Both Sides

5 Things the Cloud Changes for Microsoft Partners

You may have noticed Microsoft (and other cloud providers) usurping traditional partner services like migration. Get used to it.

• By M.S. Partner
• April 11, 2016

In my last column I discussed some of the things that stay consistent and haven't changed as the industry moves to a cloud focus. To recap, certain things still matter -- consultation and great advice, personal relationships, and strong sales and marketing teams. Also, the 80/20 rule on customer revenues still applies, and the IP assets you already have may surprise you. This month I'll explore some of the things that I see changing.

1. Speed of Change Is Increasing
Former General Electric CEO Jack Welch once said, "If the rate of change on the outside exceeds the rate of change on the inside, the end is near."

With the cloud, we're finding that the outside (industry) rate of change is increasing fast. The time between incremental software releases has shortened dramatically. New products are coming to market quicker, and vendors are more likely to field less-mature software and take feedback from the market -- sometimes with a "beta" tag put on it and sometimes not. Customers are more comfortable deploying software faster than ever before.

2. Cloud Provider Relationships Are More Direct
In providing their services directly, the software vendor is more involved with the client than ever before. They're engaging with the client directly for communications, support, service issues and billing issues. The Microsoft Cloud Solution Provider (CSP) program brings some of the responsibility for these items back to the partner, but partners will have to decide if there's enough margin to take on these additional workloads.

Longer term, the partner must continue to drive their value back to the clients. That value has to be ongoing if partners want to find a long-term revenue stream.

3. Cloud Providers Care Less About Their Partners
This happens for a number of reasons. It will happen naturally as customers engage more with the vendor directly. Customers have demanded a way to buy directly from the cloud provider, and providers have obliged. It will also happen as competitive pressures increase. For example, Google's initiatives for moving enterprise clients to the cloud for free is part of the reason that Microsoft launched the FastTrack migration services.

If a cloud provider can save the margin that a partner would make, they can either pass that to the client or keep it themselves. Plus, the provider believes that they'll be able to drive their own agenda to a client, versus a partner whose portfolio might include many competing cloud providers' solutions.

4. Data Is More Available
Active usage is the buzzword at Microsoft. Part of the reason that active usage has become a focus is that Microsoft, really for the first time, can accurately measure how enterprise clients are utilizing their software. The company can see on a monthly basis what workloads are truly being consumed. Microsoft knows that the more workloads customers use, the less likely they are to switch to another cloud provider. It also knows that the more value a customer is deriving from the investment, the more likely they'll be to renew their software.

In the Microsoft world, the rubber meets the road as active usage numbers emerge as a metric into the Microsoft field scorecard. This scorecard affects employees' paychecks and performance reviews.

Partners should expect more erratic behavior with these metrics as Microsoft tries to move the needle internally. I sometimes muse about how life would've been different in the on-premises world if Microsoft could've better measured all the shelfware that existed in that world.

5. Partners' Value
The value of a partner will continue to shift rapidly. The actual tasks that a partner has done for years have been and will quickly just be "included" in the cloud provider's product. Partners will have to invest significant time, energy and capital in developing new solutions and taking them to market. This will be a major disrupter in the market; in my opinion, more of a disrupter than anything that came before it.

Don't underestimate the number of billable hours that come from mundane tasks that customers love to outsource. What will replace the hours that your team spends today doing server builds, software upgrades, data migrations and software configurations for your client?

More Columns by M.S. Partner:

• 6 Things the Cloud Doesn't Change for Microsoft Partners
• After Missteps, Microsoft Gets Its Cloud Partner Messaging Right
• Column Archive