In-Depth

Microsoft's Channel Finds Its Place in the Expanding Azure Ecosystem

As Azure gains ground in the public cloud space and Microsoft refines its partner organization to make Azure sales more enticing, an ecosystem of offerings is springing up around the platform. We take a look at the opportunities for partners to offer Azure-based services.

• By Gladys Rama
• December 06, 2017

For the better part of the last decade or so, Amazon Web Services (AWS) has been considered the cloud market's top contender, in terms of its breadth of features and technical capabilities, and Microsoft Azure just one of its very distant rivals. In more recent years, however, Redmond has done a yeoman's job of bridging the gap between AWS and Azure, introducing new features at an often-dizzying clip and expanding its cloud infrastructure to more regions. And its partners -- and its partners' customers -- are taking notice.

"Microsoft, in general, has gotten deadly serious about cloud and really made it a point of emphasis with customers," says David Hsieh, senior vice president of marketing at Big Data platform provider Qubole Inc. The Santa Clara, Calif.-based ISV offers its Big Data solutions across multiple clouds, including Azure and AWS. However, while AWS might have had the early advantage in terms of customer interest, Qubole began noticing a shift in Azure's favor about 18 months ago.

"We see it in the form of customers asking us about our support for Azure, whereas two years ago, we saw very little interest in Azure and very little inquiries in our support for Azure," Hsieh says. "That really started to change about 18 months ago. Now, they [Microsoft] come up in almost every conversation."

It's an observation that's echoed by David Lucky, director of product management at managed cloud services provider Datapipe Inc., which was acquired by Rackspace Inc. last month. "We've been offering managed services on Azure since January 2015, and initially, it was a little light on interest level, but it definitely has picked up over the past 12 months, maybe as far as 18 months," Lucky says. "We're seeing more inquiries on it."

Lucky attributes the uptick in Azure inquiries to Microsoft's ongoing roll call of new features in its platform, bringing it closer to parity than ever before with the more entrenched AWS. For example, at its Ignite developer conference in September, Microsoft finally introduced two capabilities to Azure that have been mainstays of the AWS platform for years: reserved instances and availability zones. Microsoft also announced its plan to acquire Cloudyn this past summer, which would give it the ability to extend its cloud monitoring capabilities beyond Azure and into AWS, as well as other clouds.

"That was an interesting development, to be sure," says Jay Chapel, CEO and co-founder of Dulles, Va.-based ParkMyCloud, regarding the Cloudyn acquisition. ParkMyCloud provides an eponymous Software-as-a-Service (SaaS)-based solution that helps organizations wrangle the cost of their cloud operations. The solution itself is hosted on AWS, though ParkMyCloud partners with both Microsoft and AWS, as well as Google Inc. "From a pure technology standpoint," Chapel says, "it sure seems in general that Azure is much closer to AWS now."

"Microsoft's done a really good job of building Azure into a more credible competitor to Google and Amazon."

-- David Hsieh, Senior Vice President of Marketing, Qubole Inc.

The growing perception that Azure has achieved parity with AWS could not have come at a better time for Microsoft, given the rising popularity of multicloud environments. Many small and midsize organizations, wary of vendor lock-in, are increasingly leveraging two or more cloud platforms to maintain flexibility. At the opposite end of the spectrum, larger enterprises with many product and development teams often find themselves using multiple clouds to cater to each department's different needs.

In September, Cloudify Platform Ltd., a provider of open source cloud management solutions, published a survey of nearly 700 IT pros worldwide and found that just more than half were using more than one cloud provider within their organizations. Nearly 9 percent said they used at least five cloud vendors, and a smaller percentage as many as eight or nine. However, the most typical multicloud environments were made up of just two vendors. And the most popular two-vendor multicloud combination? AWS and Azure.

"We have more and more customers now that are multicloud, meaning they're using AWS and Azure, or Azure and Google," says Chapel. "So they're not stuck with one vendor -- they have options."

"The whole multicloud approach is definitely increasing," adds Lucky. "That's another thread that we're seeing -- customers who want to be able to utilize multiple clouds for a variety of reasons. In the past, I didn't see that, but I'm seeing that a lot more now. I think with the increasing functionality in Azure, that's just going to continue."

The comparison with AWS is one that Microsoft now seems to welcome. In October, the company published a "Cloud Service Map" (PDF here) that catalogs each of Azure's disparate services and their AWS equivalents. Aimed at developers building multicloud applications and businesses planning cloud migrations, the Cloud Service Map is organized like parallel menus of both vendors' services. Ostensibly, the document provides organizations with a simple way to understand and compare each cloud platform's offerings. However, as a Microsoft marketing document, the implicit message is: "Whatever AWS can do, Azure can do, too."

Until recently, that's an assertion that Microsoft might not have been able to make. "I think Amazon had the benefit of [having] a lot longer to build and grow and mature their cloud service. Microsoft was a little later to the game," says Hsieh. "But I think they've really done an amazing job of building Azure into a first-class cloud service."

Lucky agrees. "They [Microsoft] in the past few months really beefed up their capabilities, essentially matching a lot of Amazon's capabilities," he says.

Microsoft Courts ISVs
Nintex Global Ltd., a provider of workflow automation solutions, built and now runs its platform on Azure, so it's a direct beneficiary of Microsoft's technical progress around its cloud. "We leverage it [Azure] extensively," says Josh Waldo, chief customer officer of Nintex. "So when Microsoft matures its platform further with these types of capabilities, it helps us, it helps our partners, it helps our customers essentially leverage those capabilities as we innovate in the area of workflow automation and business process automation."

Aside from Azure's expanding technical capabilities, however, Nintex also benefits from several changes Microsoft has made to its channel program in recent months that are designed to encourage more partners to build their businesses around Azure. Chief among these is the launch of the more ISV-friendly One Commercial Partner (OCP) organization that Microsoft described at its Inspire partner conference this past July. In summary, the OCP reorganizes Microsoft's partner-facing personnel around three areas: Build-With (to foster partner development), Go-to-Market (to facilitate partners' marketing efforts) and Sell-With (which introduces a new "channel manager" role to essentially act as a liaison between partners and customers).

For an ISV like Nintex, the program change represents a positive and proactive step in Microsoft's long history of working with partners. "Microsoft has a much more renewed focus on going to market with ISVs, which is very exciting, I think more so now than ever in the past," Waldo says, noting that "Microsoft has gone through ups and downs as it relates to their ISV relationships."

Microsoft's discussions at Inspire around the OCP's three partner roles also impressed Ariel Amster, director of channel sales at Qubole. "They're looking at how they work with both ISV partners, which is something Qubole would fit into, and system integrator partners," he notes. "Microsoft's always been good with partners, but I think the renewed focus and the clarity of message is something new."

"Given that Azure Stack is particularly useful for edge cases, we're seeing a lot of interest from colocation providers, or providers in regional spaces where there isn't a lot of public cloud availability."

-- David Lucky, Director of Product Management, Datapipe Inc.

And whereas Azure may now be considered an equal to AWS on the technical front, it's Microsoft's ability to leverage its massive partner base that could eventually give it a true strategic advantage. Currently, Microsoft claims more than 64,000 cloud partners, more than AWS and Google combined. "Microsoft has a very mature channel compared to somebody like AWS and Google, who haven't been selling to the enterprise that long," says Chapel. "So their ability to enable ISVs like ParkMyCloud and others to integrate with their cloud and their technologies is obviously very important."

The launch of the OCP comes just as the number of ISVs building on Azure is reaching critical mass, as Waldo describes it. This has had the effect of extending Azure's technical chops beyond what Microsoft is able to provide and into what partners are able to provide when they work together. "A lot of the innovation that's happening on Azure is happening on top of Azure, with partner applications like Nintex and ISVs that are innovating on top of Azure," Waldo says. "So if you want to leverage Azure as a partner, you don't just have to look at natively what's in Azure and try to cobble it all together into solutions for your customer. Many times, you can build Azure-based applications with an ISV solution that happens to be on Azure. There's tons of innovation happening in the ISV community that partners can leverage and should leverage."

AI's Appeal
Another new facet of the OCP is its focus on four distinct solution areas. During his Inspire keynote, Microsoft CEO Satya Nadella listed these areas as being "modern workplace, business applications, applications and infrastructure, data and AI [artificial intelligence]." The focus on AI, in particular, has been a trademark of much of Microsoft's messaging around its cloud platform recently. At the more recent Ignite developer conference, Microsoft doubled down on its AI evangelism -- as well as machine learning, Big Data and even quantum computing -- and took pains to demonstrate how it's bringing these technologies to Azure.

Though a lot of the new features may be beyond the capabilities of many partners right now, Hsieh recognizes them as Microsoft's attempt to share the fruits of its massive R&D budget with its partners. "Microsoft has a long and rich history in the R&D arena, but I think historically, it was hard to commercialize a lot of those capabilities," he says. "A cloud platform is a great way to make those things more broadly available. I think this is a great opportunity for Microsoft to take stuff that's locked in their research lab and make it much more generally available and see where the market takes it."

Waldo sees Microsoft's AI push as a boon to partners as they work to augment their applications with the kind of natural-language, automation and predictive analytics capabilities that customers increasingly expect from their digital experiences.

"I think partners are benefitting from this innovation, whether they think they need to benefit from it or not," says Waldo. "Because once they start seeing what it can do within the context of the application that they're building, it makes the experiences that they deliver much more powerful for the end customer." Waldo expects Microsoft's efforts in AI and machine learning to enable more intelligent automation in the Nintex workflow platform: Recommendation engines can become smarter, workflows can adapt automatically based on user behavior, and customers can become more efficient overall.

"Keep your eye on repeatable frameworks and AI innovation coming out of Azure that is actually implementable."

-- Josh Waldo, Chief Customer Officer, Nintex Global Ltd.

With an established R&D department and a CTO that has a strong background in AI, Nintex may be better-equipped to implement these new Azure capabilities than other partners. Taken all at once, the barrage of new technical announcements could be overwhelming. However, Waldo says that for partners that are able to cut through their initial confusion, there are plenty of opportunities to take advantage of leading-edge developments like AI. "Keep your eye on repeatable frameworks and AI innovation coming out of Azure that is actually implementable," he advises. "There's a lot of data out there and you need to make sense of it and turn it into decision making that's more automated [for customers]. So I think AI technology is very important combined with machine learning."

Another recent Azure innovation that's perhaps more immediately accessible to partners is Azure Stack, Microsoft's hybrid cloud system that lets organizations deploy Azure environments within their on-premises environments. The first Azure Stack appliances began shipping in late September from a short roster of Microsoft hardware partners. However, there's plenty of room for colocation partners and managed services providers to build a portfolio around Azure Stack, too, according to Datapipe's Lucky.

"Given that Azure Stack is particularly useful for edge cases, we're seeing a lot of interest from colocation providers, or providers in regional spaces where there isn't a lot of public cloud availability," he says. "There's a lot of opportunities for managed service partners on Azure Stack between all the things that we can add, like security and control, [and] helping customers plan, build and run an Azure Stack and assess it."

Between Azure Stack, the ever-expanding list of new functionalities that Microsoft continues to bring to Azure, and the heavily pro-ISV direction it's taking with the launch of the OCP, Microsoft's partners have a lot to be optimistic about. "Microsoft's done a really good job of building Azure into a more credible competitor to Google and Amazon, but it's also done a really good job of reaching out to its customer base and getting them to look at Azure. And on the partner front, Microsoft's done a terrific job of reaching out to its core group of partners," says Hsieh. "Not everybody who has a cloud infrastructure service is quite as partner-friendly."