RCP Cover Story
Should You Get Services-Ready?
Microsoft rolls consulting know-how into offerings that managed partners can take to upper midmarket and enterprise customers.
- By Scott Bekker
- June 01, 2009
One of the jobs of the Microsoft Services division is to serve as a stalking horse for Microsoft partners. The prey in the stalking horse analogy is any new business opportunity for Microsoft technology. Sometimes Microsoft expertise is needed to flesh out the usage case. Sometimes the early engagements require involvement of Microsoft employees who can go back to the product teams and quickly implement changes to the underlying products. Sometimes, squirrelly customers just want Microsoft "skin in the game" for comfort.
Once Microsoft consultants have validated the opportunity with real customers and generated some implementation guidelines and best practices, the theory goes, Microsoft has a better business case to hand to partners, who can then go out and implement the technology far and wide.
Historically, Microsoft has categorized those types of engagements in several buckets. One is new technology, which is why Microsoft tends to ramp up on consultants ahead of the launch of new products, such as Windows 7, Windows Server 2008 R2 or Exchange 2010. Another is lighthouse engagements, which involve using Microsoft technology in areas that customers haven't traditionally associated with Microsoft, such as unified communications or business intelligence or enterprise search. Finally, there is customer demand/satisfaction, for scenarios when customers just want Microsoft consultants on site for peace of mind. The customer thought process is, "I'm installing Microsoft products -- I want Microsoft employees here to throttle if necessary." Microsoft often tries to steer those customers into joint engagements with Microsoft and a partner.
While Microsoft Consulting Services (MCS) itself is one of the larger IT consulting services organizations in the industry, Microsoft has repeatedly and consistently downplayed its aspirations for the unit, viewing it instead as a tool for seeding markets that partners can later go and reap.
Much of the expertise transfer from MCS to Microsoft's closest partners over the years has been informal or ad hoc. Eventually, enough intellectual property on best practices and implementation guidelines percolates to partners through personal relationships with Microsoft employees or via Microsoft's various Web properties, even as those partners are learning hard-knock implementation lessons for themselves as they take the products to customers.
About five years ago, Microsoft began thinking about ways to formalize that knowledge-transfer. Rick Devenuti, the retired senior vice president for Microsoft Services & IT, began talking about creating SKUs, or packages of service offerings, developed by Microsoft consultants and handed over to partners. The effort proved trickier than Devenuti first imagined. But Microsoft has developed the concept over the past few years, under current Microsoft Services Corporate Vice President Maria Martinez, who started referring to the concept as Service Lines.
"Our goal here is to engage in a few reference implementations, try to create the delivery IP. Once we get those wins and that knowledge, then [we'll] really proactively start focusing more in a systematic way on transferring that IP to partners," Martinez said during a Microsoft Worldwide Partner Conference (WPC) keynote in 2007. "As we mature in this model, our goal will be that we'll engage in these areas only when the technology is new or when the customer is really requesting a direct involvement with us."
Martinez heralded the arrival of that systemic way of transferring IP to partners in late April with the public launch of Microsoft's new Services Ready initiative. "In good economic times and bad, customers count on services partners to help them adopt, deploy and maximize the value of their Microsoft investments," Martinez said in a statement announcing the program on April 20. "Services Ready goes a long way toward ensuring our customers have a consistent, high-value experience with partners who are armed with Microsoft's own tested and proven tools."
Services Ready is designed to provide Gold Certified Partners with access to what Microsoft calls "pre-tested, repeatable offerings and best practices developed by Microsoft Services during early consulting engagements with Microsoft customers." The packages, for which Microsoft charges partners a "cost-recovery" fee, include several deliverables and benefits. According to Microsoft:
Program Deliverables include:
- Documented best practices and delivery guidance
- Customer-ready project plans, deliverable templates and sales materials
- Training developed and delivered by Microsoft consultants based on recent customer experiences
- Joint partner and Microsoft co-engagement on a customer project or projects to validate classroom training mastery and complete transfer of knowledge
Program Benefits include:
- Accelerate creation or maturation of technology practices and reduce costs by building on Microsoft Services expertise
- Deliver higher quality of customer projects using experiences harvested from Microsoft Services projects
- Support from a Services Ready dedicated advocate in a partner's area
- Improved time-to-market using sales training and templates targeting projects to appropriate customers
Initial Services Ready offerings are:
- Identity and Security
- Systems Management
- Desktop Platform
- Portals and Collaboration
- Unified Communications
- Deployment Services
- Customer Care Framework
The program announced in April has been piloted by a handful of partners, some of whom were approached at the 2008 WPC in Houston, says Wayne Prentiss, senior director of Microsoft Services Partner Strategy.
Leading up to the April launch, Microsoft had reached triple digits in terms of the number of partners involved. "In October, we had three partners signed up. Even now, with the economy where it is, we're at 120 partners," Prentiss says. Because Microsoft is taking the program public, the company wants the program to grow, but it will never be too broad.
"This is a pretty high-involvement program. It's really a program targeted at hundreds of partners, not thousands of partners," Prentiss explains. Those partners will be spread around the world. Prentiss says Microsoft has hired or trained Services Ready advocates globally in advance of ramping up the program.
While the Gold Certified Partner level is a prerequisite for participation in Services Ready, the partners don't necessarily have to come from the Enterprise Partner Group side of the program. "Right now about half the partners are from the Enterprise Partner Group, but we do have quite a number of partners who engage from the SMS&P," Prentiss says. Partners will need to be able to afford the sign-up fee: about $20,000, depending on the region. Microsoft positions the fee as strictly to cover its own expenses.
The program is intended for partners servicing larger customers.
"The typical target for the offerings as they are now is enterprise and upper-midmarket customers," Prentiss explains. "If a customer is smaller, it's not like all the materials are irrelevant, but if you don't have a multi-site environment, for example, you don't have to worry about that part of the design."
Prentiss says early adopter partners have so far shown the most interest in portals, collaboration and virtualization. He provides the virtualization offering as an example of the way the program is supposed to work: "We came out with the final pieces of our virtualization technology in mid-October. Within Microsoft Services we had been working with early adoption customers. We were harvesting from those engagements what the best practices were, which we gave to our internal consultants. We spun that up pretty quickly, and within a very short time, mid-January, we were out with partners with this offering." He adds: "They had access right off the bat. Most partners really don't have a way to go out and build that stuff that early in the product lifecycle."
One early adopter partner company that's seeing value in Services Ready is Gold Certified Partner Tata Consultancy Services (TCS) Ltd. TCS Global Director Raman Venkatraman described the challenge of adding new services offerings to the TCS portfolio as being similar to starting a new business. "Services Ready eliminates a great deal of that risk because Microsoft has essentially blazed the trail and provided resources to guide our implementation and help us provide greater satisfaction for the customer," Venkatraman said in a statement.
Another partner has already used Services Ready for a services management optimization engagement. In a case study posted to the Microsoft Services site, executives with BT Engage IT, a Gold Certified Partner in the United Kingdom, described how the company used elements of the program to streamline delivery of a solution. BT Engage IT is a 900-employee company providing professional services and managed IT services for private and public sector clients with between 200 seats and 4,000 seats.
|Keeping an Eye on the Microsoft Services Business
Headcount and revenues have been going up in Microsoft's fiscal year 2009.
As one of the largest IT consulting providers in the industry, the performance of the Microsoft Services unit provides a window into how large IT consulting companies are doing in this global recession.
Microsoft as a whole saw a drop in revenues and earnings for its third financial quarter of 2009, which ended on March 31. The company is fairly stingy with the details for many of its business units, but it includes a few lines every quarter related to the consulting business.
Even while reducing headcount throughout the company, Microsoft has been adding staff on the consulting side. "Cost of revenue increased $837 million or 10 percent, primarily reflecting increased online costs ... and increased costs associated with the growth in our consulting services," Microsoft reported in its 10-Q filing with the U.S. Securities and Exchange Commission.
During the same quarter, consulting and Premier and Professional product support services revenue increased $38 million or 6 percent, "primarily due to revenue from annuity support agreements." Dissecting those figures reveals that quarterly revenues for consulting and Premier and Professional product support were approximately $671 million. Previous comments by Microsoft officials indicate that nearly half of the company's consulting revenues come from support contracts.
The growth was in line with gains in the server and tools business, of which Microsoft consulting is a part for accounting purposes. For the quarter, Microsoft's server and tools business grew 7 percent on revenues of nearly $3.5 billion. For the first three quarters of Microsoft's fiscal 2009 (July through March), Microsoft's consulting business has posted about $2.1 billion in revenues, according to RCP calculations based on the company's quarterly reports. Interestingly, in the first quarter -- ended Sept. 30 -- Microsoft attributed brisk growth of 19 percent to the encouraging-sounding "higher demand for consulting and support services by corporate enterprises."
In the second and third quarters, much tougher economy-wide and for Microsoft, company accountants attributed the slightly more modest growth of 16 percent in Q2 and the much more modest growth of 6 percent in Q3 to annuity support agreement revenues.
As part of a large IT infrastructure upgrade, a British property investment firm contracted to outsource service-desk operations to BT Engage IT. In scoping the Microsoft System Center Operations Manager 2007 project for the customer, BT Engage IT's consultants used several Services Ready templates and tools, including pre-engagement interview forms, architecture design documents, task assignment spreadsheets and projection progress spreadsheets.
BT Engage IT found several benefits in using the materials both in the project and to the business in general. On the project, BT Engage IT Senior Consultant John Quirk estimated that the firm needed about half as much off-site consultant time to complete the project with the Services Ready resources as it would for an ordinary job. One example was creation of the project proposal, which took a few hours rather than up to four days, as it would under normal circumstances. The documentation provided through Services Ready also helped BT Engage IT answer client questions about the proposal very quickly. Using the pre-engagement interview from Microsoft, Quirk reported, helped limit the scope from creeping outward.
In all, the experience left BT Engage IT confident in its ability to take on larger projects, even in a business area where it already had expertise. "We've completed hundreds of System Center Operations Manager implementations to date, but knowing that we have a proven, scalable framework gives me confidence that we can tackle larger projects in the future," Quirk said in the case study.
After working on the services management optimization project, BT Engage IT is looking at other Services Ready offerings. Said Karen Dailyn, services partner manager at BT Engage IT: "We have a keen interest in using the Microsoft Services best practices in unified communications, Microsoft Office SharePoint Server and virtualization, especially."
John Madden, a Boston-based research analyst with Ovum, says he thinks the field-tested and repeatable solutions of Services Ready will prove worthwhile for many of Microsoft's partners.
"Microsoft Services has been working for the past few years to make it easier for services partners to engage with Microsoft and to generate additional revenue -- from streamlining the overall partner program, to creating areas of focus through service lines, to drawing clearer 'rules of engagement' on where Microsoft will and will not play directly," Madden explains. "Services Ready is another culmination of these efforts."
|Services Ready at WPC:
Microsoft to detail Services Ready program in New Orleans.
Attendees at the Microsoft Worldwide Partner Conference (WPC) over the years have witnessed the evolution of the Services Ready program for partners.
The idea was introduced at the 2005 conference as the SKU concept, and fleshed out two years later as the "Service Lines" initiative. A year ago at the WPC in Houston, Microsoft approached individual partners about participating in Services Ready.
This year, attendees at the WPC in New Orleans will again get a front-row seat.
Gary Dickinson, a veteran Microsoft presenter, is scheduled to conduct a session called "Services Ready: Using Service Line Offerings to Accelerate Readiness and Practice Development."
Dickinson's session will provide an overview of how to engage with Microsoft Consulting Services to get the most out of the Services Ready initiative.
He adds: "Given the economy, if I were a Microsoft partner, I would look favorably on any program offered by Microsoft that gave me the chance to reach out to new customers, sharpen my Microsoft-related skills and tighten my relationship with Microsoft."
Madden offers one caveat for potential participants in Microsoft's new Services Ready program. "I guess one danger may be for partners to overreach. In other words, they may be anxious to move into services lines where they have yet to build up the necessary skills and intellectual property," he cautions. "That may sound obvious, but with this economy I think focus is important."
"Partners should take advantage of this program only where it makes sense -- and not try to do too much too soon," Madden says.