REDMOND, Wash., March 2, 2006 — Over the past three years, the Microsoft Partner Program has been building a framework and delivering tools to help strengthen the company’s partner relationships, with the overall goal of creating an industry-leading approach to invigorating partner businesses.
Those efforts are paying off. Reports from industry partners around the globe and a new study from IDC (available at https://partner.microsoft.com/analystinsight/) confirm that partners who engage with Microsoft via certifications, Microsoft Competency programs and joint-marketing efforts experience substantial benefits in terms of their ability to land new engagements, and execute on them more efficiently.
The Microsoft Partner Program’s strategy of continually listening to partner feedback has generated important momentum, and guided the shape of the current program structure. Now the company is looking to build on that momentum by examining ways to make the program even more useful and strategic for its partners, so that it continues to drive investment and enablement that directly affect the long-term prospects of the partner ecosystem.
To find out how this continual dialogue is affecting partners and guiding the program’s overall strategy in the coming months, PressPass sat down with a group that included Allison Watson, vice president of Microsoft’s Worldwide Partner Sales and Marketing group, along with David Carmichael, head of marketing for U.K.-based Business Systems Group; Erol Anil, CEO of Munich-based IQ GmbH, and Dave Alberts, director of the Microsoft Solutions unit for U.K.-based WCI Group.
PressPass: What is the purpose of the Microsoft Partner Program?
Watson: The technology business moves at a remarkable pace, and new opportunities are created at every turn. Along with those new opportunities come more complex challenges for business leaders as they navigate their options, and make decisions to set a course for long-term growth. We have a responsibility to stay ahead of the game on what makes our partners competitive, to drive investment, and to enable a healthy partner ecosystem.
When we started three years ago, we characterized our program as “a revolutionary change in an evolutionary way.” We wanted to build a program where any partner, of any type, by partnering with Microsoft, can extend their market reach, reduce costs, increase profitability, and deliver innovative solutions that help their customers realize their full potential.
Today we’re focused on moving the company’s engagement with partners beyond discussions about margins, toward changing the industry’s approach to partner business performance. We want to change the dialogue from what the partner program does and what we as vendors do, to focusing on the actual metrics and levers that affect our partners’ businesses. What is actually driving their business profitability? And from there, how does a vendor program direct its resources to those drivers?
PressPass: Can you give us some background on the new IDC study?
Watson: Last year Microsoft commissioned an IDC study to gain a more holistic view of our partners’ business health. IDC conducted a blind study of 642 broad channel companies, who, among other attributes, resell or influence the sale of software, to create an industry partner benchmark. For comparison purposes, IDC also conducted a targeted study of 375 Microsoft partners who have achieved Microsoft Competency certification in the areas of Advanced Infrastructure Solutions, Information Worker Solutions or Mobility Solutions.
The study examined the effects of our lifecycle support across five key characteristics of partner performance – the capacity to fund new business opportunities; the business “velocity,” which has to do with the rate at which deals move through the pipeline versus their average size; business growth, as measured by the growth in revenue and new deals; the focus on higher-priced services, and a portfolio approach to their business.
The study measured 14 key performance indicators (KPIs) that will measurably impact their business health and their bottom line. These KPIs create sort of a “performance dashboard” for us to examine how our partners are doing. They include net profit margin, cash flow from operations, revenue growth, gross profit margin, sales speed, delivery speed, deal growth, customer growth, capacity utilization, daily bill rate, change in bill rate, average deal size, sales cycle and implementation time.
What we found was really a validation of our overall partnering approach, in that the Microsoft partners enrolled in competencies performed better than the benchmark groups in 12 of the 14 KPIs.
PressPass: What is the connection between the certification and training programs you offer and the financial data analyzed by IDC?
Watson: Many of the key indicators identified by IDC correlate in turn to the training, expertise and exposure provided through the competency programs. The “velocity” of deals in a given timeframe, for example, speaks to enhanced efficiency on the implementation side, as well as the ability to market and generate deals in the first place. Companies who take advantage of the opportunities we provide for marketing, who gain these certifications, are able to achieve economies of scale. And that’s just one example.
At their core, the Microsoft Competency programs are designed to help partners become more profitable, extend their market reach, reduce costs, and deliver innovative solutions that help customers realize greater returns on their technology investments.
The system of 13 competencies is designed to create value at every stage in a partner’s business cycle, and ensure they have the tools, information and opportunities that are most valuable to them. According to the IDC study and word on the street from partners across the globe, so far we’ve been successful in doing all of those things. Now we want to take that next step and continue to drive value for our partners.
PressPass: From the partner perspective, how real is that connection? Do these programs directly benefit your business?
Carmichael (Business Systems Group): The clarity and common sense approach of the Competency program was such that we could easily align our capabilities to those competencies. The Advanced Infrastructure Competency, for example, allowed our engineers to streamline the amount of technologies necessary to provide the monitoring essentials for a managed services environment. Instead of having several management and monitoring tools, in Microsoft Operations Manager we have found a single tool capable of providing the same functionality. Our partnership with Microsoft means that they have given us considerable assistance in maximizing the benefits of this technology including the provision of training for our technical staff. As a provider of managed services across a wide range of infrastructures, BSG’s ability to deploy a system such as this for our clients can only be beneficial both to them and to us; streamlining our own operations whilst offering them greater operational efficiency within a managed services environment. This is key for many of our clients are who now seeing the benefits of purchasing a managed service to meet some or all of their IT needs.
The financial impact of these kinds of benefits is also emerging. Our revenues grew to £30 million (US$52 million) last year from circa £23 million in the prior year. Within this figure, our revenue from managed services also grew, and we can quite easily give Microsoft some credit for that.
Anil (IQ GmbH): Beyond the technical details, trust is the key to everything – how can our customers trust in someone they don’t know? The best way to earn trust is to prove competency. So it’s a big help for a company like Microsoft to say that this company has the competency, has the experience, and has the references in the market. With that gold certified label, it’s a lot easier to gain new customers. And filling up the sales pipeline is only part of the equation. The enhanced reputation provided by the certification also means that we can realize a greater return on each deal. We don’t get our projects by price dumping. We get them with quality, with competency and with a proven track record.
Alberts (WCI Group): From our point of view, we are all about process improvement, so the ability for us to combine our process skills with Microsoft technology and to get all the help from Microsoft we need to do that is highly valuable. Working jointly with Microsoft has really enabled us to position an enterprise-based solution. We focus on processes that our clients use to differentiate themselves in the market, and the sort of help that we get from Microsoft to achieve that connection and get these messages out to the market at the proposition level is something we really value, and we’ve seen the results from that.
PressPass: Partners use terms like “coherent,” “clarity” and “common sense” to describe how the partner program supports the ecosystem. What do you think they’re getting at?
Anil: When you start to engage with the Microsoft Partner Program, you do get a sense that they’ve really thought everything through. The different competencies for Advanced Infrastructure, Information Workers and Mobility, for example, work together and complement one another perfectly. For me, the IW, AI and Mobility competencies are a trinity, and you really need all three of them if you want to get the most out the program for your business.
Beyond that, AI, IW and Mobility also interlace with other competencies, such as Security, Licensing and Software Asset Management. Because of our competencies in all these areas, when a customer comes to us with an idea, we know how to realize it technically, how to sell it, how it should be licensed, and how to make the entire solution secure. So you can see how Microsoft is really supporting the entire customer life cycle.
Carmichael: The competencies do work as an integrated whole allowing us, as an organization, to bring synergies into our customer engagements. The combination of the Advanced Infrastructure and Information Worker competencies, for example, has allowed BSG to foster more pro-active collaboration between those technical resources who are skilled in infrastructure deployment with those skilled in application development.
MCSEs, who were traditionally infrastructure focused, and software developers, who were previously application focused, are now collaborating on more than just individual customer projects. What we’ve seen from the information worker competency is that these Microsoft-led programs have helped us to bring these two skill sets together more dynamically, with BSG benefiting from the knowledge and skill sharing that has arisen as a result.
Alberts: Being a consultancy, we know now to penetrate vertical industry sectors, but even considering our experience in that area, we’ve gained value from the vertical solutions material available on Microsoft’s partner Web site. Where the Microsoft relationship really adds value is, once we’ve selected a market segment and the propositions we want to attack it with, we can work with Microsoft to take those propositions to market.
PressPass: You talk about making the program even more useful and strategic. With the success you’ve had so far, where do you go from here?
Watson: The work we’re doing now, including the IDC study and other efforts, is really about changing the industry dialogue around partner performance to be more about the metrics that drive partner businesses and how they guide targeted vendor investment. Microsoft’s investment in the partner channel has grown to more than $2 billion, but how do we direct that investment so that it can really enable partner profitability and performance? Every vendor in the industry talks about partner profitability as a top priority. What we’ve always tried to do is put action behind those words, and deliver actual direction, coaching and tools to help drive our partners’ business success. By working to really understand the metrics and levers that drive our partners’ profitability, we can then direct our resources to that more effectively.
