MINNEAPOLIS, July 9, 2005 — At its annual Worldwide Partner Conference this weekend in Minneapolis, Microsoft executives addressed a growing area of focus for the company that also is intended to create significant partner opportunity – industry specialization. To get closer to customers and better understand their issues and needs, Microsoft is improving its alignment to industries worldwide and across small, medium and large customer segments. The company says its increased industry focus will help partners in the small and mid-market develop vertical specializations and expand their business opportunities using Microsoft software. For enterprise partners, the increased focus will help make the Microsoft platform a more effective springboard for developing their industry-specific solutions. In addition, they say industry efforts will help partners who already sell industry solutions in all markets close more business faster using the Microsoft platform.
PressPass spoke with two Microsoft executives about the many steps taken in marketing, sales and services to help partners collaborate and connect with each other and with Microsoft to deliver the solutions customers want, whether in financial services, manufacturing, retail, healthcare or other industries. Craig McCollum, vice president of Microsoft Business Solutions Sales Strategy, and Simon Witts, corporate vice president of the Enterprise and Partner Group, talked about the company’s initiatives to help partners develop, deploy, manage and support industry solutions that take advantage of Microsoft products and technologies – such as the Windows Server System, Microsoft Business Solutions and Microsoft Office 2003 – to help customers in all industries reduce costs, increase revenue and drive competitive differentiation.
Press Pass: Why is Microsoft signaling an increased industry focus now?
Craig McCollum: First, it’s important to understand that Microsoft’s industry approach is not new. We’ve been working with partners across our Enterprise and Business Solutions groups for some time to serve specific industry needs. Most businesses – large or small – identify themselves by the industry or vertical in which they do business. So it’s only natural to address their needs from an industry and industry solution perspective. What we are signaling today is a stronger focus in this direction – and investments we’re making at a cross-company level that support this effort. Especially in the small and midmarket segments, channel specialization has not been happening to an extent that fully takes advantage of the tremendous growth.
As a major software provider, we have more to do to provide all the right tools and resources to enable this broadly. In the near future, Microsoft will be heavily focused across the company on aligning more integrated MBS-based solutions with industry business needs, creating more opportunity for our partners.
Press Pass: What does it really mean for Microsoft to increase its focus on industries?
Simon Witts: In the enterprise market, it’s really about understanding the issues, challenges and business processes of each customer on its own terms. Microsoft does not offer line-of-business products for large organizations, but in order to work effectively with partners to address the needs of customers – whether they’re in financial services, manufacturing, retail, or healthcare, for example – it’s imperative that we fully understand the industry landscape and how IT, and Microsoft software in particular, can help drive growth in their businesses.
McCollum: It comes down to four key strategies:
Increasing our industry expertise and knowledge, as Simon just explained
Ensuring that the Microsoft technology stack and business solutions platforms are the absolute best for building comprehensive industry solutions
Enabling our partners to develop and deliver optimal industry solutions using our technology stack and business solutions platform
Improving how we work with partners, as well as, how we enable our partners to work together to market and sell their solutions to customers
Microsoft has already done some great work to help our partners align around specific industries, and this is our next step. It’s really about collaboration and connecting our industry-leading partner channel. We’re committed to providing the tools and opportunities for our partners to connect with one another, to share ideas, solutions and domain expertise to drive new business together and with Microsoft.
PressPass: Let’s talk about these four strategies and what they mean for customers and partners. First, increasing industry expertise and knowledge.
Witts: Today, Microsoft has more than 200 experts – doctors, bankers, former state CIOs and folks from the plant floor, for example – leading our “industry units” in the enterprise. They have helped us get very clear on the unique pain points and opportunities in industries, allowing us to articulate a clear perspective or point-of-view on the role of Microsoft software and partner solutions in these markets. Across all segments, we have a mature industry taxonomy and industry solutions taxonomy comprising 15 industries, 66 “vertical markets” within those industries, and more than a hundred “line-of-business” opportunities. As a result, we’re positioned to align very closely with software and services partners, target specific market opportunities, and invest together in developing and delivering optimal solutions.
McCollum: Because this is a new investment across SMS&P, our field resources will be increasingly held accountable on customer and partner satisfaction in this area – an industry focus is one of our field’s top three commitments for the coming fiscal year.
PressPass: How are you ensuring that the Microsoft platform and products are best for building comprehensive industry solutions?
McCollum: Microsoft’s platform has always been designed to enable the broadest set of software and services companies to build high-value solutions at the lowest cost. We’re expanding on that by applying what we know about industries – from our partner experts and our own professionals – to Microsoft’s product development. For example, we’ve worked with partners to introduce a set of “Solution Accelerators” that provide added value to our product set by industry. The Office Solution Accelerator for Clinical Forms Automation, or the BizTalk Server Solution Accelerator for HIPAA are examples, and they give partners a headstart in delivering industry solutions on our platform. We also see a significant opportunity for partners to leverage our Microsoft Business Solutions platform to quickly build new solutions across a host of vertical markets.
In short, rather than asking customers to adapt to our technology, Microsoft is focused on working with many partners to bring the broadest selection of deep business process and solution expertise to offer a total solutions platform that works the way people work. This is an exciting time to be aligned with Microsoft.
PressPass: Can you outline how you are enabling partners to deliver optimal industry solutions?
Witts: We’ve been collaborating extensively with partners to develop and deliver a number of industry initiatives, including our Peak Performance Initiative in Manufacturing, Smarter Retailing, Experience Financial Services – with launches in banking, insurance and capital markets – and Digital Pharma, to name a few. These initiatives define Microsoft’s relevance in these markets and provide guidance and direction for our partners. We also support our partners by helping to accelerate the development and delivery of solutions to market that are critical in a given industry. In the enterprise you’ve seen us do that with companies such as Accenture, BearingPoint, Capgemini, Thomson Financial, i2, Dassault Systemes, JDA Software and many more.
McCollum: We see FY06 as a building year for the Business Solutions vertical push, and we’re moving hard and fast to make this happen. We’re investing in tools and resources to help us better align with hundreds of our partners that already deliver deep vertical solutions today and to assist other partners to move in a more vertical direction. One example of a tremendous new tool that we recently launched is the Partner Vertical Resource Center. It provides resources for all partners to support their business planning and execution and will support partners with a collection of market opportunity, skills assessment and business and execution planning tools. This complements other partner resources available – including Solution Finder – a new tool that allows partners to identify themselves to customers and other partners as offering software in specific vertical markets. Solution Finder builds on existing tools like Partner Channel Builder, which is a destination point for partners to collaborate, seek out new business opportunities and partnerships, share expertise, complement each other’s skills and drive revenue growth on Microsoft’s platform.
Of course, partner recruitment is another big priority for us as we move forward with our Business Solutions vertical push Microsoft is dedicated to aggressively recruiting new partners with vertical specialization. By the end of fiscal year 2006, the goal is to have 50 percent of partners aligned vertically and more than 1,000 vertical solutions profiled and published.
Additionally, with the goal to create a forum for connecting solution partners with reselling partners, Microsoft is hosting a Business Solutions Industry Theater at Worldwide Partner Conference 2005. The Industry Theater is a multi-country, multi-vertical initiative connecting partners that have vertical solutions with potential distribution partners.
PressPass: You also referenced efforts in place to work with partners to sell and market the best solutions – how is this being achieved?
McCollum: There are several initiatives under way to provide an increased level of sales and marketing support to the breadth channel. First and foremost, we’ve completed an exhaustive opportunity mapping exercise around vertical markets globally. Microsoft has a target of 60 percent of vertical demand generation spend will be on what we call “through-partner” marketing. Microsoft is investing a significant amount of resource to market products and solutions in an industry context. In addition, 50 percent or more of the Microsoft Business Solutions group’s marketing budget will be spent on vertical demand generation and branded partner marketing.
Witts: In the enterprise segment, we are evolving our sales engagement model and taking solution selling with partners to the next level. We’re putting the customer at the center and focusing with partners on the right solutions to meet their needs. More specifically, we are expanding our “team” approach to sales, aligning by industry, and adding resources specialized by industry and technology. The Partner Account Manager, for example, will be specialized by industry, technology and sourcing solutions, and will fully integrate partner solutions into the sales process. Planning with partners will become much more centered around a set of meaningful marketing, sales and services commitments. All of this work is designed to improve how we work with partners to meet the needs of customers, which benefits everyone.
PressPass: What are examples of partners who are already successfully serving industry customers?
McCollum: In the field we see a number of Microsoft Business Solutions partners already realizing the benefits of being a vertically aligned organization. Two Microsoft Business Solutions partners have sales approaching US$1 million per year; one has a sales pipeline of more than $2 million while another has a pipeline that is approximately $35 million. Another partner is delivering educational solutions to 7,000 customers. One partner is successfully delivering on customers’ request for supply chain agility solutions that capture the partner’s domain expertise and run on the Microsoft platform. Still another is working to establish a leadership position in the financial industry by developing solutions that combine the strength of the latest Microsoft technologies and their own unparalleled understanding of the needs of today’s financial manager.
Since March, when the Business Solutions group began more actively discussing and marketing its vertical strategy for partners, a number of significant vertically focused partners have been signed on including the NSB Group, a Microsoft classic ISV partner in the retail sector. This partnership will result in availability of a retail merchandising system that’s hosted and integrated with Microsoft Great Plains. While not one of the top 14 verticals that we have targeted for accelerated spending in FY06, retail is a key investment area for Business Solutions.
Additionally, Industry Builder is an Initiative for ISV partners announced in March at Convergence. As a part of Industry Builder, select ISVs will develop industry modules in accordance with Microsoft’s quality standards and package them up with Microsoft customer support offering. In March, Microsoft Business Solutions – Axapta announced three new partners and since March, now has eight partners under contract and going into Industry Builder solution testing. New ISV partners include To Increase NV in industrial equipment manufacturing, Iteration2 in field services, Columbus IT Partner in retail , Fullscope, Inc. in process industries, Manhattan Associates, Inc. in supply chain execution, Foliodev LLC in professional services, Project Business Solutions (formerly Navisoft) in construction, and Junction Solutions in multi-channel retail.
Witts: Our partners in the enterprise are making big bets on the Microsoft platform, and they’re seeing great results. Every day we’re closing more and more business with partners in industries such as retail, manufacturing and financial services. Partners know the value of the Microsoft platform, and as we develop industry points-of-view and become more industry aligned, we’re making it much easier for them to do business with us in this context. The momentum is very exciting, and we have several examples of major customers realizing fantastic business results from partners solutions based on our platform. One European bank, for example, has cut loan process time by 70 percent by automating functions across branches. A major insurance provider has expanded its management capacity by $9.6 million, increased efficiency by 25 percent, and increased case management job satisfaction by 17 percent. Those are great results and illustrate that our industry focus and sales model are working.
PressPass: Why is Microsoft the right bet for partners?
McCollum: Based on extensive research conducted during the past year, we believe that our partners will see not only increased market opportunity but also increased profitability by leveraging the investments that we are making in the coming years. We expect our partners to see an increase in average selling price per deal, a reduction in non-billable service time, a reduction in the costs of sale and the sales cycle, and a dramatically improved level of marketing efficacy. Microsoft is very focused on being the best vendor in the industry for partners who want to increase industry alignment. We bring a passionate focus for delivering innovative solutions and a robust platform, a commitment to the best economics, which benefits partners and customers in the area of cost, and Microsoft’s leading development tools, such as Visual Studio .NET, which help partners more quickly develop their solutions and services. And that, of course, empowers our partners to provide rich solutions for our mutual customers more quickly and more affordably.