By Charles King, Pund-IT, Inc. July 13, 2016
Microsoft is such a force in so many IT markets that it’s sometimes easy to forget the critical role that channel partners play in its success. But that’s not something the company itself can ever be accused of, as has been amply clear to the 16,000+ attendees at this week’s Microsoft Worldwide Partner Conference (WPC 2016) in Toronto, Canada.
To get a sense of the symbiosis between Microsoft and its partners, consider the figures that the company noted in WPC 2016 keynotes, blogs and announcements. According to Microsoft, some 90% of its annual revenues are driven or touched by the channel. In FY 2015, the company’s revenues were north of $90B, meaning $80B+ was impacted by those engagements.
But not all partners or partner efforts are equally successful, especially when it comes to those who do or don’t leverage Microsoft’s Azure cloud platform, services and solutions. According to the company, partners driving over half their revenues in the cloud are attaching $5.87 of their own services for every $1.00 of Microsoft cloud solutions they sell.
That’s an impressive number but even more so considering the context of a new IDC survey cited by Microsoft at WPC 2016. According to the study, channel partners with more than half of their revenues in the cloud are growing twice as fast, realizing 1.5X gross profits and experiencing 1.8X more recurring revenues than those with less than 50% of their revenues in the cloud. Toss in IDC’s forecast that larger cloud market revenues will top $500B by 2020 and Microsoft’s case for the cloud is even stronger.
The case for Microsoft cloud
That these issues and points were emphasized at WPC 2016 is not unexpected. Since his elevation to Microsoft’s CEO position in February 2014, Satya Nadella has steadily strengthened the company’s cloud efforts and fine-tuned its Azure services and offerings, especially in regards to business clients.
Given that those organizations provide the bread and butter to many channel partners, it‘s natural that WPC 2016 encouraged partners to energize their cloud efforts by highlighting a host of recent and new related solutions, including:
- Microsoft Dynamics 365, which unifies the company’s CRM and ERP cloud solutions into a single service with purpose-built apps for specific business functions, including financials, field service, sales, operations, marketing, project service automation and customer service.
- Microsoft AppSource, where business users can find and try out line-of-business SaaS apps from Microsoft and its partners. At launch, AppSource includes more than 200 apps, add-ins and content packs.
- Windows 10 Enterprise E3 for CSP (Cloud Solutions Providers), a subscription to Windows 10 Enterprise Edition as part of a managed service offering that provides enterprise-grade security and control for businesses that do not have dedicated IT resources or sizable IT staffs. Costing $7 per seat per month, the service is now available through the CSP channel. As a result, CSPs will be able to offer their customers a full stack of Microsoft services and subscriptions, including Windows 10, Office 365, Azure and CRM subscriptions with one user account, one point of contact for support and one simplified bill.
- New partnerships with IBM and Booz Allen Hamilton are designed to meet and grow customer demand for Microsoft’s Surface and Surface Hub devices. The partnerships will focus on tailored business solutions for the financial services, consumer packaged goods, government and healthcare industries.
- Customers are moving to the cloud at a record pace, resulting in nearly 120,000 new Microsoft Azure subscriptions every month.
- Microsoft has created the Skype Operations Framework, an end-to-end deployment methodology for partners. The company also continues to expand the geographic availability of Skype for Business meetings and voice services in Office 365, adding PSTN Calling in the U.K., and expanded PSTN Conferencing in additional countries.
- Windows Server 2016 and System Center 2016 will launch at Microsoft Ignite this fall. The company also announced the general availability of Azure SQL Data Warehouse, which is designed to deliver cloud elasticity to data warehousing, saving time and money compared with competitive solutions.
- Microsoft noted that businesses are moving to Windows 10 more quickly than any previous Windows release, with over 350M devices currently running the OS and more than 96% of business customers in active pilots. The company also highlighted a Forrester study suggesting that Windows 10 customers are experiencing improved productivity and cost savings resulting in an average ROI of 188 percent with a 13-month payback.
- Secure Productive Enterprise (SPE), a next-generation enterprise solution that brings together Office 365, Windows 10 Enterprise and Enterprise Mobility Suite with advanced E5 SKUs. The per-user offer will include productivity server rights and Office Pro Plus to support customers deploying hybrid on-premises and cloud solutions.
Transformational digital partnerships
Microsoft also used WPC to highlight successful efforts among partners and customers that are using Azure and other company solutions to transform their businesses, including Japan Airlines (Hololens for flight crew and mechanics training), Ecolab (Azure-based services for water usage and conservation) and Schneider Electric (Azure-based management of rural solar power distribution).
Among these, GE’s plans to bring its Predix platform for industrial Internet and IoT solutions to Microsoft Azure is one of the most intriguing efforts. According to the companies, this marks the first step in what will become a broad strategic collaboration that will enable customers around the world to capture intelligence from their industrial assets and gain value from that data via Microsoft’s enterprise cloud applications.
To achieve this, Azure will support the entire Predix ecosystems, offering customers access to core IoT applications, as well as data sovereignty, hybrid capabilities, and advanced developer and data services. GE and Microsoft also plan to integrate Predix with the Azure IoT Suite and Cortana Intelligence Suite, along with Microsoft business applications, like Office 365, Dynamics 365 and Power BI. As a result, the companies say customers will be able to seamlessly connect industrial data with business processes and analytics.
What are we to make of all this? The essential message at WPC 2016 is that Microsoft understands the evolving needs of its business customers and channel partners, and continues to explore and enable opportunities where all parties benefit. To drive those points home, the company followed a traditional messaging approach that:
- Acknowledged the importance and value of channel partners
- Revealed the success of past efforts and new events/trends that will impact partners
- Enabled new and next generation technologies that partners can utilize to drive new services and revenues, and
- Assured partners that Microsoft is continuing to develop next generation innovations that will drive future opportunities and profits
Though this narrative model may be conventional, its effectiveness depends on supporting examples and proof points. Given its latest Azure-based offerings and services, and planned future innovations, Microsoft’s continuing focus on the cloud is both appropriate and well-intentioned.
But the success of these efforts is also absolutely critical for the company. Like other traditional software vendors, cloud computing has significantly altered Microsoft’s business and go-to-market strategies. WPC 2016 emphasized the cloud-based transformations achieved by customers like GE, Ecolab, and Japan Airlines but an equally formidable cloud-based evolution is occurring within Microsoft’s channel community.
It’s no surprise that the company is enabling and empowering its partners’ and customers’ journeys to its cloud services and solutions. That was entirely expected. But the larger message at WPC 2016 was that cloud is no longer simply an optional way forward for Microsoft’s channel partners but is instead essential to their current and future success.
© 2016 Pund-IT, Inc. All rights reserved.