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What Will Microsoft's FY18 Restructuring Mean for Partners?

The landscape inside Microsoft is in flux as the company reorganizes its sales structure. For partners, the chaos presents both threat and opportunity.

• By M.S. Partner
• July 18, 2017

Editor's Note: Our intrepid, anonymous columnist turned in this piece before July 1. How did M.S. Partner do based on all the announcements Microsoft unveiled at the beginning of its fiscal year? Pretty well, we think. The jury is out on the specialists prediction, with Microsoft's reorganization fully in process right now and lots of roles being shuffled. The coverage model shakeup prediction was dead-on, especially the part about CAM and enterprise accounts being combined. Verticals? Nailed it. Microsoft is now going with six verticals in the enterprise sector. The only prediction here that didn't come true, at least in part, is the one about the licensing boundaries shifting.

There are rumblings that Microsoft will make sweeping changes to the field sales force in fiscal year (FY) 2018, which starts July 1.

Here are my predictions for what partners should look for and think about.

Specialists Are in Vogue
Microsoft needs to hire and train more folks who are true experts in their field and can sell against some of the stiffest competition that Microsoft has ever faced, including the traditional datacenter model and Amazon Web Services.

A Coverage Model Shakeup
We'll see smaller geographic coverage models as Microsoft starts to build specialist team units (STUs) that cover more segments. One prediction is that the Corporate Account Managed (CAM) space for customers with roughly 2,000 to 5,000 users will combine with the Enterprise Partner Group (EPG) teams that cover the largest accounts.

It doesn't make sense for Microsoft to have an EPG Azure Specialist driving from Dallas to Austin on the same day that a CAM Azure Specialist is driving from Austin to Dallas. Look for Microsoft to find ways to carve territories and even districts/areas into new shapes.

A Preference for Vertical Partners
Microsoft knows the value of partner expertise for clients, but product expertise is becoming table stakes. One differentiator moving forward is going to be expertise in particular industry verticals.

Tighter Focus in CTM
In the past few years, the number of accounts covered by Microsoft Corporate Territory Managed (CTM) reps dropped from 300 to 125, and I predict that we'll see this narrowing trend continue. Those accounts that are no longer directly managed will likely be swept into an expanded, inexperienced inside sales team based in Fargo, N.D., with almost no travel budget.

The upside is partners can go after these formerly managed accounts and sell to them directly without potentially battling a Microsoft rep. Plus, with the changes to the Cloud Solution Provider (CSP) and Enterprise Agreement (EA) programs (see the next section), there are more opportunities to attach licensing than before.

The downside is these inside sales teams tend to work with just the largest providers who own the licensing agreements with customers, so be careful when engaging.

Licensing Boundaries Shift
Microsoft has gotten serious about the CSP program, and why not? I'm watching for Microsoft to take several steps to drive CSP forward. One would be to hike the minimum size of an EA beyond 500 users, which was already a big increase from the old floor of 250 users.

Another is to continue to root out sales compensation conflict. Microsoft has promised that its sales reps will be neutral in their compensation between the EA and CSP programs. This is a huge win for partners who service companies that are in the CTM area, where clients could choose either the EA or the CSP program.

The shifting landscape provides both threat and opportunity as a partner. Show off your expertise, keep great relationships with your clients and offer to help the new Microsoft resources covering your accounts. There's always opportunity in chaos.

More Columns by M.S. Partner:

• Microsoft Predictions Revisited: What Came True and What Didn't
• How To Speak Microsoft, Vol. 2: Even More Acronyms You Need To Know
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