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Partnering with Microsoft in the Nadella Era: What's Changed?

Between the end of stack ranking and the emergence of faster release cycles, partners are contending with a much different Microsoft than the one under Ballmer.

• By M.S. Partner
• November 03, 2014

We're getting into the heart of the first full Microsoft fiscal year with Satya Nadella as CEO. A common topic of conversations among partners I know is the changes we're seeing in the channel in the Nadella era. Obviously, not all of the changes flow from his decisions, but his tenure is a useful marker for a new period at Microsoft.

Employee Reviews
At the end of calendar 2013, just before Nadella took over, former CEO Steve Ballmer oversaw the end of "stack ranking," his controversial employee-review and compensation system. The system rated employees on a scale of one to five with high-ranking employees eligible for bonuses and promotions and low scorers getting shown the door.

When I was a Microsoft employee I was extremely surprised at some of the behavior the stack-ranking system caused among the field folks. I saw a lot of cattiness between individuals as they tried to top each other.

The fiscal year starting in July is the first full year in which Microsoft has supposedly moved from stack ranking to a new system of core priorities. Employees are now reviewed (but not ranked) against core priorities, which can include specific sales metrics and partner performance on growth products.

I've been told the two major questions that will be asked during review time are:

• What did you do that impacted others or that others used as a best practice?
• What did you make use of from your peers?

My gut tells me the first question will continue to have the unintended consequence of programs being built and implemented for a short time until that individual is moved into another role. I'm hopeful that the second question will have a positive impact on partners. As a stronger community, we'll all do a better job of fighting against our real, main competition: a customer who takes no action on new initiatives or on putting licensed products to full use.

Speed of Change
Every partner has asked for Microsoft to increase the speed of change within its business. It always felt like Microsoft was lagging behind.

We're seeing Microsoft move much faster now, and it's a case of being careful for what you wish. Fast Track, the Microsoft-led onboarding of clients to Office 365, and the related free mail migration, is a good example. Microsoft internally set the date of Sept. 1 for the program to launch. However, communicating the launch to partners was a scramble. Another example is the pricing change that Microsoft recently made to cloud licensing on Enterprise Agreements (EAs). It made the pricing change on Sept. 1 and had little to no material explaining the change to the field or to customers.

I appreciate Microsoft being more nimble, but I hope it takes the time to think about the impact the company is having on its customers and partners. I think the relatively simple pricing change to the EA price sheet will, unfortunately, give competitors and cloud doubters ammunition for their arguments that Microsoft's long-term goal is to lock clients into the Microsoft cloud and then continually raise prices.

Shifting Resources
In talking with other partners, there is a definite perception that Microsoft is shifting away from partners to direct selling and implementation by Microsoft. Office 365 onboarding is one example. Moving headcount a year ago in eliminating entire LAR regional coverage teams and moving those employees into CTM (midmarket) sales roles is another. Plus, there's more competition from Premier Services than we've seen in Microsoft's corporate accounts space.

The largest change is the creation of an entire selling force into the Corporate Account Managed (CAM) space, which now has their own selling team by product line for those clients.

Are you seeing Nadella's Microsoft move to consolidate control through direct sales efforts, or is the company enabling you in a helpful way? Leave a comment below or send me a message at [email protected].

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• Microsoft Partners: Get Used to Dodging a Drunk Dinosaur
• Which Way Is the Wind Blowing at Microsoft?
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