents for new use cases and improving and governing those agents. Many partners had “T-shirt-sized” managed services models for smaller businesses, with options for growth as customer needs increased. Similar to other solution areas, partners have been aiming to grow managed services as a share of revenue.

Service

Partners help businesses transform how they serve customers — either via self-service or an interaction with a customer service representative — before, during, and after a purchase with customer service solutions (CSSes).¹³ Microsoft partners do this by offering services for Dynamics 365 Customer Service, Dynamics 365 Field Service, and Dynamics 365 Contact Center. Interviewees told Forrester that demand for these solutions and services was strong, driven by goals to scale and improve service effectiveness and efficiency. Partners are successfully deploying Dynamics 365 Contact Center as it resonates with customers, and they are doing more agent-related work, which they expect to grow.

The Service solution area overlaps significantly with Sales. Partners said Service projects often follow Sales projects, though they can also lead. Dynamics 365 Contact Center and Teams Phone also create complementary opportunities for partners. Smaller businesses may often start with one solution and progress to other Dynamics 365 and even Microsoft 365 solutions.

Similar to ERP and Sales, CSP partners also guide their customers in terms of the right licenses to purchase and the appropriate quantity. As a result, they earn a recurring margin on those sales.

Forrester calculated the Service opportunity per knowledge worker to align with other solution areas and presents the data on a per-user basis. However, partners said that employee and user counts matter less for ERP, Sales, and Service than they do for non-Dynamics 365 solution areas. Instead, partners consider client and project complexity when evaluating Service revenue opportunities. Partners should also consider what modules they deploy and service. Based on interview feedback, Forrester factored in economies of scale when calculating the opportunity.

• Services deployment opportunities are growing. Implementations of Dynamics 365 Customer Service, Dynamics 365 Field Service, and Dynamics 365 Contact Center typically move from assessment and discovery to proofs of concept, pilots, and full deployment. Deployment includes setup, initial integration, system configuration, and data migration. Businesses sought to deploy these solutions as they grew to improve service efficiency and effectiveness with AI. These projects were similar in scale to, or slightly larger than, Sales projects and often included additional automation work. Interviewees shared examples of typical Services project deal sizes for smaller businesses ranging from less than $100,000 to $200,000 or more (including deployment, advisory, and solutions development) for each of the solutions. They did explain that there could be economies of scale for deploying multiple solutions. Additionally, partners said some customers want faster deployments to achieve quicker ROI, which could lead to smaller initial projects but more follow-on work after deployment. Interviewees also shared examples of packaged solutions.
  Partners said that Microsoft gave them a competitive edge when winning Service projects. An interviewee said: “The nice thing about Microsoft’s contact center offering is they started from scratch and built it from the from the ground up. It has integrated innovative functions and features built into it that customers on old technologies have not experienced before. When they see it, they get excited.”

• Advisory services continue to rise in value. For CSS deployments, partners provide business consulting, governance, COE setup, change management, training, and related services. As with other solution areas, partners emphasized the importance of these services. An interviewee said: “Especially with AI developments, the first phases of the project and the advisory become more important. It becomes more important to scope the deal and really understand the business of your customer addressing the change. It is a growing segment of our revenues.” They further elaborated on how customer expectations are shifting toward business process advisory: “Our customers are more and more saying that they want to have a standard solution because they want to move along with the Microsoft developments. They do not want all these customizations. They ask, ‘Can you help us make our business fit to the standard instead of the other way around?’”

• IP, and increasingly AI agents, are a key part of the revenue opportunity. As with Sales, partners use their own IP, including agents, to win services deals and deliver projects faster. Similar to Power Platform, partners use agents as an overlay for customers on competing solutions, creating an entry point for future migration. An interviewee explained, “Where a full-on Dynamics implementation may not be relevant, we do have Microsoft 365 Copilot agents that we are bringing to the table that overlay other competing contact-center-as-a-service platform offerings.” Partners also deliver customization and integration work for businesses.

• The Service customer relationship continues post-deployment. After deployment, ongoing offerings include monitoring, standard support, and enhancements. As partners aim for quicker deployments, managed services become more important for post-deployment revenue as they add features for clients. An interviewee explained how well this was resonating with smaller customers: “They do not have these big IT shops. They are looking to outsource all that, and we will provide a managed service for them at a good return on their investment to drive their business forward and become their go-to partner.”
  They also explained how managed services for one solution area can drive the overall revenue opportunity: “We like to provide the ongoing managed service for two reasons. One, it is a revenue stream for us, but two, it also keeps us engaged with the customer, so we understand their other business problems. There are Microsoft solutions that we can expand and help them solve those problems in a very real way.”