Directions

Watering the Partner Ecosystem

• By Paul DeGroot
• July 15, 2009

Rain often gets a bad rap, but a little rain isn't bad when the land below is parched. A lot of partners are feeling parched these days, but there's a storm on the horizon that may send rain their way.

That storm is the crisis that Microsoft finds itself in-and how it plans to weather it. One approach under serious consideration is for Microsoft to do less by itself and, instead, to do more with partners.

Customer Tiers
To understand how this works, you need a handle on how Microsoft categorizes customers, which isn't that different from the way Microsoft segments partners.

The tiers may be changing, but I'll use the names that are current as of this writing. At the top is a class of major, global and strategic customers who have at least 5,000 employees-although a particularly strategic customer, such as an industry leader or a regionally influential firm, may have fewer. Below them is the corporate account space, with 1,000 to 5,000 employees. Below that are midmarket and small customers.

Like partners, customers have various degrees of management. Large, global enterprises may have a dedicated Enterprise and Partner Group (EPG) account team. Smaller enterprises may share an account team with half a dozen or more other customers. In the corporate account space, customers are more likely to be telemanaged. By the time we get to the midmarket, Microsoft relies greatly on partners to do the heavy lifting.

The lines between these levels, particularly for end customers, are fuzzy. Every year, Microsoft re-segments customers based on a range of data. This data can include how much revenue the customers generated for Microsoft, as well as more subjective judgments like the customers' future prospects, importance in their geographic region or industry, and other factors. Some customers move up on the management scale, while others drop down.

Survival Mode
Right now, as you know, a lot of customers are no longer generating the kind of business or the quality of relationship that qualifies them for a higher tier of management. Customers who received personal treatment in the past are hunkering down in survival mode, tightening budgets and presenting Microsoft with far fewer sales opportunities.

As a result, in Microsoft's next fiscal year-starting July 1-more customers than usual are likely to fall out of EPG-managed tiers and rain down on the partner-led space.

Furthermore, Microsoft is reconsidering its segmentation criteria to reflect changes in the marketplace. As it tightens the criteria to ensure that it doesn't waste management resources on customers who aren't going to buy, the shift of customers down the management tiers could increase the number of partner-led opportunities.

Big Investments
These customers represent significant opportunities for partners. They're not little guys just getting into IT who are scared by four-digit price tags. These are customers with seven- or eight-figure investments in IT-and they're looking for partners that can provide the kind of touch they used to get from Microsoft itself. They may not be buying licenses, but their willingness to consider services from partners may be greater than ever as they look for ways to shave costs.

Next Month: The OS vs. the Browser