Steve has another chat with Charles Lamanna

In this episode of "Steve has a Chat", I try and sneak up on Charles Lamanna again, but no dice. Recently promoted to CVP, Citizen Application Platform I wanted to see if I could get Charles to help clear up some of the confusion around licensing and API limits that seem to be the topic of the day. He was more than happy to help me set the record straight. Enjoy!

Full transcript follows:

Charles Lammana: Hey Steve. I bet you're recording this, aren't you?

Steve Mordue: Charles, you know I am. Did I catch you at a time where you could talk for a little bit?

Charles Lammana: Yeah, for sure. I'm about to go to dinner, but I'd talk to you anytime Steve.

Steve Mordue: I appreciate that. So we're recording this on Friday the 13th, that's ominous. And right now there's a lot of questions out there in this space, and I thought, "You know what?" I'm going to grab you and see if we can't answer some of these, for some of these folks. I've been fearlessly FUD fighting for the last week or two. I thought I'd just go grab the horse and get his mouth, so.

Charles Lammana: Sounds good. I can guess what you're fighting, but I'll let you share that first.

Steve Mordue: I will. Before I do that, congratulations on the promotion.

Charles Lammana: Thank you very much.

Steve Mordue: Corporate Vice President of Citizen Application Platform, right?

Charles Lammana: Yeah, that's right. I think I dilute the Microsoft CVP brand a little bit, but-

Steve Mordue: I don't think so. I don't think so. Are you still seeing that girl that you introduced me to a little while back?

Charles Lammana: Yes, yeah. And you know what's funny is, the place I'm going to dinner is actually the same place that we ran into each other-

Steve Mordue: Oh yeah? Well I guess she chose wisely then, in selecting a boyfriend. Should we read anything into the Citizen being part of the title?

Charles Lammana: So Citizen Application Platform's been the name for our team for a while and the main focus there is not like citizens of the United States or any country, but instead that anybody, even if they're not a professional developer, can use the Power Platform to go create applications, create dashboards, create flows and so on. That low code element. So that's the real focus, why we have the Citizen Application Platform.

Steve Mordue: So we're already shortening that to CAP?

Charles Lammana: Yeah.

Steve Mordue: You guys calling it CAP inside too?

Charles Lammana: Yeah, it is a mouthful.

Steve Mordue: It is.

Charles Lammana: And people ask me, do I work with the government or something. But nothing related to the government, just making it so anybody can build apps.

Steve Mordue: So I think that a lot of the questions, of course, are coming around from the Dynamics 365 guys. It's interesting because we used to all be Dynamics 365 guys and now there are Dynamics 365 guys and Power Platform guys. And they overlap some, but there's clearly a path for those like myself and others that have decided, "We're going to go Platform all the way." And a lot of the partners that are still heading down the first party all the way, and some of the confusion that's out there around some of the new licensing things. The two things that keep popping up on me and Mark's live weekly show, have you heard that yet by the way?

Charles Lammana: I haven't, but I'll check it out. If you guys are talking about licensing, I got to hear what you're saying.

Steve Mordue: Oh, we're just saying wrong stuff I'm sure. But licensing and of course the API stuff popped up and I've been responding to both those and I realized that one of the things I was saying might not have been correct on the new per app licensing. Now you know that that $10 per app licensing is blowing up everybody's head, right? Everybody's thinking, "This is crazy. This is going to blow up the market. How can anybody make any money?" But clearly this is a scale play and I was just under the assumption, I guess because of the way I was reading this stuff, that that $10 license was for a single app that you just built on the platform. And Ryan Cunningham confirmed with me the other day that no, you could use this on the Dynamics 365 instance as well if a user's only using a single app that doesn't use any restricted entities.

Steve Mordue: Well there's hardly any restricted entities in the sales app and I thought, "Well, I mean you're just going to have a bunch of people that are going to pull out a couple of things in the sales app they may not be using anyway and start paying 10 bucks instead of 95." Clearly that's not the intent. Was he wrong, am I wrong or is there just this idea that, "You know what? We're going for scale at 10 bucks and everything else, get out of the way"?

Charles Lammana: You're both right, but let me inject an additional piece of information. So even in a Dynamics instance you can use the new per app per user license, that's $10 for power apps, as long as you don't use any of the restricted entities or any of the application IP, like a schedule board or something from field service. The piece of information that's missing is that list of sales restricted entities as part of the new per app per user license, there's a few more entities from sales that will be added to that list.

Steve Mordue: Now it starts making a little more sense. Yeah, because I was thinking whoever owns the sales app must be crapping their pants over there at this stuff. You've got to throw him something to keep his PNL going. Are you at liberty to say what those are yet?

Charles Lammana: Yeah, so I don't have the exact list off the top of my head, but I mean the intent is exactly as you described with the list that we have. And that is to make sure that if you are using the dynamics for sales application IP, which has a whole giant engineering org working on it, then it's only fair to pay Dynamics 365 for sales licenses or we'll go purchase them. So it's not going to be contact, but the ability to create an opportunity or manage opportunities, that probably should be restricted, if that makes sense.

Steve Mordue: Yeah. That's where it starts kicking into the logic and certainly those aren't components of the platform by itself, whereas contact is, and that's where you start bringing in the Microsoft vetted logic around all that stuff. So that makes sense. That makes sense. Plus it's good for me, as you know, from what we're doing, I'm sitting here thinking, "Oh great, everybody's just going to go start paying 10 bucks for the sales app and I don't have a business anymore," so I'm still good.

Steve Mordue: On the API stuff, and I've been kind of comparing this, there's a lot of FUD out there and frankly I've probably created some in the past, I know, I've not always said positive things, but at least I said things that were true. And lately, every time you guys go and announce something, and I'm just picturing you guys sitting back there reading that thing a hundred times thinking, "Okay, this is going to be fine, right? Nobody's going to have a problem with this." And it pushes a publish button and all hell breaks loose. And I feel for you guys, I really do, especially when these folks just attack anything you say and try and turn it into the worst case possible scenario. And the API limits I think is the one that all I'm hearing people say is, "Open a contact record. It does 50 API calls," you know, they're clearly taking that conversation in a direction. And my understanding from you guys is that when you do things like this with these limits, you're looking at a fraction of the market that's outside of it. I mean 95% of the people out there today shouldn't even have to think about this. Is that a fair statement?

Charles Lammana: That's exactly right. And I mean all the limits are a bit ... at this point Dynamics is such a big service with such a big surface area and so many customers, we can do pretty good quantitative analysis of what a typical user or a typical customer does. And we did that and that's where the API limits came from because our main focus, put very simply, we want basically all except the most sophisticated complex implementations to just require user licenses, because it's just such an easier conversation for the customer and Microsoft. I have a thousand sellers, I want a thousand sales apps, that's it, boom, done. You don't want to have to go architect, "How many API calls did they make? How many integrations do I have?" And basically our position is you shouldn't have that conversation if you're just going to do this, the vanilla sales workload or vanilla general power apps, workloads over CDS; you don't need to go even think about API calls.

Charles Lammana: And we do that. We do it because there are customers who do use a lot of API calls and it is important to their implementation and they'd like additional API capacity where there's no way for them to purchase it from Microsoft today. So we have to have a limit and then we have to have a way to purchase incremental API calls in order for that model to work. But again, the idea is we're not selling infrastructure or PaaS, there's no cores, none of that stuff. We just want customers to be able to buy USLs for power apps, for Flow, as well as for Dynamics.

Steve Mordue: Yeah. I think it kind of creates some fairness too because obviously we've had issues in the past with a certain segment of customers that are getting a lot more from the platform than intended and everybody else is using it as intended. So I can imagine if you've got some customer that, because of how they're using the platform or running their business or generating a zillion API calls, well they should be paying more. They're getting more out of it. They're doing more with it than the average customer who isn't. So I think it makes it a little more fair. I've always been annoyed at thinking that my customers or myself am subsidizing other customers overuse, you know?

Charles Lammana: Exactly, yeah. Tragedy of the commons, right? That's what the problem is with the multi-tenant SAS. If people can use way more infrastructure at no incremental costs or has issues, we're just trying to shape that behavior. But I mean I'll own, from a Microsoft point of view, we could have done a lot more to more clearly communicate those changes and make it more obvious and provable that the vast, vast, vast, vast majority of our customers will not be impacted. And we kind of view it, and it's kind of funny, we didn't really expect such a pushback on it, but we viewed it as just like that little asterix that you have with your cell phone or cable provider where when I get my internet from Comcast I don't think about how many gigabytes I used to download, but there is a limit. I mean it's really big and I bet like almost nobody hits it, but there is a limit at some point of internet download I can go do with my internet provider. But they have those same types of protections. But I just don't worry about it because it's not front and center. We should have done more to make it clear that that's the intent of these changes, to be that little asterix that you really don't have to think about unless you're doing something well outside the normal bounds.

Steve Mordue: You know, and we had the same challenge with the storage when we tried to change the storage for the better. And when that first got announced all you heard was, "Storage is going up eight times," and everybody's thinking, "Oh my God." And you guys retrenched a little bit, came back with a little clearer story about how that would work and I'm sure some people are paying a little more, but none of my customers are. So that doesn't seem to have impacted but a fraction of customers also.

Charles Lammana: Yep. Yeah. And a lot of those changes, our whole goal is we want our billing model to also not drive weird behavior or bad behavior that make it hard to implement. And the old storage instance cost model did that. So I mean that's why it was really important to change and some of the new API call models also do that. We just wanted to make it so if you build things the right way, the licensing and billing model will reward you for a more reasonable price.

Steve Mordue: So you say you don't want to reward or create weird behavior, but we just launched a $10 skew that sits on a platform that has access to all of the XRM capabilities. If somebody was motivated enough and had enough budget they could essentially build the entire Dynamic 365. They wouldn't, and as I stand back and kind of look, from my perspective, haven't been probably one of the first people in there when there still was missing parts and seen them come, I've seen the portals come, we've seen the Outlook come, we've seen the accelerators now have CDS only versions, we're just seeing more and more stuff coming to the platform, that that's got an awful lot of appeal to people to ... I won't say do weird behavior, but who think, "I want to get off this $95 skew if I can." I mean what's the thinking inside on that? I mean that's got to be expected?

Charles Lammana: Yeah, I think just our viewpoint would be if we ... I would say we are quite confident on the Microsoft side that the value and the intellectual property and the ongoing services and support and SLAs and integrations that come with the proper Dynamics applications can and will continue to command those prices. And it's not always $95, we also have Sales Pro and Customer Service Pro which are a cheaper price. And even if you use the pro license or the enterprise license, it also entitles you to a multitude of custom applications in that same environment, which the $10 per user license doesn't.

Charles Lammana: So I think we feel pretty good about that value prop, and going back to the ... we don't want to do artificial things with our billing model. We think a platform for one app, $10 per user per month, that can unlock the entire world to build all their apps on that platform and we feel like that's the right price for it, the right level of cost between the customer and Microsoft. And we wouldn't want that statement, which we believe to be true, to go be limited because we also think that we can sell a finished SAS application in the case of sales or service for pro and enterprise at a higher premium.

Charles Lammana: We think both of those things can exist and we will have blends. Like we will have customers who will repurpose their sales license for platform capabilities and we'll have customers who will use our platform license to go and try to create a mini CRM, and we think that's okay. I mean that's just their own calculation based on their value. But we're aiming for the 95 to 99% of the entire world where we think the value prop works pretty well.

Steve Mordue: Yeah, I mean I know that when I look across our customer base there certainly is a significant percentage of those people that are heavily using a lot of those high value features that you talk about. And then there's a segment that just never did, they're just kind of using basic stuff, and those are going to be pretty simple candidates to say, "Hey, you know what? You're not using all this stuff, just drop down." Or try and do a sales job to get them to start using it, because the worst case scenario is they aren't using it and they feel like they're paying too much and then they just churn out. And I'd rather move them down and keep them on something that they want, maybe they grow back up.

Steve Mordue: That's another story that's had a little confusion out there is that migration back and forth story. Now, my understanding today is of course if we start on CDS and the customer says, "Hey, this is pretty good, but I want to get some of those snazzy features in the first party," right now we're looking at a migration project, I think. Is that something that you guys think will be fixed or is it something that is a concern or something to think about, or are we just kind of looking at those as different customer types?

Charles Lammana: No, I'd say we definitely don't want to require a data migration like it does today. We want to get to a proper model where ... because I think of CDS and the platform as almost like Windows OS, right? You buy the Windows OS and then you'd go buy all the apps that you want and install it on the OS. And it's not like if I buy Windows and I install Office, but then I want to install, I don't know, Adobe Acrobat or something, I have to go re-image my Window server, right? So we want to make that be the right layering, and that's really just an architectural legacy reason for being that way today. But longterm, absolutely, you want to allow it. So you start with CDS, you can add sales, you can add service, you can add field service, you could add Talent, you could add Project Online; you can add and mix and match all these different applications on top of that CDS environment.

Charles Lammana: And we have early positive signs where that happens. We can't do it for the core CRM app yet, but low approvals, which is modeled as an XRM app and Project Online from Office 365, that's also an app installed on CDS. Those, we actually have many customers who start with a blank CDS and then end up with both of those applications installed in addition to Talent, which is also an app on top of CDS. All those three apps added incrementally, organically over time on top of CDS. So that works great, we just need to go make it so the core CRM also can do the same thing. And that's just some legacy reasons, which as you know, we've been on a journey the last year and a half to go clean up and we're kind of going piece by piece, like Outlook, then Activities and server-side sync are all just some examples where we're hammering against that, but we think we'll get there, no problem, in the foreseeable future.

Steve Mordue: Yeah, I mean for what we've been trying to do with the RapidStart, the Outlook app was definitely something that we needed. I mean everybody was wanting something like that, so thank you for that. And you knew I was hammering you guys for it too.

Charles Lammana: Yep. You would never let me forget it. I mean I wanted to make sure it was done before we had this phone call happen again, but ...

Steve Mordue: No problem. You guys got it done. Appreciate that.

Charles Lammana: Yeah. Yeah, and I've heard quite a bit about RapidStart, so it's great to see the traction of a third party app bill on top of the platform, it's really exciting for-

Steve Mordue: Oh yeah, yeah, we're excited too. We're developing some now on top of the accelerators, so, and the ... you having much to do with the accelerator groups? Smith and-

Charles Lammana: Yeah, so it's not directly out of my team but we collaborate very, very closely with them. But yeah, I mean accelerators are so key because the world increasingly is going to industry-based motions, like if I'm a financial institution, do I really have to rebuild all the financial services goo that goes on top of a CRM or CDS all the time? They don't want to, so the accelerator just provides a ton of value out of the box.

Steve Mordue: Yeah. So they just, with the banking accelerator, I think it's the first one where they released a CDS only version and then some additional add on versions that might take advantage of some of the first party. And I was talking to James about that and he said there's a plan to kind of go back to the other ones. So as soon as they did that we took a look at that banking core, which is an accelerator, and put our accelerator on top of that accelerator, "That'll be real fast," and looking at trying to leverage those accelerators. I think that's going to be an interesting ... I'll be curious to see what the market does with something like that that's built on an accelerator. It'll be a good test for the market.

Charles Lammana: Jjust on the accelerator bit, for Dynamics 365, our core customer engagement or CRM app, the accelerators have been absolutely key the last six months to drive business.

Steve Mordue: Yeah, I've been hearing that.

Charles Lammana: Financial services places, man, it's been a lifesaver for us because customers just love to see that fast time to value. And then so just we think that accelerators are going to be really important for the platform, for the Dynamics apps and for third party apps and building our ecosystem.

Steve Mordue: You know, talking about data models and industry data models, what's the latest on ODI? Is that progressing as you had hoped? Is it going faster, slower or is it going to happen? What do you think, or is there too many people punching-

Charles Lammana: It's advancing exactly at the paces we would want/expect, and I'll expand on what I mean by that. ODI is one of those super industry changing efforts and motions, and the reason it's industry changing is because we're bringing together so many companies like SAP, Adobe and Microsoft, that historically don't partner together and are built completely different stacks. We're bringing together all three companies to go do something, to create basically open data for our mutual and joint customers and a well-defined schema with a well defined set of entities to deliver a bunch of value to customers. So that's going to be a big deal when it lands. But just-

Steve Mordue: It's a big rock. Yeah, it's a big rock to move.

Charles Lammana: Exactly, three companies and 25 different applications, you mix in Dynamics, you mix in Office, you mix it Azure on the Microsoft side, it takes time. But when it arrives it's going to be a big deal. So ODI is absolutely something to pay attention to and it's something that continues to get significant investment from all three companies. It's taken its time, but I think it's going to be, whenever it arrives, it's going to be a really transformational item for our customers.

Steve Mordue: Are you still driving that?

Charles Lammana: I'm not. Robert Bruckner on our team is driving that. We support it from a platform, of course, just it's a lot of energy to go drive that process, so I'm glad we have Robert shouldering the burden.

Steve Mordue: Yeah. So we've got October release coming right around the corner, and of course the advance news that has come out, all anybody has been focusing on, the FUD rakers, is on licensing and APIs. But if you take that part of the conversation aside, which I feel like we should have done in our conversation so far, I feel like we've accomplished that, to all but the truly ignorant, if we take that part aside, what do you think are some of the most exciting things people should be looking for in this release for Power Platform?

Charles Lammana: I would say there's a few little things which I think are a big deal, and then there's a few big things. The little things are just usability improvements. If anyone's gone on and turned on the October release switch in the admin center, you will notice a significant modernization of the unified interface for model driven applications. There's much better grid density, much better density on forms, way less wasted white space. Better-

Steve Mordue: And how long have we been hearing that, right? People complain about white space. So just glad to see that one finally get behind us.

Charles Lammana: Oh man. And they're all little things, but you know what? We fixed the top 10 most painful user experience items of unified interface for October. And it's hard to do that in a way which doesn't trigger a whole bunch of retraining for our customers, so we had to be really thoughtful and diligent and you may not even realize it if you first turn it on, but just open it up side by side and we're really proud of those. Lots of little changes, lots of little pebbles that together really changed the experience for Dynamics and for model driven applications for power apps. So those are kind of the little ones. I'm very excited about that.

Steve Mordue: Yeah, I was poking around in an October version and yeah, you could definitely feel it. It's not dramatic, it's not like, "Oh my God, where am I at?" You haven't lost anything. But you definitely sense right off the bat the density and then the features that have been added or ... yeah, I think you guys probably did a smooth job of that. So now tell us about the bumpy stuff.

Charles Lammana: Yeah, the big stuff, the bulky stuff would be AI Builder is reaching general availability, as is PowerApps Portals. And we think that basically a modern platform needs to be able to support B2C, so external users to your company as well as anonymous access, and PowerApps Portals delivers that for the standalone PowerApps customers. And then we also believe the future of all applications and all automations and workflows is an intelligent, enriched experience and AI Builder delivers that for us. So you can use binary classification and prediction capabilities inside of AI Builder to make your power apps that are canvas model driven, but are built on top of CDS, make them much smarter. And that is one of my favorite features, it's just so amazing how easily you can enable a machine learning model without any data science or even developer background.

Charles Lammana: And then also we have like things like the Forms Recognizer which actually parses digital paper, PDFs, JPEGs, what have you, extracts that information into a structured form and you can use that in your power app or your flow. And we're seeing unbelievable adoption, almost 50% of all AI Builder customers are using the forms understanding capability. It's so transformative for the back office, and if you haven't checked it out, just use it and then your mind will start racing; "My legal department, my finance department, my HR department, my procurement department, all of them can just work so much more efficiently if you can get forms recognized or working with the flow." So we think Portals and AI Builder are two big, bulky, meaningful changes for Power Platform.

Steve Mordue: And AI Builder goes across, right? I mean you could stand up AI Builder on just bare CDS, you could stand it up on first party, it goes across, right?

Charles Lammana: Yep, absolutely. And I apologize to anyone else from my team that may be listening that I didn't mention your feature that you worked on, but they're all important in the October release. But those are my three most favorite children.

Steve Mordue: I definitely am hearing excitement about AI Builder and Portals is another one that's getting its share of FUD, something I read recently and some guy jumped on social talking about how Salesforce is so much cheaper because of this, that and the other. And unfortunately Dileep Singh happened to see what was going on, he jumped in and said, "Wait just a minute here," and kind of clarified some stuff right out there that reversed that whole story. So I'm looking forward to the day when we don't have a whole bunch of people out there watching your every move looking for the gotchas.

Charles Lammana: Well I would say our goal at Microsoft is broad adoption, which I mean generally reflects in lower prices. I mean that's our goal. Like if you go to Microsoft's mission statement, empower everyone and every organization to do more, you can't do that with outrageous bespoke boutique pricing. So that definitely is not our objective and we certainly will learn and we make mistakes, but our push is we want everybody to be able to use this thing. I want everybody in the world to build apps and create flows and create power BI dashboards.

Steve Mordue: Yeah, we'll leave the hidden costs to Salesforce, they're pretty good at that. So Charles, anything else you want to touch on? I've got, I don't know, millions of people that will be listening to this probably.

Charles Lammana: I mean the biggest thing I would say is, and this is my kind of call to action every time I talk to you, and maybe it's an overwrought point at this point in time, but Power Platform, I mean our push is to go unify the Office and Dynamics communities with a single low code platform for all of Microsoft, and in the process make it so everybody in the world can have access to analyze data, create apps and build automations. So if you haven't checked out Power Platform as just Power Platform and outside of Dynamics or Office, go do it now. I think it's super amazing, in five minutes you can get value and just from the point of view of Microsoft as a company, it's just really critical to where we think the future's going.

Steve Mordue: Yeah, I've had people ask me, "Where's the best place to start with Power Platform?" And I typically suggest Flow because it's about the easiest one to understand, the quickest of value and suddenly just light bulbs start going off. And when people are talking about building, because we are doing a lot of work with customers that are moving up from spreadsheets, that's a huge mountain out there for customers that are doing relatively complex business processes on a bunch of shared spreadsheets and torturing them. And we're generally recommending those customers go straight to a model driven app that has kind of that foundation, because then from there, you know, they can spring off with canvas flow, AI Builder, Power BI, have all those other things. And we're starting to get to a point where I'm getting crisped for that conversation because whenever you announce new things and stuff like that, nobody knows what we're talking about. The partners are behind and customers are behind-er. So, lots of education, a sales process now is an education process and probably will be for a while, because I don't see you guys slowing down.

Charles Lammana: Never. We-

Steve Mordue: Yeah, you're not even going to let us catch our breath before you're going to go do some stuff and keeping the partners hopping.

Charles Lammana: Yeah.

Steve Mordue: Well, Charles, I appreciate you taking some time. I knew I might be able to catch you here in the last hour of your work week and I was glad to do it. We'll be publishing this here, I don't know, probably Monday or something like that, get it out there pretty quick while everybody's got all the questions.

Charles Lammana: Sounds good.

Steve Mordue: So you have a good night, you mentioned something about dinner, so enjoy your dinner.

Charles Lammana: Yeah, as always, great chatting, thanks Steve.

Steve Mordue: Tell your girlfriend I said hi.

Charles Lammana: Will do.

Steve Mordue: All right, bye, guy.

Charles Lammana: Bye for now-