In-Depth

Marching Orders 2014: Partner Tips and Predictions from Channel Experts

What will 2014 bring? RCP's stable of experts know, and they share their insights on everything from cloud and hybrid to new business models to the coming frenzy of Windows XP replacement.

• By Redmond Channel Partner magazine staff
• December 16, 2013

There's no better time than the holiday slowdown of December to think about the year ahead. The half-empty hallways and offices of U.S. businesses often provide the quiet required for reflection and serious brainstorming.

To help expedite that process, we've assembled our best stable of contributors yet for Redmond Channel Partner magazine's annual Marching Orders. This year, a dozen channel luminaries offer their insights on what 2014 will bring and how to position yourself to take advantage of the trends.

You'll find guidance from top Microsoft channel executives, including new worldwide channel chief Phil Sorgen. Next, you'll hear from consultants and partners, including 2013 RCP Rocket Award winner Intellinet Corp.'s Mark Seeley, about best practices for partners over the next 12 months. The last few entries cover emerging technology opportunities that nimble partners can seize right away.

The Time for Cloud Is Now
Phil Sorgen, Corporate Vice President, Worldwide Partner Group, Microsoft

Over the past two years, Microsoft partners have seen the cloud gain significant traction in terms of customer demand. The time is now for partners to join the thousands who have already built a cloud practice to start reaping the benefits.

With recently released data now quantifying profitability opportunities for partners in the cloud, there's no reason to wait. According to IDC, partners who generate more than 50 percent of their revenue from the cloud grow at double the rate, accrue new customers two times faster and generate double the revenue per employee compared to non-cloud-oriented partners.

However, partners don't necessarily need to abandon their traditionally successful on-premises solutions. The key to cloud sales in 2014 lies in hybrid solutions, which will offer partners the best competitive advantage.

We're ready to support partners in their transition to the cloud. At the 2013 Worldwide Partner Conference, we announced some updates we'll be making to the Microsoft Partner Network (MPN) to better align to how you're selling. This will help you better take advantage of the cloud profitability opportunity. Familiarize yourself with these upcoming changes by reviewing our Disclosure Guide to fully take advantage of opportunities in the coming year. Together, we'll make 2014 the year of cloud opportunity and profitability.

Service Providers: Go Hybrid
Marco Limena, Vice President, Hosting Service Providers, Microsoft

Earlier this year at our Hosting Summit, I shared research that revealed a shift in customer demand when it comes to cloud infrastructures. According to the 451 Group, in the next two years, 68 percent of customers plan to adopt hybrid cloud models. That's an increase of nearly 20 percent from today. This shift is driven by an increased customer demand for cloud solutions that will help them grow their business or realign their organizations.

In looking at this data, there's no denying we're entering the era of hybrid cloud. Now is the time for service providers to begin building and deploying hybrid clouds that meet customer demands and allow them to move between on-premises solutions, the public cloud and service provider clouds.

Microsoft is focused on providing the resources and support to enable hosters to take advantage of this new era. We've built out a portfolio of products to support this effort, including infrastructure solutions such as Windows Server, Systems Center, SQL Server and Windows Azure, as well as applications such as Exchange, SharePoint, Lync, Office and Office 365.

All of the pieces are in place. I'm looking forward to seeing how our community of hosting partners will capitalize on this opportunity.

Point Customers to the Right Devices
Jenni Flinders, Vice President, U.S. Partner Group, Microsoft

In the New Year, computing will continue to be everywhere and vastly more integrated. Not only will our devices talk to one another, the range of "devices" will expand greatly to include cars, buildings, roads, cities and homes. Our interactions with technology will be more natural and intuitive. Modern devices that enable productivity on-the-go and connect to all the important information you need is one of the key demands from your customers.

The experience of combining Windows 8.1 and the many amazing devices shipping from our original equipment manufacturers (OEMs) is positioning the U.S. channel for great success. Partners must listen to the needs of their customers and find the right devices and services that will work best for their businesses. I encourage all partners to become familiar with all the devices available to offer a customized experience.

When the right devices are paired with how businesses want to work, partners have more opportunities to deliver a complete mobile experience by developing mobile applications. This is an area I believe our partner organizations are poised to lead. It's time to help businesses tackle the mobile adoption curve and help integrate mobility into traditional application-business models.

Resources available to support our partners with this include our MPN disclosure guide, which is a comprehensive look at upcoming changes to programs to support our partners to integrate more closely with us.

We've also developed learning paths aligned to new tracks and updated requirements for the MPN competencies.

Three Keys for SMB
Cindy Bates, Vice President, U.S. Small and Medium-Sized Businesses & Distribution (SMB&D), Microsoft

As we move into 2014, SMB partners have a tremendous opportunity to build excitement and urgency with SMB customers around how technology can modernize and transform their businesses. Here are three things I believe can deliver great impact for SMB partners this year:

Help SMBs move to modern technology. The end of support for Windows XP and Office 2003 is only a few months away. The April 2014 deadline gives SMB partners a great opportunity to drive meaningful conversations with SMB customers about the benefits of modernizing their technology and the risks of not doing so. By helping customers move to modern devices and embracing a services mindset, partners can capitalize on the ubiquity of devices, the accessibility and transformative nature of cloud and the rise of affordable virtualization.

Take the next step in building your cloud business. Cloud is absolutely critical to growth and longevity in our industry. We've made it fundamental to many of our core SMB partner programs by merging the VAR Champions, Cloud Champions and Top VAR into one SMB Champions Club, offering even more robust and flexible benefits to members. This year, we also replaced the Big Easy and Cloud Easy Offers to create the more flexible SMB Advantage offer. Microsoft is committed to helping SMB partners take the next step toward ensuring your growth and success with cloud services. Our Cloud 1-2-3 framework helps SMB partners navigate the world of cloud resources across MPN so you can start, build and grow your cloud business regardless of whether you've just closed your 50th cloud deal or have yet to sell cloud services at all.

Develop your marketing muscle. Our most successful partners have one thing in common: They all invest in marketing. We continue to invest in bringing partners world-class readiness, enablement and marketing resources that make it easy for partners to connect with customers for maximum impact. The Ready-to-Go Marketing portal brings all available resources to one place. From the product- and solution-specific campaigns, to the local customer event programs driven by Microsoft Community Connections, or the outbound and inbound marketing services we've hand-selected for partners to help boost their business, make it your New Year's resolution to step up your marketing game in 2014.

To access all trainings, marketing resources, offers and incentives for SMB partners in one place, visit the new SMB Partner Center on the MPN Web site.

A Trick To Being All Things to All People
Howard M. Cohen, Senior Resultant, The TechChannel Partners' Results Group

The core message of the MPN is to focus, specialize, make big bets and invest in the competencies that really drive your business. Of course, the next question is, "But what about all the other services?"

This is when people bring out the familiar line, "You can't be all things to all people." But you can provide all things to all customers...if you partner.

It's true that you'll stretch yourself too thin if you try to be the best at everything, but you can absolutely provide the best of everything if you take the time to find the right partners. The best way to do that is to join and participate enthusiastically in partner communities. There are several great ones out there:

The International Association of Microsoft Channel Partners (IAMCP) is committed to helping members get the most value out of their Microsoft relationships and learn how to best partner with other members to make more money.

SMBNation has unified the many partners who serve small businesses with one voice and great guidance.

CompTIA is the industry association, the voice of the computer technology channel.

There are others, as well. The most important thing I can tell you is that my own participation in these communities has always helped build the success of my business, and that's the most important thing of all.

Bake a 'Business Pizza'
Ken Thoreson, Principal, Acumen Management Group

As I write this, many of my clients are working through their business-planning process for 2014. Done right, it expands past the one-page business plan and an Excel spreadsheet to a quarterly planning process by department with specific quarterly revenue goals. It also includes specific tactical plans for each partner's various sectors: sales, marketing, delivery and administration. I like to suggest this is their "Business Pizza" -- lots of ingredients broken in to digestible slices.

Focus on talent. Proper human ingredients will make all the difference in your business. It's also the hardest part. Hiring sales, marketing and delivery talent must be your No. 1 focus in 2014. To elevate your performance, you must have quality. Make it a goal to upgrade your talent level. It may take you four months to find the right salesperson who can professionally consult with your prospects by bringing the right mix of business expertise, savvy and a commanding presence.

Test your message. I've spent an enormous amount of time this past year with clients on learning to separate themselves from their competition by developing their marketing messaging and offerings. From thought leadership marketing ideas to vertical knowledge to new value propositions, Microsoft partners must be service-focused and offer levels of expertise that competitors can't match. Keep it grounded, though. Whatever messaging you create, you must be in a position to prove it during the sales process.

Focus on the Business, Not the Technology Flavor of the Day
Keith Lubner, Managing Partner, Channel Consulting Corp.

Mobility is here. Cloud has been here. What's next?

"Who cares what's next?" should be your mantra. In 2014, those companies who prepare their business to succeed will be successful regardless of the technology flavor of the day.

The old saying, "If you have a solid foundation, you can build anything," was never as true as it will be in 2014. There are three things we see that every solution provider should focus on in order to be well positioned next year, and the year after that:

Turn your sales people into consultants. We preached this last year and actually implemented a tool called Business Guidance which helps accomplish this goal. It's important that sales folks make this change because it will let you focus on quality in your pipeline instead of quantity. Who wouldn't want more quality opportunities? Invest in a program that will help you change your sales culture.

Think of unique ways to partner in order to expand your portfolio in 2014. Here's an example: If you need mobility expertise, there's a risky way to go about it. You can invest in hiring talent (which is tough these days) and invest in the time to spin up a mobility practice. On the other hand, you can partner with custom mobility development firms who are establishing unique channels of their own. I'd recommend the latter, because you can immediately offer mobility specialization to your customers without incurring the tremendous uncertainty in doing it yourself. Partner to buy yourself some time and immediately offer a valuable service to customers.

Reinforce. I can't tell you how many times I hear the line, "We tried that, it didn't work." Well, often the reason a program or initiative or training didn't work was because it wasn't reinforced. That is, there weren't mechanisms put in place to ensure that what is taught is retained. It's just like school. Invest in training but reinforce it in 2014. Your organization will thank you.

A solid business foundation can accommodate any technology trend in 2014 and beyond.

Taking the Pulse of IT Services Executives
Mike Harvath, President and CEO, Revenue Rocket Consulting Group

For the 2014 Marching Orders, I wanted to hear directly from IT services executives about their outlook for the year. I wanted to know where they felt they were well positioned for growth and where they weren't.

We conducted a brief, informal survey among IT services firms. It's very much in keeping with what we hear every day:

• IT Industry in 2014: Two-thirds of executives are optimistic going into the year, while 29 percent are looking to an average year.
  
  
• Company Growth Rate: Fifty-three percent are anticipating a healthy growth rate (15-25 percent), 29 percent are looking to be OK (5-15 percent) and 12 percent are expecting a bountiful year with growth over 25 percent.
  
  
• Company Net Profit: Forty-four percent are looking for 10-15 percent net profit, 29 percent are anticipating 5-10 percent net profit, and 21 percent are looking for net profit of more than 15 percent.
  
  
• Challenges: Respondents ranked their companies' challenges from most to least important: 1) revenue/profit, 2) talent, 3) new customers, 4) competition and 5) vendor relationships.
  
  
• Key Growth Strategies: Respondents ranked their companies' key growth strategies from most to least important: 1) organic growth, 2) entering new verticals, 3) M&A, 4) new software partners and 5) entering new geographies.
  
  
• Company Rating: Respondents rated their companies in different categories on a scale of 1 (excellent) to 5 (troubling): 2.2 for talent, 2.3 for market position, 2.4 for delivery prowess, 2.7 for financial position and 3.3 for sales and marketing prowess.
  
  
• Vendor Impact: When assessing vendor impact, 59 percent of respondents don't expect any impact negatively or positively, while 35 percent expect positive impact.
  
  
• Cloud Impact: When assessing how they feel the move to the cloud will affect their businesses, 53 percent expect a positive impact, while 41 percent expect a negative impact.
  
  
• Talent Impact: When assessing the technical talent shortage, 50 percent say it's a big problem, 26 percent say it won't have an impact and 24 percent see it as an opportunity.

So from these firms' perspectives, most of the marching orders for 2014 are people-oriented. The most important challenge, as always, is generating incremental revenue and profit. Partners need to get new customers organically, improve the sales and marketing apparatus, and pursue and upgrade technical talent.

Windows XP Migrations Will Be a Frenzy
Harry Brelsford, CEO, SMB Nation

Here's the good news: I predict that Microsoft won't extend the April 8, 2014 deadline for extended support for Windows XP, all of the Microsoft 2003 server products (including Small Business Server) and Office 2003. Why is that good news? We're dealing with humans. Most customers won't be motivated to migrate until the April 8 deadline arrives and passes.

Much of the evangelical outreach we're conducting in the fourth quarter of 2013 to properly plan for an orderly migration before the deadline is great air cover. The real ground war will start in the second quarter of 2014. And that's good news for partners over the next year. Starting now, you can stake out a leadership position on this migration work. It's good work and, if you buy into my thinking, it's essentially mandated by Microsoft as a "must do."

By the numbers, the Windows XP migration opportunity is easy street. First, discover which of your existing clients have Windows XP assets in their IT infrastructure. Then, use customer-facing events like Microsoft Community Connections to acquire new customers for this work. It could add more than $50,000 per technician to your bottom line in 2014.

From 'Systems Integrator' to 'Solution Innovator'
Mark Seeley, President and Senior Partner, Intellinet Corp.

Microsoft systems integrators (SIs) have done extremely well in providing excellent technology know-how for the Microsoft product stack. However, as more platforms migrate to the cloud, SIs will need to adapt their business model to the new paradigm.

Delivering with innovation will be key to standing out in a crowded marketplace.

Proactive consultancies will reshape and reimage service offerings in a way that provides true business solutions versus platform solutions. At Intellinet, we shifted our business three years ago to provide end-to-end solutions to clients. From strategy to solutions to support services, we've found the full lifecycle helps us stay connected to customers and deliver greater impact to both the firm's and client's bottom line.

By moving upstream to strategic and business consulting, consultants can ensure strategy and technology solutions map to their clients' actionable business goals, as well as deliver thoughtful platform solutions. When business goals and strategy are established upfront, client leadership is better equipped to communicate a solution's end goals and justify costs, ensuring a smoother delivery process. Once solutions are delivered, providing ongoing maintenance and strategic insights on a regular basis will enable the firm to stay connected to its clients and ensure the success of their investment.

This new breed will redefine "SI" from "systems integrator" to "solution innovator." The SI's DNA will be rooted in business-process excellence and delivering with a mindset of innovation. By providing end-to-end, value-driven solutions on top of sound platforms, these new SIs will continue to be indispensable partners to their clients.

Cloud Success Requires Business Expertise
Michael Fraser, CEO and Founder, VDI Space Inc.

We're in a new era of technology with the cloud. The only way to succeed going into 2014 and beyond is to become a business expert using cloud to solve business issues.

With everything in technology morphing into an "as-a-service" model, partners need a high level of business expertise to ensure customers are getting the right solutions for their business needs. The only way to gain expertise is a balance between learning and experience. This means you must be diligent to keep up with what's going on, as well as leverage experts, be they cloud providers, consultants or peers.

Looking at Microsoft, the company is radically evolving its business model. Microsoft understands that business expertise is driving cloud adoption. This also means technical expertise is being pushed more to the cloud providers, which is why IT service companies are being encouraged to take more of a trusted advisor or business-expert role.

The cloud is ensuring organizations are becoming more efficient, getting more value out of every dollar spent, lowering the barrier to entry, getting exactly the resources they need and eliminating the complacent from the channel. If your traits include being technologically enterprising, relationship-building, problem-solving, value-adding, business expertise-giving, you will succeed with the cloud.

Take Control in Key Accounts
Ross Brown, Senior Principal, The Spur Group

In the coming year, two trends will combine to create a perfect storm for partners. First, there's the increasing focus on virtualizing everything (storage, network, compute, memory, sessions and so on). Second is the increasing need for integration and federation between on-premises virtualized workloads and cloud services.

The ubiquity of virtualization is a bonanza for partners because of two compelling and unstoppable forces:

Virtualization-driven flexibility brings significant value to customers.

As with server virtualization, the shifting of account control from the hardware vendor salesforces to the software and services channel that delivers the virtualization solution.

With the server virtualization wave of 2006-2010, we saw a massive shift in power. We started with direct vendor sales teams owning the server sale as a platform lock-in. We ended with the decimation of the value of server homogeneity and the rise of the virtualization integrator.

In 2014, this wave is coming to hit the storage and networking markets with as much force and will shake up the existing hierarchy of vendor-sell/partner-deliver to partner-sell-and-define/vendor-supply.

Compounding and accelerating all this is the new need to federate on-premises applications with cloud services, including Infrastructure as a Service (IaaS). So virtual workloads can migrate from on-premises to cloud and back.

Another driver is application communication models that let cloud events drive on-premises applications -- for example, a new sale in an on-premises enterprise resource planning (ERP) system triggering the close of a record in Salesforce.com. This area is somewhat nascent now, but there's real opportunity here for vertical applications.

Both of these shift the balance of power back to the competent Microsoft partners who focus on getting from a product-based approach to a practice-based approach to value creation. Partners with repeatable IP, formal methodologies and an integration-centric model will grow faster than the market, take share from hardware-centric channels and gain account positions that are defensible into the rest of the decade.