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In-Depth

Microsoft Partners, Meet the NSIs

National Systems Integrators are the rock stars of the U.S. Microsoft Partner Community. Is it a designation worth aspiring to?

Each month, Geno Cenci and his regional sales managers from ePlus Technology Inc. spend a full day on the phone, about an hour at a time, with six different Microsoft regional partner account managers (PAMs), going over the ePlus pipeline. If it sounds like a long day, it is.

But imagine what it would be like if ePlus didn't have a national business development manager (BDM) such as Patricia Kniphfer from Microsoft to coordinate with the regional PAMs whose territories overlap ePlus' approximately 20 offices, line-up the calls and help set the tone. ePlus would probably be taking calls from those regional PAMs over different days, and the Herndon, Va.-based systems integrator would have to work harder to get the regional PAMs to understand ePlus' goals as a company with business horizons that spread beyond any regional PAM's borders.

Having that national BDM is one of the key perks of ePlus' designation as a Microsoft National Systems Integrator (NSI).

"It helps us get in sync with them on key initiatives we need to execute on," Cenci, Microsoft National Practice Director at ePlus, says of the long, but orderly and focused, monthly planning process. Getting all that planning out of the way leaves Cenci with one key contact at Microsoft who is very attuned to the company's needs, his national BDM, or NSI PAM. "I probably talk to my [NSI] PAM every day."

The company's status as an NSI, and having that NSI PAM advocate for ePlus, helps Cenci learn about opportunities early and get his company's problems solved throughout Microsoft. "When I talk to a lot of the Microsoft PAMs, everybody knows who ePlus is," he says. That awareness goes well beyond the field. "We've been able to get a lot more visibility with senior management," says Cenci of the company's situation since working its way into NSI status in 2007.

 "It helps us get in sync with [Microsoft] on key initiatives we need to execute on."

Geno Cenci, Microsoft National Practice Director, ePlus Technology Inc.

ePlus is one of the lucky few, the roughly 40 systems integrators within the United States that are officially named NSIs within the Microsoft U.S. Partner Group. It is, generally speaking, the largest of the Microsoft systems integrator partners based in the United States. It's typically a tier below the global alliance partners, also known as global systems integrators that may be based in the United States but have international scope, such as Accenture, CapGemini, Computer Sciences Corp., Hewlett-Packard Co. or Unisys Corp. And because "national" applies more to the way NSIs are handled by the Microsoft field than to the partner's true geographic reach, it's a status that any emerging systems integrator with a territory covering several regions could aspire to attain.

The names of NSIs are generally familiar to members of the Microsoft Partner Network. A few firms, such as direct market reseller CDW Corp., are national in scope, and attendees of the 2009 Microsoft Worldwide Partner Conference (WPC) in New Orleans would recognize CDW Microsoft Practice Director Liz Eversoll as one of the featured partners in the huge hanging posters in the hallways. Others like ePlus, which has offices throughout the east and in California, approach national coverage. NSI partners also frequently join Microsoft on stage at product launch events and on national tours. Idea Integration, the IT consulting and marketing unit of MPS Group and an NSI, for example, participated in a five-city tour with Microsoft in mid-2008 for the launches of Windows Server 2008, Visual Studio 2008 and SQL Server 2008.

NSIs are often at the forefront of Microsoft product initiatives. Sapient Corp. has been a driver for Microsoft efforts to gain mindshare in service-oriented architectures and business processes, and the company's Web page on its Microsoft alliance starts off with a quote attributed to the firm's NSI PAM spelling out Sapient's importance to Microsoft: "One of Sapient's great strengths is its ability to position and prove the scalability of our technologies with our most demanding customers." Another NSI, Pointbridge, has been an early seller of the cloud-based Microsoft Business Productivity Online Suite (BPOS) and a prominent advocate of BPOS to other partners.

Some other high-profile NSIs include Ascentium Corp., Catapult Systems Inc., Ironworks Consulting, M3 Technology Group LLC (part of Azaleos Corp.), Magenic Technologies Inc., Neudesic LLC, Perficient Inc., Slalom Consulting, speakTECH and Statera Inc.

 "We encourage and work with all partners that have the potential and business model to meet the criteria of the National Systems Integrator."

Jenni Flinders, Vice President, U.S. Partner Business Development and Sales, U.S. Partner Group, Microsoft

Setting a High Bar
For Microsoft to bring a partner company in as an NSI, the company has to meet a number of criteria. According to Jenni Flinders, vice president of U.S. partner business development and sales at Microsoft, the U.S. Partner Group might be flexible on some of the requirements if a partner is particularly strong in others.

"We look at all these criteria. Not every box has to be checked exactly," Flinders says. "It may be a choice that we make based on the engagement with these partners to put them in and help them build out some of those capabilities."

The baseline criteria that are reviewed twice a year are relatively straightforward to list, but difficult to achieve. First is a revenue bar for partner-influenced revenue as well as a partner-influenced pipeline -- think licensing revenue that Microsoft can directly attribute to the NSI partner even if the money officially flows through a Large Account Reseller. A second, separate bar involves services revenues surrounding Microsoft products. While Flinders and Cenci wouldn't say what these commitments are, others familiar with the NSI system said the two revenue bars add up to a total in the seven figures and increase every year.

To qualify, partners also must commit to a certain level of investment in growing their Microsoft practice, must have more than 50 Microsoft-focused employees across some mix of engineers, consultants and developers, and have to demonstrate the ability to create demand through dedicated marketing staff.

Then there's what could be called a law of threes -- the partner must be able to engage in three or more locations, three or more customer-size segments or three or more vertical markets within the United States. This is an area where Microsoft exercises discretion to bring in some partners that might be strong in one area to help them develop strength in the other requirements, Flinders says.

Through this year, NSI partners have been required to have three or more Microsoft Competencies. As Microsoft changes the Competency structure within the Microsoft Partner Network to add Advanced Competency versions of each Competency in October, the NSI requirement will also change. In the future, NSIs will be required to have a minimum of one Advanced Competency.

Finally, a partner company must have common business management and organizational practices across all offices -- this is a must so the NSI PAM has a single structure he can plug into.

A Shrinking Model
The NSI team has evolved significantly since it was created in 2006 and was tightened for fiscal year 2010, which runs through the end of this month. "Originally it was referred to as the VAR team and then evolved to be more around the larger SI partners across the United States when it was re-branded as NSI [around 2006]. In the past year, we've tried to stay true to the national [part of the name] and reduce redundancy with the field," she says. "In 2006, we had approximately 70 partners that the team managed; however, they did not meet the criteria of the NSI as it exists today. Many of those partners were more regional and local, and we have since transitioned them over to the appropriate field organization," Flinders says. "In fiscal year 2010, we strengthened the criteria to help the true national partners grow, and we reduced the number to 40. This year [fiscal year 2011] we will have between 40 and 45 partners, following our portfolio reviews with our team."

Analyst Paul DeGroot with Directions on Microsoft says NSIs also appear to be the latest iteration of an older Top 200 list of partners that Microsoft used to maintain but didn't make public. "Microsoft slotted them by geography, size, strategic importance and vertical expertise," DeGroot says. DeGroot speculates that there may be other reasons Microsoft has cut back on the number of NSIs.

"Microsoft wants to focus its limited marketing development funds on partners who have a track record for delivering the goods, so SIs who aren't generating the revenue or who are in a narrow geography or vertical that isn't promising right now are getting cut," DeGroot suggests. "[Or] there are fewer partners of this size and scope because of mergers or pullbacks in the scope of their business."

At the same time, DeGroot contends that Microsoft may be doing a better job than ever of correlating revenues to the partners that influence that revenue, creating a clearer picture of which partners are its biggest contributors. "For a long time, Microsoft had no way of tracking how much revenue a partner brought in, and even global integrators found that they had to proactively track this to remind Microsoft of how much business they generated for the company. A few years back, one told me that the Microsoft list had four major engagements listed in a given financial quarter. The systems integrator fleshed that out with another 16, based on their own records," DeGroot says.

"Because Microsoft has better tracking of this now, we can expect to see a partner's Microsoft revenue generation play a bigger role in their relationship with Microsoft. While many vendors' partner programs have tiers that are based largely on sales of a vendor's products, Microsoft hasn't done that," DeGroot says. "I think it's a logical evolution of the company's partner programs."

In any case, the NSI model with its twice-a-year reviews is in a regular state of churn, with partners coming in and going out every year. "It fluctuates a little bit, so we evaluate the criteria on an annual basis. We continue to ensure that we're managing the right partners," Flinders says.

One slot may have just opened up. Ascentium, an NSI that had a Microsoft specialty in CRM and xRM, agreed in late April to sell those parts of the business to Avanade Inc. The deal was expected to close this month, potentially leaving an open slot for a new NSI.

Cushy Benefits
Part of the reason Microsoft is so careful placing partner companies in the NSI is because the benefits are so powerful. The top benefit is probably the NSI PAM. As of earlier this year, there were eight NSI PAMs, each handling five partner firms.

NSIs also get a national technical strategist, and they're supported by a technical team run out of the national subsidiary. Market development funds, reportedly harder to come by throughout the Microsoft Partner Network these days, also flow to NSIs. Flinders says the Microsoft monetary investment varies among NSI partners based on the partner's revenue influence. The money is designed to help partners increase their capacity and their pipeline with Microsoft.

According to Cenci, ePlus takes advantage of the marketing funding for customer events at their offices. "Leveraging the NSI funding allows me to really do the regional or national events at our offices," Cenci says. As partners who have used market-development funds from Microsoft and other companies know, when those events lead to two or three deals, they quickly pay for themselves.

Partners labeled NSIs also get advocacy and representation through the NSI PAM, through the Microsoft technical resource and through executive relationships that accrue to participants. Cenci believes the visibility his firm gained as an NSI helped ePlus to a position on one of the influential Microsoft Partner Advisory Councils, which in turn can lead to more face time with senior Microsoft executives, such as Allison Watson, corporate vice president of the Worldwide Partner Group, and Bob Kelly, corporate vice president of Infrastructure Server Marketing.

Flinders says NSI partners also get exclusive opportunities. One example is the so-called Ranger events."We run what we call Ranger events across the United States, targeted at top NSI IT folks. You get your chief technical architect that will come through, your CIO. It takes them end-to-end and is [designed to show] how they can maximize, not only opportunities, but practice areas around the opportunities," Flinders says.

Is It Worth It?
Are those benefits worth a partner's effort? Ask a former NSI whose firm was bumped during one of the biannual reviews. "I'd kill to be back in as an NSI," says the partner, who asked not to be identified to protect his firm's ongoing relationship with Microsoft. The partner presents the NSI PAM as the key benefit but added, "NSIs' access to programs and resources is far and above what anybody in the field sees. Those partners asked to participate in the Office 2010 launch were NSI-managed partners."

A somewhat cynical view might hold that these and similar benefits would come naturally to any partner bringing in the kinds of revenues for Microsoft that the NSIs are supposed to generate. Not so, says DeGroot. "If you can't come up with a good Partner Solution Plan, Microsoft may go to market with someone else instead," he says. "These days, there's less enterprise work to go around, and everyone needs a good friend on the inside to give them an advantage."

Cenci says ePlus has definitely found the NSI partner engagement model valuable. "I feel being an NSI has given us much more visibility and access to Microsoft people and identifies us as a national go-to partner," he says.

Questions about numbers aside, Flinders says Microsoft is "absolutely" on the lookout for new NSI partners. "We encourage and work with all partners that have the potential and business model to meet the criteria of the National Systems Integrator. We do this all the time," she says. "We look at all the systems integrator partners from a local, regional or national standpoint."

Meet an NSI: No. 1

Company: CDW Corp.
Type: Direct Market Reseller
HQ: Vernon Hills, Ill.
Scale: Ranks 41st on Forbes' list of America's largest private companies; revenues of $7.6 billion for the 12 months ended Mar. 31; 6,150 employees.
Notes: A giant even among the NSIs, CDW rivals some Global Alliance Partners in scale, but has its focus in North America with 21 offices in the United States and one office in Canada. The company resells thousands of products from hundreds of vendors, although Microsoft products and services are a major component of the business. CDW may be unique among NSIs in that the company is also a Microsoft Large Account Reseller.



Meet an NSI: No. 2

Company: ePlus Technology Inc.
Type: General-purpose SI
HQ: Herndon, Va.
Scale: Revenues were nearly $700 million for FY 2009 (ending March 31, 2009); about 650 employees; 20 offices.
Notes: Relatively large for an NSI, ePlus is a more traditional systems integration firm partnering with several vendors, not primarily Microsoft. The firm has practices built around Cisco, HP, IBM, Lenovo, NetApp, Oracle, Symantec and VMware, among others. That said, ePlus has been steadily increasing its commitment on the Microsoft side, adding Competencies and Microsoft awards at a steady clip.



Meet an NSI: No. 3

Company: Neudesic LLC
Type: Microsoft Specialist
HQ: Irvine, Calif.
Scale: 250+ employees, 12 U.S. offices and an office in Hyderabad, India.
Notes: One of the first NSIs named in November 2006, Neudesic is one of the categories of NSIs who identify themselves primarily as a provider of Microsoft technology-based solutions. The firm's technology practices include connected systems, custom application development, Dynamics CRM, portals and collaboration, and SQL/BI.



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