News

Bracing for Tailwind

Microsoft's latest salesforce reorganization opens new opportunities for enterprise partners, but raises questions about the company's long-term ambitions.

• By Rich Freeman
• September 01, 2005

First off, Microsoft has restructured its enterprise account teams, adding a new corps of industry and technology specialists to support its existing account managers (see "Microsoft Realigns PAMs to Help Partners Go Vertical"). Partner account managers, also now aligned by industry and technology, are being incorporated more closely in the sales process, and for the first time, will be paid a revenue-based commission.

The objective is to offer enterprise customers complete, industry-specific solutions combining Microsoft platform technologies with services and line-of-business applications from partners, a major change for a company that has historically been far more comfortable marketing individual products. "This marks the next rung on the ladder as [Microsoft] climbs into enterprise sales," says Paul DeGroot, an analyst with research firm Directions on Microsoft.

"[Microsoft gaining] a deeper level of understanding of the verticals can only be a benefit to partners." Hardin Byars, Executive Vice President, Intellinet

Meanwhile, to accommodate the new specialist resources, Microsoft will grow its U.S. enterprise sales team by 10 percent in the 2006 fiscal year, which began July 1, and by as much as 60 percent over the next five years. Additionally, in the most extensive revamping of its enterprise customer list in half a decade, the company has shifted responsibility for a reported 20 percent of its roughly 4,600 enterprise accounts to its mid-market sales group. An unspecified number of mid-market accounts were also bumped up to enterprise status, but the overall trend is toward fewer enterprise customers.

The upshot is that more Microsoft salespeople, with deeper vertical expertise, are now calling on fewer enterprise accounts, triggering concerns about channel conflict. At least some partners, however, appear unworried.

"More sales reps is a good thing for partners," says Brad Weydert, president of Denver-based Statera, an IT consulting firm and Microsoft Gold Certified Partner. "The more software they sell, the better it is for partners." Of Microsoft's push into verticals, Weydert says, "from a big picture standpoint, it makes a lot of sense. I don't see channel conflict in that at all."

Hardin Byars, executive vice president of Intellinet, a Microsoft Gold Certified Partner headquartered in Atlanta, concurs. "That they're getting a deeper level of understanding of the verticals can only be a benefit to partners," he says. "If it were to go in a direction in which they want to control all of the relationships in a vertical," then he would be concerned, Byars says. "But I don't see that being the case."

DeGroot, too, sees little risk of Microsoft elbowing aside its partners any time soon. "Microsoft has nothing to sell that isn't delivered by a partner," he observes. "It really has to go to market with partners in verticals, in the short term at least. In general, the vertical focus should work out fairly well for partners."

"The more software [Microsoft sells], the better it is for partners." Brad Weydert, President, Statera

Still, if the way Microsoft works with partners is unlikely to change soon, the way it chooses partners is changing already. A deep commitment to Microsoft technologies was once the key to being among Microsoft's favorites. But the big winners going forward will be those partners most successful at keeping in step with Microsoft's industry thrust by promoting and deepening their vertical capabilities. DeGroot advises partners to make sure Microsoft knows what vertical markets they target, and to familiarize the new industry specialists with their offerings as quickly as possible.

With new people coming on board and account teams being reconfigured, Tailwind is likely to generate some disruption in coming months. Weydert, however, is unconcerned. "Microsoft changes all the time," he notes. "Customers are used to it."