In-Depth

The New Rules of Partnering with Microsoft

As the Microsoft Partner Program marks its fifth anniversary, its leadership lays out a new long-term game plan.

• By Anne Stuart
• July 01, 2008

But there are two things Microsoft wants you to know about that effort, sure to be discussed everywhere from keynote speeches to cocktail parties during the July 7-10 event. First, it's very much a work in progress, with plenty of gaps to be filled and questions to be answered. Second, but equally important: Change won't come overnight.

"We're going to do it in an evolutionary way," says Julie Bennani, the program's general manager, who highlighted some key elements in the new program during exclusive interviews with RCP editors a few weeks ago. "We don't want to whipsaw the channel. We want our partners to come with us."

The multifaceted initiative comes as the program marks its fifth anniversary, an occasion that Microsoft officials viewed as the perfect time to take stock.

Bennani says the program's original intent remains as relevant today as it was in 2003: "Any partner of any type can, by partnering with Microsoft, extend their reach, reduce their costs, increase profitability and deliver innovative solutions," she says. "We feel like we've done a fabulous job of engaging the ecosystem to date."

At the same time, Microsoft sees plenty of room for improvement. "The world changes, our partners are changing, our customers are changing," Bennani says. "So we need to continue to evolve where we head with the program itself."

Specifically, she says, the marketplace has become far more sophisticated since the program's launch: "We've moved from a very transaction-oriented, linear partner value chain to something that's much more complex. We've got our partners in the ecosystem that are doing transactions, but we've got a lot of them that are starting to do more solutions and services that are connecting more tightly with what we are putting in the market." Another factor in the decision to reorganize the program: the entire industry's no-turning-back journey into the era of Software plus Services (S+S). A third: a diverse customer base that includes everything from giant enterprises to struggling small businesses to individual consumers.

And finally, there's the sheer number of partners involved -- officially, nearly 400,000 worldwide -- a number that Bennani says could double within the next few years.

Overall, the emphasis is on clarifying, unifying and, where possible, streamlining the program's offerings-while, at the same time, meeting the needs of the program's highly diverse, rapidly growing constituency. Says Bennani: "We're trying to balance being complete with the goal of moving toward simplicity."

Some program changes are strategic and long-term. Chief among them: a new set of designations that will eventually rank partners not just as competent, but as "good," "better" or "best," in various product and technology specialty areas. Others are more tactical and immediate, such as an updated collection of partner competencies rolled out on May 30. Many -- such as enhanced business-model profiling and a tighter focus on vertical industries -- are currently high-level goals, with specifics yet to be fleshed out.

Following are a few highlights of the Microsoft Partner Program's new game plan:

Good, Better, Best
Microsoft's current partner-program structure is, of course, the three-tier pyramid with Registered Members at the base, Certified Partners in the middle and Gold Certified Partners at the top (and the newer Small Business Specialist Community spanning all three tiers).

At the moment, that structure remains unchanged. But Microsoft is adding a "framework" of designations intended to go beyond simply identifying a partner as competent in various specialties, instead ranking the level of competency in each area as "Good," "Better" or "Best." Bennani explains the reasoning this way: "When a partner qualifies in the program today, if they're, say, certified in [customer relationship management] and they're certified in mobility, we allow them to call themselves Gold." However, that status doesn't indicate how much expertise the partner actually has in either specialty -- a shortcoming that the Good, Better or Best ranking is designed to correct.

In addition, the criteria for earning those labels will be tailored to fit each specialty. "We want to be very clear about what a Best partner in CRM looks like, and that's probably very different than a Best partner in mobility," Bennani explains. "That's the kind of clarity that we're trying to drive."

Partners and customers have both long sought such clarity about what Microsoft considers "the best" of its partner community. "Partners want to know what Microsoft expects, what Microsoft needs in order for them to surface themselves that way," Bennani says. "And customers also want to know who we think are our best partners, based on their quality, their commitment to Microsoft, their proven expertise, etc."

And the best partner for a given customer scenario might not be the biggest one -- or even one that's earned Gold Certification. "We have our largest partners that are the most committed and maybe have high-revenue impact. But we also have partners that may not be very big, but are the best around a technology or a location or a vertical that we want to surface with our customers," Bennani says. "It's very hard for a smaller company to be branded 'Gold' today. There are lots of hurdles. It's a big investment for them." Providing that alternate route to be branded as Best can help level the playing field for those partners.

Currently, the new labels remain conceptual, with those customized requirements to be developed over time, Bennani says: "Evolving the entire program against the Good-Better-Best vision will be a three-year journey."

It isn't yet clear exactly how the new framework will affect the classic three-tier pyramid. But program officials are already considering changes for the Certified and Gold Certified levels in response to long-standing partner concerns. "We've heard feedback that our Gold bar is too easy ... and that for the Certified base, the value proposition has become muddied," Bennani says. "We haven't been clear about what those partners mean to the marketplace." As a result, Bennani says, "we're refreshing the requirements" for Gold Certification -- but, so far, program officials aren't publicly discussing what might change or when that might happen. Meanwhile, Bennani hinted that the Certified level -- whose numbers have been steadily shrinking and which currently has "no brand equity" in the marketplace -- could eventually be phased out.

Something Old, Something New
Microsoft has already refreshed its collection of partner competencies. A few weeks ago, officials rolled out three new competencies, renamed a fourth and refined the requirements for others.

"The competencies are a good step into what we're thinking about with our long-term vision for the next generation" in terms of a clearer, more unified approach, Bennani says. As an example, she cites the new Business Intelligence (BI) competency. Previously, the program's approach to BI was based on Microsoft's product-group organizational structure, with various aspects covered by two specializations in two separate competency areas. "Now we have a customer-relevant approach that brings together a single, unified view of what BI means to a customer and how a partner might support that," Bennani says.

Both the existing and the new competencies better reflect the needs of today's IT marketplace-and of partners themselves: "The competencies better complement each other now. They're more useful for people with multiple practices," Bennani says. "For instance, there's a lot of complementary activity between Data Management and Business Intelligence." The underlying goal: "We want to go down the path of deeper specialization for partners."

And the competencies will soon better complement other pieces of the partner program as well, Bennani adds. During Microsoft's 2009 fiscal year, which began on July 1, officials plan to more strongly align partner competencies with the company's high-powered market campaigns. "That way, when we do our broad-scale PR and advertising, they can actually tag off that in a much simpler way and a much more logical way," Bennani says. "We're doing a lot of work internally ... to make sure those value propositions land in a way that's relevant to both customers and partners, because they're not always the same."

Longer-term, Microsoft may also make other organizations' certifications available through the partner program, focusing on those that set the standards for their industries. One example: The prestigious project-management credential offered by the Project Management Institute, an international professional association, might be offered to Dynamics partners: "Project-management skills are critical to a successful [enterprise resource planning] implementation," Bennani points out. "We want to broaden our view so we encompass that kind of range" of outside opportunities.

Finally, Microsoft plans to offer partners additional help in developing key business skills and capabilities. "Our partners have been asking for help from us around sales, marketing and business effectiveness with customers," Bennani says. "They wouldn't necessarily be certified in these areas, but we'll provide an assessment route for them."

C-Sat: Customer Satisfaction
The partner program's new rules also add what Bennani calls "a hard pivot" around customer satisfaction. "We as a company think about [customer satisfaction], but we haven't explicitly connected that to our partnering strategies" until now, she explains. "We're recognizing the significance of the role that partners play in driving that experience and satisfaction for us -- and making sure that we factor that into all of our strategies as we move ahead."

Those efforts will tie into a larger initiative driven by Microsoft COO Kevin Turner, long a critic of the shortage of comprehensive data on how satisfied customers are with their Microsoft partners. Already underway: an effort in which Microsoft contracts with a third party to survey a partner's customers, then provides the partner with criteria for putting the results in perspective. (Microsoft officials say they receive only an aggregate view of the C-Sat data, with no customer- or partner- identifying information.)"They're able to benchmark themselves against similar partners who are serving similar customers with similar vertical focus or similar solutions," Bennani explains. That process, which had been voluntary since its introduction 18 months ago, will become a requirement for upper-level partners during the current fiscal year.

But even in making the process mandatory, Microsoft views it as a positive tool to help partners better understand exactly what

customers think about their products and services-information they can use to improve and differentiate themselves. One function worth highlighting: The tool allows a partner company to gauge its own sense of how satisfied a customer is-then compare that assessment against the customer's actual evaluation. "If they're aligned, that's terrific-that means you've got folks that are very in tune with your customer," Bennani says. "If they're not, it's a good way to work with your employees to see what the disconnects are."

Coming down the road: a shift in the types of customer testimonials that Microsoft requires its upper-level partners to produce. "Today, we've got references that are formally baked into how we assess partners. We feel there is significant room for improvement around that," she says. "The rigor around those is not what we think it could be." Meanwhile, the software-delivery revolution is already reshaping partner-customer relationships, Bennani says: "With Software plus Services, we have to think more broadly about how our partners influence our customers."

Like many other pieces of the new game plan, specifics remain undetermined. But program officials currently expect to phase out the emphasis on formal references in favor of case studies and other more specific, quantifiable forms of customer evidence.

One Microsoft, Many Segments
Finally, Microsoft is taking to heart its partners complaints that the program has gotten too convoluted and fragmented. "We continue to grow as a company and we're more complex than we were five years ago," Bennani acknowledges. "The question is, how do we continue to do all the innovative things we want to do-and still make it easier for partners to connect with us?" The answer becomes especially challenging given the increasing emphasis on specialization and differentiation.

Big picture, the vision hinges on the "One Microsoft" philosophy, "which includes simplifying the engagement as much as possible and making it transparent," Bennani explains. While program officials will examine multiple ways to streamline their offerings, one area where program members should soon notice consolidation is in account management. "The feedback has been, 'We love that we're managed, but we have too many people and they're approaching us from 10 different angles,'" Bennani says. Program officials will work to make sure managed partners get the same level of support in a unified, coordinated way.

At this stage, it's too early to say how the proposed revisions will affect partners.

"What I've seen is very conceptual and big-picture," says Paul DeGroot, an analyst for Kirkland, Wash.-based consultancy Directions on Microsoft (and an RCP columnist), who was also briefed on Microsoft's plans before the WPC. "I haven't seen how these new goals will be delivered specifically to partners in the form of partner program changes."

In addition, "many of them, such as greater focus on verticals, are signals that the MSPP has been giving for quite awhile," he says. "Microsoft already has a form of good-better-best in the partner tiers, and it already has a rough element of vertical specialization in the competencies."

Overall, he says: "It makes sense that Microsoft wants to clarify the specific value that a partner brings to the company. But implementation and execution will be very important."