Both Sides

For Microsoft's Cloud Partners, 'Consumption' Is the Order of the Day

It's not enough for partners to drive sales of Microsoft's cloud; now, they're being asked to drive cloud workloads.

• By M.S. Partner
• April 30, 2015

Consumption is the new marching order of the day! As Microsoft partners we're used to seeing shifts in focus and attention out of Redmond. The company frequently moves from focus area to focus area to improve its internal scorecards and drive its business. Right now we're seeing Microsoft make major focus and incentive changes faster than ever before.

The Microsoft Consumption Problem
Fundamentally, Microsoft has a consumption problem. Many clients, especially larger ones, were lured into Office 365 subscriptions based on licensing incentives. Some clients were "seeded" with the cloud subscription -- basically, Microsoft discounted the entire Enterprise Agreement to negate the incremental cost of the cloud technologies. Or they received a discount that made choosing cloud-based licensing a relatively small uplift with the promise that they could continue to run their workloads like they had done in the past. The challenge with these sales methods is that they didn't drive the value of the cloud solutions.

Now that Microsoft has the tools to look at how organizations are actually utilizing its software, the company can provide a ton of information around it. From this we know that many clients haven't taken advantage of any of the cloud licensing that they own. We also know that the majority of clients in these scenarios have only deployed one or two of the cloud workloads (Exchange Online, SharePoint Online, Yammer and so on).

Buzzword Alert: 'Consumption'
So, consumption is the new buzzword. Microsoft has been asking for assistance in migrating companies to the cloud for a while. The new ask is to help the company onboard clients onto all of the workloads in the cloud. Obviously, if clients don't see the value, then they simply won't renew the services. This is especially true for products like Microsoft Azure, which can be scaled down to zero at an Enterprise Agreement anniversary. Plus, Microsoft knows that the more it can get clients using its technology before the competition's, the better. OneDrive is a great example: If clients get their end users to adopt it, then it becomes the standard by default. Microsoft doesn't have to have the best product on the market to capture a significant share.

Get Ready Tto Get Measured
I think partners should watch for several things this year. One is a focus by the partner teams toward consumption starting right now. This will be at the top of their lists.

Then starting next fiscal year, Microsoft will begin including consumption metrics into the pay plans of its sellers. Partners will also be paid against consumption metrics to earn their Partner of Record fees.

In my opinion, this hard shift will be another example of Microsoft overemphasizing the correction in its messaging in order to get partners and their own employees to move and shift focus more quickly. I'm just viewing this as another normal shift of focus in the market. We've seen it go from product sales to services to managed services to the cloud. Now we're seeing it go to consumption-based.

Balancing Act
As a partner, I'm still working to figure out how to play in the consumption world. We need to balance doing the best thing for our client with being a solid partner for Microsoft and maximizing the profitability of our businesses. For example, I think Yammer is an awesome product. I'm not sure there are enough consulting dollars to justify the sales expense necessary to evangelize the solution today.

Could consumption just be part of a managed services or outsource agreement? Should helping a customer plan their full deployment of Office 365 just be included in every sale? Are we talking to the right people in the client's organization?

Be a Winner
Solution providers that can figure out how to efficiently meld consumption into their sales and marketing processes will have a head start. Fundamentally, I can guarantee the systems integrators that can get the attention of prospects and clearly articulate the solutions to their business problems will always be winners.

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