In-Depth

Microsoft ISVs and VARs Finding Success in Partner-to-Partner Deals

• September 24, 2012

Creating a channel of service specialists makes sense for Microsoft, which is seeking to ensure customers receive support that will maximize the value of their investment in business solutions. But customers also want simplicity in their business relationships -- finding a new partner for every IT project they undertake is not simple.

Which is where P2P relationships come into play. Because partners can no longer be everything to every customer, they seek partnerships that complement and extend their services to maximize customer relationships. Much like building contractors, partners can bring added value to customers through partnerships and referrals, bringing in the experts for every job.

"Partners are starting to leverage each other's channels, solutions and support offerings. It's a natural event that's happening within the channel," says Jenni Flinders, vice president of the Microsoft U.S. Partner Group. "Partners aren't trying to be all things to all customers. They're becoming very specific in their offerings and leveraging the capabilities of other partners to bring end-to-end solutions to their customers."

Partners work together in many different ways, but the relationships most affected by the MPN changes include VARs working with ISVs to offer specialized solutions, and partners with complementary competencies delivering services jointly.

ISVs Plus VARs
The relationship between an ISV and a VAR covers a wide range of complexities. The simplest is when the VAR purchases and downloads an application to be installed as part of a project implementation. Inputs from the ISV are limited to the user guide and installation instructions. The most complex relationship is when the VAR and the ISV deliver large-scale project services together.

Jornata LLC, a Boston-based SharePoint partner, uses the Axceler product ControlPoint on many of its migration projects. When Jornata determined that it needed a SharePoint governance tool, the company surveyed the tools available and found the right fit with Axceler.

"During our evaluations, we talked to Axceler extensively to understand their philosophy as well as their products. Our ISV relationships are very limited because we're only going to recommend products that we strongly believe in," says Scott Jamison, chief architect and CEO of Jornata. "That's what led us to the relationship with Axceler."

For those solutions that provide a key component of a VAR's offering, the relationship with an ISV should be strategic. An ISV that's deeply involved in a vertical market can and should serve as a tremendous business development asset for the VAR. Adding strength to the concept is the fact that working closely with a few, very select ISVs is not only easier to manage, but is also more valuable to both parties in the end.

An additional benefit for all involved that comes from a close working relationship between an ISV and a VAR is the improvement of the ISV's product. VARs implementing solutions in the field provide the front-line feedback for ISVs to respond to changing customer requirements. "Since they're doing the up-front work with the customer and understanding the customer's pain points, the type of feedback we get from partners is incredibly beneficial to us for our product roadmap for development," says Claudine Bianchi, Axceler chief marketing officer. "They're comfortable telling us the features of the product that can be improved or enhanced."

As every VAR knows, there's an abundance of ISVs that are working to build their VAR channels. While it's easy to be tempted by new functionality, the depth of relationships will always be key to success.

ISV relationships, as with every other business decision, should be based on strategic objectives. VARs are well advised to focus on maintaining strong relationships with a few strategic ISVs. In the same vein, ISVs will spend less time cajoling reluctant partners if they focus on working closely with a few, well-aligned VARs.

Complementary Partnerships
In the past, SIs and VARs were reluctant to engage other partners on customer projects. Fear of customer poaching, lost license revenue and customer confusion were all factors that kept partnering the exception rather than the rule. While those concerns may still linger, there has clearly been a channel mind shift that the cost and customer service benefits derived from partnering outweigh the risks. Finding the right partner is the key to risk control.

When Sam Cool, vice president of Planet Technologies, and John Hendrickson, CEO at InterDyn BMI, met at a Microsoft Dynamics Inner Circle leadership meeting, the first discussions were not about how their firms could partner. The families-included event provided an opportunity for people to connect with like-minded people on a personal level.

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As a longtime Microsoft partner, Hendrickson has learned that good business connections can present themselves at any time. "You never know where you may find your partners," Hendrickson says. "Look for opportunity, but do your due diligence. Gather the knowledge and file it away."

When an InterDyn BMI client needed CRM expertise that his team couldn't deliver, Hendrickson called Cool to tap into Planet Technology's deep CRM bench. While Hendrickson was looking to deliver a quality solution to the client, he was also interested in the knowledge that Planet Technology's team could share with the InterDyn BMI team.

"Not only would we need to support the client later, but I also wanted my team to gain some knowledge through the process. This arrangement is better than working as an outsource model, where the code is completed and delivered back to the partner. We worked with a trusted partner to learn more," Hendrickson says. "There was not only a great solution delivered to the customer, but there was knowledge transfer."

As a member of the elite Microsoft National Systems Integrator (NSI) program, Planet Technologies has access to specialized technical training and resources for its employees. Ready to share that knowledge, Planet Technology's altruistic philosophy has paid off well in its partner connections. After the initial InterDyn BMI project was completed, another followed closely behind.

"We build partnerships with a long-term view," Cool says. "As our partners build their skills, they'll win more and engage us on more-complex projects. The opportunity expands for us as our partners win."

As technology has become more specialized, it's become a necessity for partners to work more cooperatively. Alignment of business philosophies, trust and respect are clearly the fundamentals for success in partnership -- no surprise there. Finding those partners with the right fit and the right competencies continues to be the challenge. Always be looking.

Evolution of Partnership Programs
Currently, the majority of P2P connections are born out of necessity from a functional requirement or based on personal relationships. That might be changing. With Microsoft prodding partners to focus on vertical markets, ISVs and VARs are combining forces to market, sell and deliver services. Much like the MPN program has matured with a stricter partner model, ISVs will have to focus their efforts on their best VARs.

Rockwell Automation Inc., a global industrial automation control and information solutions provider, has already taken the step to formalize their partnerships. According to the company's Web site, the Rockwell Automation Systems Integrator Program requirements include: "Operational excellence, competency validation and product knowledge, Rockwell Automation annual purchases and established sales and marketing efforts within the integrator's marketing territory."

Maverick Technologies LLC, a Columbia, Ill.-based Dynamics AX and Dynamics CRM partner, has worked with Rockwell Automation for many years and recently achieved "Recognized" systems integrator (SI) status. "Over time, as our SIs prove their competency and have success in delivering projects, we promote them to higher and higher levels within our program," says Khris Kammer, information partner manager for Rockwell Automation. "Maverick's achievement means that they have passed the requisite number of exams, and we have queried stakeholders from their projects to verify service-delivery quality."

An industry leader in the manufacturing sector, Rockwell Automation helps recognized SI partners build visibility in that vertical through joint marketing. Co-sponsored webcasts, videos and events help validate industry expertise for those SIs that have met the Rockwell Automation bar.

"We're proud of our partners -- their success helps drive our global leadership position in the marketplace," says Kammer. "With such an important role in our go-to-market strategy, we strive to ensure our customers have access to the best partners to help solve their varying needs."

Rob Gellings, senior vice president of enterprise integration for Maverick Technologies, says, "Rockwell's partner program is meaningful because it weeds out the unqualified folks and demonstrates our commitment to excellence. We think it's better to hold all partners to the higher standard -- for both Microsoft and Rockwell -- to improve value to customers."

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Formalization of partner programs takes the next step forward, validating the vertical and functional competency of VARs and SIs. As with the MPN program, ensuring customer experience is becoming more critical for ISVs to protect the reputation of their brand.

Making Connections: IAMCP
Finding the right partners to bring value to customers and mitigate risk takes work. While sources like Pinpoint -- the online Microsoft partner and solution directory -- and the annual Microsoft Worldwide Partner Conference each July are a huge step forward for inter-channel connections, more regular face-to-face meetings and conversations play a big part in finding compatible partners.

The International Association of Microsoft Channel Partners (IAMCP) is the largest independent organization dedicated to promoting connections among Microsoft partners. Regional chapters across the globe hold regular meetings to give partners the opportunity to meet their peers and find reasons to partner.

At David Gersten's first Southern California IAMCP chapter meeting in March 2011, he announced that he had an ERP opportunity with a CRM component and was looking for a CRM partner who could help. Fortunately for Gersten, who is a business development executive for Cerritos, Calif.-based Apex Computer Systems Inc., there was a Dynamics CRM gold competency partner at the meeting: Richard Wu, Southwest regional director for Webfortis LLC.

After winning and delivering the project together, Apex and Webfortis received the Southern California IAMCP chapter's "Partnering for Success" award for 2011.

"Partnerships will continue to be more important as Microsoft emphasizes specialization. Our partnership with Apex is a proof point that specialization does work as long as you're willing to partner," Wu says. "You aren't going to be limiting your revenue, but actually increasing your business. Good partners will expose you to many more customers than you can ever get only on your own."

On the regional level, IAMCP can provide partners with a unique way to meet other partners in a non-competitive environment. There are chapters in more than 35 U.S. cities and in many countries. Regular meetings, often held at a local Microsoft office, allow partners to learn from one another as well as explore P2P opportunities.

As volunteer-based organizations, the challenge for IAMCP chapters is to deliver a consistent experience for members. The rise and fall of membership in each chapter is directly tied to the energy and commitment of the local chapter leadership. For those partners ready to contribute to the momentum of the organization, joining the local IAMCP can be well worth the investment.

Making Partnerships Work
As with all relationships, communication and flexibility are the most common success factors noted by partners for project and long-term collaboration success. Partners advise that communication should be well defined and well structured up front to ensure that lines stay open. Because every project involves unknowns, partners should discuss how they'll accommodate changes from the beginning.

"You have to have a fluid model and keep up with communications," says Mike Rogers, VP of business development and marketing for Customer Effective Inc., a Dynamics CRM gold competency partner. "Partnerships work when partners can adapt to customer expectations. We all know that things are going to change during the course of a project. You need to have a framework in place that's flexible enough to deal with those changes."

Arlin Sorenson, a longtime advocate of P2P relationships among Microsoft partners, also places a heavy emphasis on establishing a strong foundation. "There needs to be investment of time at the principal level," Sorenson says. "Something unexpected always comes up when you're delivering a project. People have to make decisions on your behalf without you being there. Without relationships, it can become pretty sticky, pretty fast. Build a relationship first."

It's Not a One-Stop-Shop World Anymore
The world has changed from the days when "Your One-Stop Shop" was on most IT professional's business cards. But specialization doesn't mean that partners have to limit the value they provide to customers. Whether it's through referrals, subcontracting or parallel projects, bringing in the best people for the job will win trust and repeat business.

For partners to create the most impact, relationships should be intentional and strategic, building lines of business and filling competency gaps. Delivering on customer trust requires due diligence in finding and maintaining connections with the best-qualified and most-reliable partners.

The changes to the MPN program may have fueled the proliferation of P2P relationships, but, as always, partners adapt to maximize opportunity. Partners are capitalizing on the strength of the channel to build service models that suit the unique needs of each customer.