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Microsoft Partners At A Crossroads: Radical Changes Rattling The Channel

Wade Tyler Millward

Recent changes to Microsoft’s partner program -- NCE and the upcoming Partner Capability Score -- are rattling some solution providers in Microsoft’s 400,000-strong channel ecosystem. Is the tech giant listening?

Microsoft’s Relationship With Partners

Microsoft’s channel leadership itself, meanwhile, has gone through change. Former channel chief Rodney Clark—who also held the title of corporate vice president of channel sales— decamped for Johnson Controls in May.

His role has been split into two, according to a Microsoft statement to CRN. Instead of a channel chief, Microsoft now has a vice president of channel sales, David Smith, and a vice president of go-to-market, programs and experiences, Julie Sanford.

“The decision to evolve what formerly had been a single role into two distinct areas of responsibility is a reflection of the growing importance and breadth of our partner ecosystem all-up,” according to the statement.

Microsoft recently named Nicole Dezen chief partner officer and corporate vice president of the Global Partner Solutions organization. Her role is considered “much broader than channel chief,” according to Microsoft. It “focuses on Microsoft’s entire commercial partner business—encompassing all different types of partners and relationships.”

During Microsoft’s annual Inspire partner-focused event— held online July 19 and 20—Dezen said that Microsoft’s co-sell program has seen $33.8 billion in annual contracted value and 35 percent revenue growth since its launch in fiscal year 2018.

“From the beginning, Microsoft has been a partner-first company,” Dezen said during Inspire.

“Our ability to co-sell together is what makes our partners—plus Microsoft—the most powerful asset in the industry,” she added.

Microsoft Chairman and CEO Satya Nadella said during Inspire that partners help “make small businesses more productive, nonprofits more effective, multinationals more competitive [and] governments more efficient, improving health care and educational outcomes and creating economic opportunity and creating jobs. That’s what makes this partner ecosystem so unique.”

Although Prejean and partners of Guardian Computer’s size bring in fewer dollars individually, that long tail is a revenue generator for Microsoft and helps the Redmond, Wash.-based company bring its software to Main Street when larger consultants prove too pricey and lack a local presence.

“The MSPs, a lot of us, are relatively small,” Prejean said. “So I think it’s maybe hard for [Microsoft] to hear the feedback because we’re just a bunch of little fish. But if you add us up, I’m sure we make a difference.”

But Microsoft’s partners also benefit from the tech giant, as Nadella indicated during Inspire.

“For every dollar in revenue we generate, partners who build differentiated software solutions on the Microsoft Cloud generate $10 more,” the CEO said.

Prejean and other Microsoft partners who spoke with CRN said they don’t want to leave Microsoft, a leader in the productivity applications market with popular apps such as Word, Excel and Teams. Google is considered its closest competitor in productivity with its Workspace offering and apps including Docs, Sheets and Meet.

Microsoft is also widely considered the No. 2 cloud computing vendor behind Amazon Web Services and ahead of Google Cloud.

The New Partner Capability Score

Tackling NCE and the discussions with customers over whether to make an annual commitment to Microsoft software packages or to pay a 20 percent premium on month-to-month commitments in case of a change in employee count or license type was a heavy enough lift for some partners.

But as Microsoft executives said again and again during Inspire, the second controversial change for the Microsoft partner program— the Partner Capability Score—is here to stay.

The Partner Capability Score will determine who qualifies as a Microsoft “Solutions Partner,” the designation that replaces the classic Gold and Silver partner competencies that come with sales and customer support for partners.

Under the new system, partners earn points for deployments, usage growth, getting certifications and new customer adds, with rules around how large a customer must be to count toward the score. Solutions Partners can also go on to earn “specializations” with more benefits.

Microsoft executives have touted NCE and the Partner Capability Score as simpler ways for customers to do business with the ecosystem.

For example, NCE moves Microsoft from about 20 licensing constructs and purchasing experiences—including Open License and Select Plus—to three, Clark previously told CRN. The three are a breadth motion that includes Cloud Solution Provider partners, an enterprise motion serviced by Enterprise Agreements and Microsoft Customer Agreements, and a self-service motion, all sharing a common platform.

Customers opting for annual commitments give partners a more accurate forecast of the revenue they stand to make. And the 20 percent premium on month-to-month commitments gives partners some cushion should a customer go out of business or reduce license count.

The Partner Capability Scores should also improve collaboration between Microsoft sellers and partners, according to the company.

Dan Rippey, program director for the Microsoft Partner Network—which the tech company will rename as the Microsoft Cloud Partner Program in October—said during Inspire that the new designations are meant to better communicate to customers a partner’s technical acumen and “ability to deliver successful outcomes.”

Dezen said that partners who sold collaboratively with Microsoft sellers saw revenue grow 29 percent in 2021, almost double the 15 percent revenue growth of partners not actively engaged in Microsoft co-sell.

Partners have until Sept. 30 to renew legacy competencies—and they will retain benefits they received as Gold and Silver partners until their next anniversary date. Gold and Silver badges and marketing materials from Microsoft will go away Oct. 3.

 
Wade Tyler Millward

Wade Tyler Millward is an associate editor covering cloud computing and the channel partner programs of Microsoft, IBM, Red Hat, Oracle, Salesforce, Citrix and other cloud vendors. He can be reached at wmillward@thechannelcompany.com.

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