In-Depth

Unlocking the Secrets of Microsoft's Calendar

To many outside Redmond, the inner workings of the company's fiscal year are baffling at best. Our quarter-by-quarter guide removes some of the mystery -- and helps partners profit by doing the right thing at the right time.

• By Rich Freeman
• August 01, 2008

Ask longtime channel executives what working with Microsoft is like, and they're likely to tell you it all depends on the time of year. One month, their account managers are nowhere to be found; the next, they're banging down the partners' doors. Financial support for marketing programs flows freely in the summer and then dries up completely come autumn. The seasonal shifts are enough to leave many in the channel scratching their heads in bewilderment.

Reed Overfelt has met more than his share of people confused about when things happens at Microsoft. Today, Overfelt is chief operating officer of Reston, Va.-based Mural Ventures, a venture capital, software incubation and strategic advisory company that's a Registered Member of the Microsoft Partner Program. But before September 2007, Overfelt was Microsoft's general manager in charge of sales to small and midsize businesses in the company's mid-Atlantic region. In his experience, many partners haven't the slightest idea about how Microsoft's fiscal-year calendar shapes the company's actions and attitudes. "It's a complete mystery [to them] why Microsoft people disappear at certain times of the year and are very active at other times," he says.

In contrast, for partners versed in the nuances of Microsoft's fiscal year, such ups and downs are as predictable -- and exploitable -- as the change of seasons. Indeed, many channel veterans say that understanding the cadences of Microsoft's fiscal year gives them a critical edge in securing leads, funds and IOUs.

"It's crucial in order to be successful in partnering with Microsoft," says Brad Heidemann, managing partner and vice president of worldwide sales at Gold Certified Partner Ascentium Corp., an interactive marketing and technology firm with headquarters in Bellevue, Wash. "There's a rhythm to the business, and if you're not in concert with that rhythm, you tend to get left out of the things that matter most."

What follows is a quarter-by-quarter breakdown of Microsoft's fiscal year calendar, and a guide to turning its peculiar syncopations to your advantage.

"It's a complete mystery [to partners] why Microsoft people disappear at certain times of the year and are very active at other times." Reed Overfelt, Chief Operating Officer, Mural Ventures

Q1 (July-September): Making Plans and Taking Names
Microsoft's first fiscal quarter begins with a familiar milestone: the annual Worldwide Partner Conference (WPC). (For coverage of the 2008 WPC, which was held in Houston in early July, visit RPCmag.com. FindIT code: WPC2008) The WPC is where Microsoft officially lets its partners in on its top sales and marketing priorities for the next 12 months and unveils any planned changes for the partner program.

Yet the conclusion of that much-anticipated summit ushers in what, to some partners, feels like the sleepiest period of the year. Phones that were ringing off the hook in June go silent as sales reps and partner account managers (PAMs) take their vacations.

E-mail inboxes once packed with incoming messages from Microsoft take a breather as the company's field and corporate marketers recuperate from the rigors of the previous fiscal year. "Most partners see Microsoft go dark from mid-July to mid-September," Overfelt says. "It feels like Microsoft kind of takes a powder for two-and-a-half months."

In fact, however, there's plenty of activity going on within Microsoft during Q1, and savvy partners understand the importance of being in on it. For one thing, the WPC isn't Microsoft's only major conference of the summer. Almost immediately after that event, thousands of Microsoft sales and marketing professionals gather for the Microsoft Global Exchange (MGX), which this year was held July 16-19 in Atlanta, Ga. Just as the WPC is where Microsoft briefs its partners on the coming year's key themes, MGX is where the company's field teams get their marching orders. Those instructions can vary from what partners hear just a week earlier in subtle but significant ways.

MGX is an internal company event typically open to just a handful of especially plugged-in channel partners by invitation only. But asking your closest Microsoft contacts for a post-conference debriefing can be a useful way to get the lowdown on how the company will be measuring and compensating its field organization over the months ahead. That's information you can use to synchronize your company's sales and marketing focus areas more closely with Microsoft's.

The weeks following MGX are when most Microsoft account teams draw up sales plans for the coming year. If you hope to play a part in those plans, late July and August are an excellent time to reach out to any Microsoft account reps you know. Just make sure you have concrete leads to share, versus a fuzzy interest in collaborating. "Partners who come to the table with real business are the ones who get the most love and attention from Microsoft," Overfelt observes.

The post-MGX period is also when most Microsoft employees finalize their individual objectives for the new fiscal year. That's another wise topic to explore when speaking with your Microsoft contacts. Called "commitments" internally, to convey the seriousness attached to accomplishing them, those personal goals are a major factor influencing employee compensation. The better 'Softies do at meeting their commitments, the larger the bonuses, stock grants and pay increases they receive at fiscal year-end. Overfelt advises partners to ask all Microsoft contacts they work with regularly for their commitment lists. Then, he says, ask how you can help them achieve those objectives. You're likely to receive a grateful -- and potentially rewarding -- reply. "I've seen a lot of partners ask that question and then walk away with a really important project," Overfelt says.

Q1 is also an important time for establishing new relationships. Microsoft employees constantly switch roles, but July is when jobs in the company's field organization typically change hands. As a result, summer is likely to produce some unfamiliar faces in key sales and partner management positions. Get to know these newcomers immediately, suggests Ted Dinsmore, co-author (with Edward O'Connor) of Partnering with Microsoft: How to Make Money in Trusted Partnership with the Global Software Powerhouse (CMP Books, 2005). "You need to educate people on who you are and what you do, to protect your existing accounts and to talk about new opportunities," Dinsmore explains.

Finally, use Q1 to pitch co-funded marketing activities, such as seminars and webcasts, to Microsoft. "After that, all the marketing plans are baked," Dinsmore notes. Also, plan to spend time researching opportunities for obtaining business investment funds, the money Microsoft doles out to partners in support of especially strategic deals and projects. For example, the company might contribute $5,000 in deployment assistance to a partner that talks a client into swapping an Oracle database for SQL Server. "There are usually a dozen or so of those types of campaigns [a year]," explains Ascentium's Heidemann. "This is the time to understand what those are, how they're tied to the priorities of the account teams, [and] how you can participate."

Q2 (October-December): Putting the Gears in Motion
If Q1 is mostly about planning, Q2 is largely about execution. Heidemann calls it the "build-the-pipe quarter," in which Microsoft and its partners devote most of their energy to trolling for prospects and qualifying leads.

Beyond that, most partners say, Q2 includes few must-dos. Overfelt, however, points to one important don't: Withholding deals until December. In the past, he notes, Microsoft paid especially close attention to its midyear and year-end sales figures. As a result, partners who chipped in last-minute revenue often won extra kudos from their Microsoft field contacts. However, Overfelt warns, those days are gone. When Kevin Turner became Microsoft's chief operating officer in 2005, he quickly set about instilling year-round fiscal discipline in his front-line troops by pushing sales managers to meet quotas every three months instead of every six. "There's a lot of pressure to hit your quarterly numbers," Overfelt reports. The upshot for partners, he adds, is that wins are now no more valuable to Microsoft in December than they are in September or March.

Not that reserving deals for those months will do you much good either, of course. According to Overfelt, many in the channel believe Microsoft is more willing to offer discounts at the end of a quarter. In truth, however, those same discounts were available to partners the month before: "They just needed to ask," he says.

Q3 (January-March): Correcting Course
Though Microsoft now eyes sales figures closely every quarter, January remains a time of unusually deep introspection for the company. Turner, CEO Steve Ballmer and other top executives spend much of the month immersed in marathon midyear review sessions, closely scrutinizing each subsidiary and business unit's year-to-date results. What usually emerges from those weeks of discussion are adjustments to sales and spending priorities aimed at exploiting what's going well and correcting what's going poorly.

Late January and early February, then, are smart times to hit up your PAMs and other Microsoft sources for news of any post-midyear course corrections. Find out whether the company will be ramping up investments in specific sales efforts, launching entirely new campaigns or scrapping unsuccessful ones. Ask about new co-marketing opportunities as well. Microsoft usually holds a pool of marketing funds in reserve until after midyear reviews, Overfelt notes. Partners with detailed proposals for boosting sales of strategic products and solutions can often land some of those dollars.

A similar, slimmer co-marketing window opens up again at the tail end of Q3, experienced partners say. That's usually when Microsoft marketers and product managers start anxiously looking for productive ways to deploy lingering pockets of unspent budget. A modestly scaled campaign idea that you can complete by end of June just might attract some financial support in March. Extra business-investment funds can become available in late March, too, for similar reasons -- and often with fewer-than-usual strings attached. For example, a product group in Redmond might contribute seed money for a new solution that you're developing even if you can't specify precisely how much revenue Microsoft will ultimately net from its investment. "Sometimes the rules get a little more relaxed in the March-April time frame because [Microsoft managers] need to spend the funds," says Albert Wang, CEO of IdeaBlade Inc., a Gold Certified Partner and vendor of .NET development tools in Emeryville, Calif.

Of course, if Microsoft is struggling to hit its sales targets for the year, it's also possible that marketing dollars and investment funds that were promised to you earlier may suddenly vanish in Q3 as the company seeks to boost profitability by lowering outlays. "Typically at this time of year, there's either money left over or they're absolutely starved for money and putting things off to July," observes Tim Huckaby, CEO of Carlsbad, Calif.-based Gold Certified Partner InterKnowlogy LLC, a provider of custom application development and network services.

Q4 (April-June): The Final Sprint
For Microsoft's field organization, no three months of the year are more fraught with anxiety than April, May and June. "Q4 is the moment of truth," observes Heidemann, of Ascentium. "That's when everyone's opportunities to drive and win business for the fiscal year come due." Microsoft salespeople spend June in particular desperately toiling to make their fiscal year-end quotas. "More than ever, a significant portion of local Microsoft compensation is directly related to licensing sales, so you get kind of a panic mentality at this time of year," Huckaby says.

Looking to relieve some of that stress, Huckaby's sales force makes a springtime habit of approaching Microsoft with specific suggestions for pushing work-in-progress deals through the pipeline. Grateful for the help, Microsoft sales and marketing contacts almost always return the favor down the road, Huckaby says: "Being proactive at this time of year goes a long way."

Conversely, however, being a distraction in Q4 can haunt you later on, so avoid approaching Microsoft with opportunities that won't close by end of quarter. "They just don't have the cycles to pick that up," Heidemann says. In fact, smart partners know to put off all business not directly tied to short-term licensing wins until the next fiscal year begins in July. Warns Overfelt: "Trying to do anything in Q4 other than driving revenue for Microsoft is a bad idea."

The Strategic Planning Cycle
Back in his Microsoft days, Overfelt recalls, partners often approached him after the WPC with input on the company's just-announced themes for the new fiscal year. Too late, he always told them politely. Those priorities had been locked into place two months earlier.

Exceptions to the Rules

Most sales and marketing activity at Microsoft follows predictable rhythms. But almost every fiscal year also includes major product launches that can defy those regular patterns. For example, though many Microsoft partners do their serious sales-pipeline building in Q2, a product launch in Q3, such as last February's release of Windows Server 2008, will trigger a whole new cycle of prospect hunting. In addition, fresh waves of marketing funds and sales incentives typically accompany new product releases, giving partners extra opportunities throughout the year to tap into Microsoft's coffers. For example, when Windows Mobile 7, the newest version of Microsoft's operating system for smartphones and other mobile devices, hits the streets in 2009 as currently expected, partners will probably enjoy access to a variety of discounts and subsidized marketing campaigns. Meanwhile, if you're looking to play a direct part in a launch event, get in touch with Microsoft well before the scheduled date -- at least nine months in advance, suggests Brad Heidemann of Gold Certified Partner Ascentium Corp., an interactive marketing and technology firm with headquarters in Bellevue, Wash. -- R.F.

Indeed, Microsoft's strategic-planning process gets underway well before many partners realize, as far back as the previous November. That's roughly when the company's top-most executives begin drawing up key corporate objectives for the next fiscal year. Subsidiary and business group leaders, in turn, share their own initial thoughts during midyear reviews in January. Then, at a subsequent closed-door conference, senior managers across the company convert those preliminary conversations into a firm list of priorities, which subordinates flesh out in detail during the spring.

It's not easy to influence that planning process from outside Microsoft. In December, the company usually bounces early plans off members of its partner advisory councils (PACs), invitation-only groups of partner-company executives that provide candid feedback on channel-related topics. But non-PAC partners are likely to have trouble gaining access to Redmond's emerging fiscal-year blueprints. "Microsoft is pretty guarded about those plans," Overfelt notes.

Still, most partners can have at least some impact on planning for the next fiscal year, provided they start early in the current year-between July and December, Overfelt says. Use one of Microsoft's semi-annual partner satisfaction surveys to offer your thoughts, he suggests, or sound off to your PAM. Either way, be professional -- but don't pull your punches out of fear of offending someone. "Give them hard feedback," Overfelt advises. "People do pay attention."

Dinsmore, for his part, is turning his attention to the fiscal year ahead these days. In addition to being an author, Dinsmore also manages the relationship between Microsoft and the New York office of Conchango plc, a U.K.-based Internet professional services firm and Gold Certified Partner recently purchased by EMC Corp. of Hopkinton, Mass. Last year's fourth quarter was as hectic as ever, he says, but understanding Microsoft's internal calendar helped him see it through. It's the same story every year, Dinsmore observes: June is crazy. "But I know in July I can go to the beach and hang out," he says.