The world is changing, and customers are looking for different things from their IT providers than they did a few years ago. These days, building an ongoing partnership has overtaken the old licencing model. While it’s challenging Microsoft Partners to adapt and do more than ever before, the rewards for them and their customers more than make up for the effort.
Just like former MasterChef Australia contestant and TV presenter Poh Ling Yeow, the tech sector is always reinventing itself. These days it’s becoming increasingly difficult to say just what a tech business is. In 2023, almost every organisation must be a technology company, whether it’s administering digitised health services or selling clothing. The scale and importance of the systems that organisations run on has ramped up over the past few years, as have their people’s expectations of how technology can improve their lives.
All of this requires a level of ongoing support that most in-house IT teams are not equipped to deliver, as the list of systems under their remit increases. This dynamic shift has been coupled with a change in the way people expect to pay for IT services, towards a cloud-based as-a-service model. They want to be able to pay only for what they use, and add or remove services or users from their systems without any cost disadvantages.
What this means is that IT solutions providers are having to undergo their own digital transformations, shifting their business model towards becoming full-service, end-to-end service providers – even business advisors. That trend has driven recent changes to Microsoft’s partner model from the Microsoft Partner Network to the Cloud Partner Program, recognising the increasing importance of cloud and managed services.
While we know this will challenge some of our partners as they work to adapt, the shift in demand among customers around the world is too great to ignore. And so is the opportunity for IT partners to grow a more profitable, sustainable business by evolving to meet their needs.
IT as a professional service
In the early days of our partner programme, the business model for solutions providers was relatively simple: reselling licenses and renting server space in their on-premise setups to business and organisations. The first big disruption to that model flowed on from a growing need for bespoke solutions from businesses with complex needs. Microsoft partners began to build and deploy custom products, which would generally be handed back to the in-house teams at the completion of the project.
Now, as in-house teams are stretched and customers morph in new directions requiring oversight of digital operations and a fast-changing product, privacy and security landscape, selling licences or solutions in isolation is no longer enough.
The big opportunity for partners is to provide them with ongoing support and managed services.
I like to think of it as the technology business maturing into a fully-fledged professional services industry, in line with the legal or accounting sectors. In technology, as with the law, having the support of external experts is valuable for all organisations, especially those without the scale to support large internal teams.
We’re already seeing traditional professional services organisations expanding into the delivery of managed technology services, recognising the massive growth potential and opportunity to add value to their businesses. KPMG’s recent work with Te Puni Kōkiri to develop a business assessment and grant management solution using Microsoft Business Applications is a great example. EY has also launched local cyber security centres supported by Microsoft Sentinel.
We want to support our partners to transition from the other direction – moving from their existing licensing or product development models into a more resilient model offering the end-to-end managed services customers want.
We’re already seeing success stories of transformation around our ANZ partner community. Data#3 is a perfect example. A Microsoft partner for over 20 years, Data#3 is one of the largest IT service providers in Australia, with operations and offerings across the Pacific. This year, Data#3 was recognised as the global Microsoft Device Distributor/Reseller Partner of the Year.
Data#3 has seen the industry shift a number of times, and has successfully moved with the times to keep momentum going, without straying from what made it successful in the first place.
Over the past few years, Data#3 has transformed its business to integrate its provision of end user devices with its software products, to build an innovative model that provides cradle-to-grave services for its customers. This has freed up resources and cashflow for organisations around Australia and the Pacific.
An organisation that partners with Data#3 can reach out for Surface devices for its people and receive a full, wraparound service which integrates its entire offering on an ongoing basis.
Another first mover in the ANZ region is Datacom. Datacom is a Kiwi success story, one that has spread out beyond the borders of New Zealand off the back of continual innovation and growth.
It too has evolved its business model over the years, moving from selling licences and server space to packaging up its own custom products and services into wraparound support for customers, a move which has supported growth and some truly innovative solutions, like its Partner Award-winning work with Sealord on ‘Advanced Fishing Analytics.’
An ecosystem of excellence
At Microsoft, we know that a rising tide lifts everyone’s boats, so we’re working with our partners across the board to create a whole ecosystem of support to help them to take the initiative and the opportunity presented by this new wave of technology needs.
Distributor Partners like Ingram Micro, Dicker Data, Pax8, Synnex, Leader, and Crayon have been instrumental in this work. These companies are on the ground with partners and resellers of all sizes helping them to think bigger, and to unlock new opportunities. Resellers can reach out to distributors as Centres of Excellence, helping spread skills and knowledge across the sector, just as customers are now increasingly using partners as their own Centres of Excellence to establish best practice in their organisations.
The opportunity in managed services is big enough for everyone to get on board, so we love watching more of our partners adjust their models to seize that opportunity.
There’s undoubtedly some uphill work to do to enable that change, but there are solid rewards waiting at the end of the hike. Change is already opening new doors to bigger and better opportunities to do business together. If necessity is the mother of invention, it’s also the mother of reinvention. And we can’t wait to see how our Partners innovate, adapt and thrive in this new world.