Cloud Credo to Microsoft Partners

Why should Microsoft's partners who sell software to customers feel inclined to sacrifice those revenues and margins in favor of the company's cloud services?

"If you don't do it, you will be irrelevant in the next four or five years," said Vahé Torossian, corporate vice president of Microsoft's Worldwide Small and Midmarket Solutions and Partners (SMS&P) Group. Jon Roskill, corporate vice president of the Microsoft Worldwide Partner Group, reports to Torossian, and Torossian reports to Chief Operating Officer Kevin Turner.

Torossian spoke to a group of about 60 partners yesterday at this month's local International Association of Microsoft Channel Partners (IAMCP) meeting held at Microsoft's New York office. "Believe me, I'm a very polite guy, I don't want to be blunt for the sake of being blunt, I am saying that because it starts with us."

Microsoft's competitors, the likes of Google and Saleforce.com, are making this push without the legacy of a software business to protect. Torossian told partners that he believes 30 percent of all of its customers will transition their IT operations to the cloud with or without Microsoft.

"I think it's important that you start to lead the transition and assuming that your customers have already been meeting with your competitor," he said. "We are giving you the opportunity to have the discussion with your customers [where you can say] if you're really interested in the cloud, you'll be able to get there. We want to position ourselves as a leader in the cloud."

It should come as no surprise to those who have been following Microsoft's "we're-all-in" the cloud proclamations these days. But the fact that he responded so bluntly underscores how unabashed Microsoft is in trying to get its message out to partners.

"I think he was just being blatantly honest, I don't think there was any softer way to say it, it's the truth," said Mark Mayer, VP of sales and marketing at Aspen Technology Solutions, a Hopatcong, N.J.-based solution provider. "His most important point, is his competition doesn't' have a legacy business. He's not competing apples to apples."

Howard Cohen, president of the New York IAMCP chapter, said he initially thought Torossian was joking, but quickly realized he was serious. "I think it was refreshing," Cohen said. "He wasn't saying 'you should do this because we want you to,' he was saying 'we're doing this because we have to. The market demands it and you should come along with us.' I think that's an accurate message. I too believe if you ignore cloud services you won't be doing much."

The challenge is for solution providers and partners to deal with the change in a way that allows them to transition and maintain a profitable business, said Neil Rosenberg, president and CEO of Quality Technology Solutions Inc., a Parsippany, N.J.-based partner.

A $50,000 Exchange deployment might translate to a $15,000 consulting engagement to deploy Exchange Online. "Making up the volume is challenging," Rosenberg said.

So what's he doing about it? He's starting to focus more on the application stack, getting involved in more SharePoint and business intelligence development and consulting, for example.

"On the flip side, I don't think infrastructure is going to go away, it's going to gradually reduce in terms of what customers are looking to have in house, and there's going to be a whole separate set of services around management and planning of the infrastructure," Rosenberg said. "Stuff still needs to be managed in the cloud, just in a different way."

Posted by Jeffrey Schwartz on October 22, 2010