In-Depth

Microsoft Launches Cloud Champions Club

Three-tier model brings field resources, MDF, per-deal subsidies to U.S. partners.

• By Scott Bekker
• October 01, 2010

Microsoft is spinning up a new engagement model called the Cloud Champions Club to encourage and help partners sell more of the Business Productivity Online Suite (BPOS). The club includes tiers that come with specific marketing-development funds (MDF), deal subsidies, higher margins and field resources.

"It's a program that provides increased support and resources and funding to partners who are really committing to developing a cloud practice. It's enabling them to develop their business and transform their business and be as successful as they can," Eric Martorano tells RCP. Martorano is responsible for SMB Channel Strategy, Marketing and Online Services, in the newly formed Microsoft Small, Medium Business and Distribution (SMB&D) organization run by Cindy Bates.

The three-tier program was set to launch with a webcast on Sept. 17.

The entry-level tier (Tier 1) requires a partner to sell BPOS to at least three new customers for a total of 75 seats or greater. "That just shows that you're getting some traction and you're making some commitments," Martorano says. Benefits of joining the Cloud Champions Club at this level include specialized cloud training, monthly webcasts, marketing support, qualified leads and an online services partner development manager (PDM).

Martorano contends that the biggest value will come from the live help from Microsoft. "One of the biggest things that we're doing is you'll get assigned an online services PDM who's going to work with you to scale your business," he explains. He says Microsoft is looking to put in place a ratio of about one PDM for every 20 Cloud Champions Club members, and the PDM's incentive will be partly based on moving partners up through the tiers.

A middle tier (Tier 2) requires a partner to be the BPOS Partner of Record on at least eight customer wins with 200 or more seats. "At that point, we're going to introduce increased [MDF]," Martorano says. Level 2 partners will qualify for $2,000 in MDF plus another type of funding called "Velocity" funding to help subsidize proof-of-concept work with clients and post-migration work.

"One of the things we're hearing from partners is, 'We're having to do a lot of proof-of-concept to show them these programs,'" Martorano says. "We realize time is money; we get that. [The Velocity funding] is close to the range of what it's costing these partners to provide some of these services to their customers."

Tier 2 partners will qualify for $250 in proof-of-concept Velocity funding and $250 in post-sale-migration Velocity funding per deal for customers with more than 25 seats.

Benefits really kick in for partners who reach Tier 3 of the program, Martorano says. With a requirement of 20 customer additions and 500 seats, "you're really starting to show that you have an established business in the cloud," he explains. Finder's fee margins for Tier 3 partners will be doubled, from the current 12 percent to 24 percent, according to Microsoft. Also at the top tier, MDF increases to $5,000, Velocity funding doubles to $500 each for pre- and post-sale, and partners will gain access to a field-marketing consultant and a marketing advisor.

Deal eligibility will be retroactive to July 2009. Pete Zarras, president of Morris Plains, N.J.-based Cloud Strategies LLC, says his company is grandfathered in to the top tier, and he's looking forward to using the Velocity subsidies.

"For us it's going to be huge, because it helps subsidize work that we're doing in segments that may not be otherwise profitable or lucrative, Zarras explains. "We're taking a somewhat different tack than other partners. Some partners are avoiding the micro-space of really small businesses, but we look at it as cost-recovery in that space. For us it's about volume; it's about velocity. Anything that helps subsidize work that's not hugely profitable for us is clearly a win-win for everyone."