In-Depth

What's the True Price of a Microsoft Competency?

Between exam costs, training costs and the cost of lost billable hours, the price of a gold Microsoft competency can far exceed Microsoft's base fee. Using the Gold Server Platform competency as a baseline, we look at how two partners have invested in the competency program, and what that investment has gotten them in return.

• By Gladys Rama
• June 16, 2014

Competencies certainly aren't the only way to measure a partner's investment in the Microsoft Partner Network (MPN), but they're an important one. First, they're one of the most visible measurements customers have of the relative competitiveness of the partner companies with which they're considering doing business. Second, the prevailing wisdom is that the more competencies a partner has, the more willingly and closely Microsoft will engage with it.

That may seem obvious enough. However, the alchemy that turns partner investment in the competency program into quantifiable partner benefits is a little more opaque.

A Microsoft-sponsored study conducted by market researcher IDC in 2012 (PDF) delved into that equation. Based on in-depth interviews with 16 Microsoft partners, IDC researchers determined that for a partner company with 50 employees that makes between $5 million and $10 million in revenues, having two to five competencies provides access to $320,000 worth of core benefits.

Those benefits and their values, according to the study, include:

• Internal-use rights: $125,000
• MSDN subscriptions: $83,000
• Partner learning center: $37,500
• Partner marketing center: $11,000
• Technical presales and advisory services support: $6,000

That's in addition to other benefits, such as access to various incentive programs, the Demo Showcase and use of the Pinpoint Online Marketplace.

Obviously, the dollar value of those benefits will vary depending on a partner's size and engagement with the competency program; smaller partners with fewer competencies will likely have access to fewer benefits, and vice versa, IDC noted. Additionally, different partners will find value in different benefits. The study also did not take into account "soft benefits" like customer retention or the value of closed deals. These caveats aside, IDC researchers were able to draw a convincing correlation between how much partners invest in the MPN and the value of the perks they receive.

Those perks, however, can be hard-won. "There is a trade-off to MPN engagement and benefit utilization: the human resources and financial costs to the partner," IDC's researchers wrote. "Through training requirements, program fees, time out from billable work, and time invested in managing their relationship with Microsoft, partners often make a significant commitment to the partner relationship."

'A Self-Fulfilling Cycle'
For New Signature, a mid-market-focused consulting firm and a Microsoft National Systems Integrator (NSI) based in Washington, D.C., that commitment is built into the company's framework. According to CEO Chris Hertz, outside of its administrative staff, each of New Signature's 90 or so sales and technical employees are required to spend roughly 5 percent of every work week on Microsoft training activities. They must also pass one Microsoft certification test per quarter.

These activities are aimed specifically at "support[ing] our ongoing education and things like competencies," Hertz says. "It is actually how we measure [employee] success on a quarterly basis." He added that because it's considered a requirement for employment at New Signature, the company does not consider the time employees spend on preparing for and taking certification tests as lost billable hours.

As of this writing, New Signature's Pinpoint profile lists 12 gold competencies and six silver competencies -- a relatively large number. For just the Gold Server Platform competency, Hertz estimates that New Signature spends about $113,200. That takes into account employee training costs, exam costs, increases in employee salaries for passing the required Microsoft Certified Professional (MCP) exams and the Microsoft Gold Competency fee of $5,260. (For a company like New Signature with 18 competencies, that registration fee would actually be spread across all the competencies because partners only pay for the first competency. For more details, see the "Gold Competency Requirements" sidebar in the next page.) As a Microsoft Learning Partner, New Signature is able to save on training costs because it already has Microsoft-certified trainers on staff, who are then able to train employees in-house instead of a third-party company.

For Hertz, the effort and money that New Signature invests in its Microsoft competencies is less of a burden and more a matter of necessity for a partner operating in an ever-changing IT environment.

"It's easy to hear other partners complain about the burden that competencies represent to them, and I always think that's a little disingenuous. I don't think that burden is high and, frankly, the activities that you would do in order to earn that competency are activities that you should be doing anyway," Hertz says. "A lot of business owners see professional development, investment in education, as a risk because they're worried that they'll invest in their employee and their employee will then go somewhere else for a higher salary. My argument is ... you have a greater risk if you don't invest in your employees because then your business will stagnate."

Hertz acknowledges that New Signature -- as one of 35 Microsoft NSIs and a managed Microsoft partner in the mid-Atlantic, New York metro and northeast regions -- has "sort of a higher status of partnership than just your traditional partner." For instance, he says Microsoft allows New Signature greater access to product teams, participation in early-access technology programs, and free or discounted training resources for employees.

But, he adds, "it is sort of a self-fulfilling cycle ... in the sense that because we have made the commitment to education and to become highly competent, Microsoft sees that and rewards it."

Besides the partner perks that come directly from Microsoft, New Signature has seen a good deal of those less-quantifiable "soft benefits" that IDC referred to in its MPN study. During the last two years, New Signature has grown 25 percent year over year. Over the past 11 years, Hertz estimates New Signature has averaged between 35 percent and 50 percent growth each year. That growth is directly correlated with New Signature's investment in Microsoft competencies, Hertz says.

"Do I think that we'd be the size that we are today if we weren't invested and decorated? I would say no," he says. "When I go to a customer and they say, 'Why should I purchase from you versus the person that's bidding next to you, if you are either of the same price or perhaps slightly more expensive,' I can say, 'Because I've demonstrated my commitment to really building a group of talented engineers and architects who can deliver success to you, and Microsoft has recognized that.'"

'We Definitely Get More Attention'
At Toronto, Canada-based Navantis Inc., the training literally takes place in-house.

"We actually have our own training studio here," says Susie Ibbotson, vice president of marketing and alliances at the Microsoft solution provider. "It has 20 classroom-style seats with 20 large monitors, and we bring in course instructors to do training. For some of our staff who've already done training [and] are good trainees and trainers, we have them repurpose curriculum that they've taken in off-site training programs and [use] it to train our employees in-house."

Navantis requires employees to participate in training that's aimed both at updating their skills and obtaining MCP certifications. More than 180 of the roughly 300 Navantis employees are MCP-certified, Ibbotson says. While Navantis doesn't pay for employee training for Microsoft certifications -- and employees must do their exam preparation outside of work hours -- the company does pay for the exam fees themselves. For employees who are done preparing and are ready to take an exam, Navantis sets aside four hours of billable time for each exam.

At the time of this writing, Navantis holds 11 gold competencies and four silver competencies, according to its Pinpoint listing. For its Gold Server Platform competency, Ibbotson says Navantis spends roughly $7,100 in exam fees. In addition, Ibbotson estimates that Navantis invests, in total, over $70,000 worth of billable hours across all of its gold competencies.

"It's a tough market to be in right now, especially in the Microsoft world, with everything moving to the cloud," she says. "We want to remain competitive, so we invest a lot of time in our staff doing the training and maintaining our competencies to do that."

The upside of that investment, of course, is that Navantis appears as much more than a blip in Microsoft's radar.

"I've worked at a partner that had two competencies, and I've worked at a partner that has more than 10. We definitely get more attention with more competencies," Ibbotson says.

There is some room for improvement from Microsoft, she acknowledges -- for instance, in the number of rewards or marketing campaigns that are available to partners with Navantis' volume of competencies. Additionally, she noted that there is sometimes not enough differentiation between the rewards given to partners with very few competencies and those given to partners with, say, 10.

And from a procedural standpoint, the MPN competency process -- from determining the requirements to achieve each competency, to remembering when to begin preparing for renewals -- is complicated enough that Navantis employs a person for the sole purpose of managing the company's competencies. "If you're an organization of any more than 60 people," Ibbotson says, "then you need a dedicated person managing this. Because it can be a very complicated process on a yearly basis."

For all of its potential complexities, however, Ibbotson sees the MPN as a vast improvement over the old Microsoft Partner Program, particularly as a metric for partner competitiveness.

"[With] the old program, you could associate the same individual to multiple competencies. ... In the past, partners would have just one guy do all the exams," Ibbotson notes. "Now, you have to have all of your people do all the exams to be measured properly. This was very smart, because it separated the ... small boutique firms from firms like ourselves that have a number of employees with a number of talents."

Related:

• Microsoft Partner Network Cost: How Much To Join the MPN?