Microsoft to take its 'mobile first, cloud first' mantra to partners

At WPC, the company will unveil new cloud programs and incentives for channel buddies like resellers, ISVs and system integrators

By , IDG News Service |  Software

Will the announcements be well received?

Whether these and other announcements satisfy partners in attendance is an open question. With a universe of hundreds of thousands of partners, Microsoft faces the challenge of serving a vast and very heterogeneous group whose needs, priorities and preferences are extremely diverse. Catering successfully to partners is always a work in progress.

For example, many long-time resellers and integrators that have built businesses upon selling and implementing on-premises Microsoft software face a significant adjustment when pushing cloud services.

"A lot of these guys don't like the new model," said IDC's analyst Darren Bibby.

For starters, the nature of the deals is different. The on premises deals usually involve a one-time payment, while cloud services are sold via subscriptions, which generate a recurring revenue stream. The size of the deals tends to be smaller.

"Cloud causes partners the most issues," Bibby said. "At WPC, partners will want to discuss what their place is and what opportunities exist for them."

At the same time, Microsoft has started to attract a new type of partner which hasn't done business with the company before -- the "born in the cloud" partners that never focused on selling on premises software. They face no transition pains in adopting Office 365, Azure and other Microsoft cloud services. In fact, for them, Microsoft can't go fast enough in the direction of cloud and mobile.

Then there are partners that feel equally at home with cloud and on premises products, and are able to cater to customers that want hybrid implementations.

"The channel overall is in this transformational phase," said Gartner analyst Tiffani Bova.

To sell cloud computing services, partners may need also to revamp their staff's skill sets, boosting software development capabilities, learning how to deal with Microsoft cloud APIs (application programming interfaces) and adding expertise on mobility, she said.

Likewise, salespeople will have to be trained on selling cloud services, and those who resist learning the new model may have to be let go, Bova said. Partners may need to engage in a similar pruning process of their historical customer roster, based on whether they're open to moving to the cloud or not.

Partners may also struggle with their business identity. Bova cites the hypothetical example of an on-premises software reseller that generates US$10 million in annual revenue and pockets $1 million in profit. In a cloud world, this same partner may see revenue shrink to $6 million but margins may grow so that profit doubles to $2 million.

"Culturally, the lower revenue has significance for them," she said. They need to shift their mindset and measure the success and size of the company by the higher profit, not the amount of revenue.

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