MPN 2.0: Behind the Microsoft Partner Network Overhaul

At the Worldwide Partner Conference, Microsoft laid out a major overhaul of the 3-year-old Microsoft Partner Network. The changes send several important messages about how the software giant is thinking about its partners and their role.

Three years is a lifetime in technology, and the same can be said of technology channel programs. The original Microsoft Partner Network (MPN) launched in late 2010, and a lot has changed since then. Cloud has taken center stage, tablets and smartphones are ubiquitous (and they're not running Windows), and Microsoft's datacenter strategy has coalesced around choice of delivery and provider.

To address those and other changes, Microsoft is rolling out an overhaul of the MPN throughout the rest of 2013 and into early 2014. While Microsoft has tweaked the MPN in the last few years, the scope and scale of the changes communicated in July at the Microsoft Worldwide Partner Conference (WPC) are by far the most substantial since the MPN came into being. In context, this is nowhere near the scale of the change from the Microsoft Partner Program (MSPP) to the MPN, but it's definitely enough of an upgrade to merit calling this version 2.0 of the MPN.

Between the lines of the announcements surrounding competencies, the Microsoft Action Pack Subscriptions (MAPS) and cloud programs, some themes emerge. Microsoft's moves send a few important messages to partners about how Microsoft executives are thinking about the channel and its role in Microsoft's overall strategy.

Cloud Is Finally Assuming Its Place at the Center of the MPN
It could be argued that Microsoft didn't know what to do with the cloud. Several years ago, Redmond declared itself "all in" with the cloud and has since been exhorting partners to jump onto the cloud bandwagon. Yet, programmatically, the cloud was bolted onto the MPN in such programs as Cloud Essentials and Cloud Accelerate. It was not a part of the competencies that are the core of the MPN. Microsoft certainly wasn't alone in its uncertainty about how to handle cloud. Many of its partners were in no hurry to rush their businesses to the cloud, either.

Microsoft took a half step toward integrating cloud with its main MPN late last year when sign-ups for Cloud Essentials were integrated into the MPN renewal process. That simple step caused cloud program participation by partners to skyrocket.

This January, Microsoft is taking the cloud integration much, much further by making cloud a "track" in a dozen competencies and by integrating cloud products into MAPS. Under the new structure, partners will choose either a standard or a cloud track in certain competencies, and then pursue the competency via different requirements.

Office 365 will be the core of the cloud track in Devices & Deployment, Messaging, Collaboration & Content, Communications, Project & Portfolio Management, Small Business and Midmarket Solution Provider. Windows Intune will be part of the cloud track in Devices & Deployment, and Midmarket Solution Provider, as well. Windows Azure will be the flagship product for the cloud track of Application Development, Datacenter, Data Platform and Data Analytics. Dynamics CRM Online will be the product for the Customer Relationship Management competency's cloud track.

Because cloud revenue is easier for Microsoft to tie to individual partners, there will be specific revenue or seat deployment requirements as part of the cloud tracks for gold and even some silver competencies. Currently, most competencies require gold partners to only commit to certain revenue amounts, and require nothing revenue-related for silver partners.

One example of a competency with a cloud track that carries licensing requirements for both silver and gold is Devices & Deployment. To qualify for a silver Devices & Deployment competency, a partner must have done at least one deployment and installed more than 150 seats of Office 365 or Windows Intune. For gold, the requirement is three deployments and more than 250 seats sold.

It's not only the competencies that integrate cloud now. When the new rev of MAPS rolls around in January, it will essentially absorb the current Cloud Essentials program, including Internal Use Rights (IURs) from Cloud Essentials as part of the MAPS IURs.

As a Class of Partners, Hosters Are Incredibly Important to Microsoft Right Now
Microsoft's competitive differentiator against Inc. and Google Inc. on cloud is hybrid. Microsoft argues that Amazon Web Services (AWS), for example, may be good for cloud-only deployments, but only Microsoft has the breadth of offerings to present customers with a choice of on-premises, third-party hosted and public cloud, along with the ability to move among the three. A critical group of partners in that equation are third-party hosting companies. Microsoft demonstrated how strategic those hosters were by designing a lot of the features of Windows Server 2012 and the larger Microsoft Cloud OS platform with that partner group in mind. With the MPN overhaul, Microsoft is showing the importance of hosters again by turning the Hosting competency into a track across several competencies.

It's been clear since the launch of the MPN in 2010 that hosters were important because Microsoft dedicated a competency to those partners. Unfortunately for Microsoft, the approach hasn't gained traction. "The Hosting competency is not a key business driver today: 40 percent of top [Services Provider License Agreement] partners do not have the Hosting competency," a Microsoft slide from the WPC states. Microsoft regularly claims 15,000 or more hosting partners. The same slide shows that there are only 269 gold Hosting competency partners and 2,295 silver Hosting competency partners.

The measure of how important hosters are to Microsoft is the company's refusal to give up on that partner group. Instead, Microsoft is retooling its efforts to find the right place in the MPN for hosting partners. The new approach will be a hosting track (similar to the cloud track discussed previously). The track will cover the four competencies most relevant to hosting providers. The Datacenter competency will cover hosters with customers running hosted Windows Server, System Center or Windows Azure. The Data Platform competency will cover hosted SQL Server or Windows Azure. The Messaging competency will involve hosted Exchange, and the Communications competency will involve hosted Lync.

With Hybrid as a Theme, Microsoft Wants Partners Focused on Datacenters
Hosters aren't the only partners important to Microsoft's hybrid strategy. Any partner that can credibly help customers maximize their datacenters will be a key partner for Microsoft for the next few years. And in January, Microsoft will streamline the ease with which partners can walk into datacenter engagements and establish expertise.

In the past, Microsoft partners that wanted to bid on major datacenter projects needed to have a number of competency badges to demonstrate the expertise required for the job. A major engagement could require competencies in Server Platform, Identity & Access, and Management & Virtualization. Now Microsoft will fold all three of those competencies into one new competency called Datacenter.

From a paperwork and training standpoint, it means partners will be able to establish all the expertise necessary to earn a gold competency with four Microsoft Certified Professionals (MCPs) rather than a dozen MCPs (four unique MCPs are required for most gold competencies). That means more time deploying datacenter solutions and less time clearing paperwork hurdles. It also means an opportunity for smaller partner organizations to compete on equal footing (from a Microsoft credential perspective) with larger partner organizations for datacenter engagements.

The Competency Framework Introduced in 2010 Is Holding Up
While competencies are an old idea for Microsoft partners, the concept got a facelift in 2010. Competencies went from a sideshow in the MSPP to the centerpiece of the MPN. Rather than classifying an entire partner company as Gold Certified or Certified under the MSPP, with the MPN Microsoft switched to classifying the partner company's expertise in a competency area as gold or silver.

While a lot is changing in January 2014, the central role of competencies is not changing.

For one thing, Microsoft remains extremely disciplined about the number of competencies. Redmond started the MPN with nearly 30 competencies. In 2012, Microsoft dropped the number to about 25, and this round of changes will bring the competency total down further to 22.

Nonetheless, Microsoft is actually adding three competencies as it eliminates and redirects others. A true addition to the competency structure is the User Experience Design competency, which is a nod to the growing importance of the UI designer's role in everything from mobile to desktop to cloud. Another new competency is Datacenter, which consolidates three retiring competencies (see previous section). Data Analysis, meanwhile, is a new name for the competency formerly known as Business Intelligence.

Other retiring competencies are Mobility and Windows Embedded. Mobility will be split into two existing competencies. Mobile device management scenarios will fall under the Devices & Deployment competency. Mobile application scenarios will fall under the Application Development competency. Meanwhile, a quasi-competency for Windows Embedded partners will be folded into Application Development when the previously separate Windows Embedded Partner Program is brought into the MPN.

The Message to Small and Midsize Business (SMB) Partners Is Mixed, at Best
Many small partners are feeling aggrieved and have been for some time. Microsoft's decision to end development of Windows Small Business Server (SBS), the sharply higher price of earning a Small Business competency as compared to the previous cost for being a Small Business Specialist with a related Action Pack, the emphasis on low-margin cloud offerings, and a general sense that Microsoft is focusing its resources on larger partners that can make a visible difference in sales are all contributing to partners' unease. Even small partners who feel that Microsoft is responding to real market dynamics rather than driving the changes out of a misguided set of priorities still feel pinched.

Some of the coming changes are clearly taking small partner concerns into account, but others will fit into partners' narratives of a Microsoft that doesn't value them anymore.

One positive is the previously discussed consolidation of competencies into Datacenter, which should make it more realistic for boutique partners to compete. Another is Microsoft's promise to keep the cost of the Small Business silver competency at $999 for another six months, extending that promotional price through January 2014. The enrollment fee for silver had been expected to jump to $1,490. The promotional price and the proposed regular price are a significant acknowledgement of the financial situation of small partners -- a normal silver competency costs $1,850. The gold competency price for Small Business is also lower ($3,800 compared to the $5,260 cost of other gold competencies) and the competency requires half as many MCPs as other gold competencies. All those changes are nods to cost-conscious SMB-focused partners who tend to be very small SMBs themselves.

For partners put off by the enrollment costs, training requirements and paperwork of the competencies, Microsoft's newly customizable Action Pack provides plenty of options at a cost much closer to the $350 range of the former Small Business Specialist program.

The bad news comes in two forms. One is the Aug. 31 discontinuation of the TechNet program, which some partners relied on as a source of evaluation software. The other is Microsoft's decision to end the Small Business Specialist Community (SBSC), a once-thriving community of Microsoft partners serving small businesses. Once the Small Business competency launched, the SBSC lacked direction and seemed like an artifact. Nonetheless, its demise will be one more bullet point in the "Microsoft no longer values small business partners" narrative. Microsoft officials are promising to launch some other kind of peer-to-peer community for small business partners in January, but no details are available yet.

Cost Is an Issue for Microsoft, and the Company Is Driving Costs Down Everywhere It Can, Including in the MPN
Think Microsoft's earnings miss in late July isn't on everyone's minds in Redmond? Microsoft executives knew before the WPC in July that Q4 didn't end well. And it doesn't take a rocket scientist to look at the consecutive quarterly nightmares of PC sales declines and not conclude that Microsoft needs to do some belt tightening as its Windows income stream drops.

Partners already saw some cost cutting at WPC 2013, when attendee bags became a paid option. And yes, WPC partner attendees got incredible discounts on Microsoft Surface tablets, but developers got the devices -- along with Acer Iconia tablets -- for free at Build. (Partners basically got the same deal on Surface as the IT attendees of the Microsoft TechEd conference in June.)

Partners are already seeing Microsoft's efforts to trim expenses in several program changes, as well. On July 8, Microsoft chopped the number of free licenses partners get by signing up for Cloud Essentials. The program went from 25 IURs for Office 365 and Dynamics CRM Online to five seats each. In a few months, the free Cloud Essentials program will be retired entirely, with partners only getting cloud IURs by paying either for MAPS or a silver competency. The decision to end new TechNet subscriptions in August is another example of Microsoft jettisoning a once-generous deal for IT pros and partners. With the 2010 MPN overhaul, TechNet had been an important component of the benefit mix for partners at the subscription and competency levels.

Competency partners are taking a separate cost-related hit. Up until now, Microsoft partners with gold or silver competencies were entitled to unlimited phone support for business-critical issues on behalf of their customers. In November, Microsoft will clamp down, limiting gold competency partners to 15 incidents and silver competency partners to 10 incidents.

Microsoft Finally Has a Place for All of Its Managed Services Providers (MSPs)
The MSP phenomenon has largely passed Microsoft by. While MSPs are one of the biggest trends in the channel, Microsoft never had anything programmatic intentionally focused on that group of partners. Which is not to say there aren't any MSPs that are Microsoft partners. The MPN has been a hotbed of MSPs -- they just didn't have a formal spot in the program, largely because Microsoft didn't really have any products specifically for MSPs.

The late 2013 to early 2014 overhaul, however, finally provides a place for MSPs. The new MAPS is organized as a customizable package, and the options for partners to configure their own MAPS includes six so-called "resource centers." One of the resource centers is managed services. Described in Microsoft documentation, the resource center for managed services is "focused on helping partners understand the managed services opportunity, build a managed services practice, and [offer] technical support."

Other general elements of MAPS that might be a help to MSPs are the IURs to support a 10-person organization, technical support, training, discounts on MCP exams, developer tools, Bing Ads credits and access to Ready-to-Go marketing campaigns.

Microsoft will introduce a lot of changes to the MPN in the next few months, although none of them are radically disruptive. Instead, Microsoft is reinforcing a lot of the trends that have been visible to partners for the last few years: an emphasis on cloud, hosters and datacenter-focused partners; the gradual diminishment of the most generous benefits; and a program arguably less friendly to smaller partners focused on SMBs.



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