What should you do to make the most of technology business opportunities in 2017? For this "Marching Orders" series, we put that question to a number of channel luminaries, including top Microsoft channel executives, consultants, Microsoft partners and other regular RCP contributors. This entry comes from Keith Lubner, managing partner at Channel Consulting Corp. and co-founder of Channel EQ.
Our company develops ridiculously good training content and programs for the channel. One of our most popular programs is called Business Guidance Selling. The essence of this course is transforming salespeople to sell outside of their comfort zones and into other areas beyond the IT department.
In 2017, your ability to excel will be determined by your ability to sell to all the other stakeholders within an organization that now have budgets to spend on your products and services.
You can thank the cloud for this shift in the market. More applications and services now exist for more people within an organization. Couple this with the cloud allowing companies to shift spending buckets from CapEx to OpEx and you create more buyers in more departments within more companies. The problem is, for the most part, partner sales teams have been focused on selling to the IT department.
To jump start your transformation and your capabilities, focus on the following in 2017:
- Turn your salespeople into consultants. We mean this figuratively, not literally. Selling to other areas within a business is different. Therefore, your people need to think and act differently. They need to do better pre-call planning. They need to ask better discovery questions. They need to start making recommendations to the prospect on areas for improvements or cost reductions.
- Because this transformation is not easy (but required in order to make the leap into those other areas), you need to arm your salespeople appropriately. This means training the salespeople on market "pains" and "requirements." This means educating your technical staff to ask more questions about other areas within the business. This means learning more techniques to prospect into the layers of an account.
- The seller/buyer relationship has changed dramatically, and in order to prosper, you must come to terms with this reality. Buyers know more about your products and services before you ever pick up the phone or walk in the door. You need to differentiate and the only way to do that is to shift your mental approach to the account. Instead of pitching a product, start thinking of presenting a solution. Instead of being reactive to a prospect, become proactive in giving advice. Elevating your abilities will help you rise above the competition and keep you from falling into the control of the buyer.
Think and act differently in 2017, and you will develop more robust pipelines by selling to more people outside of the traditional IT.
Posted by Keith Lubner on December 28, 2016 at 7:43 AM0 comments
What should you do to make the most of technology business opportunities in 2017? For this "Marching Orders" series, we put that question to a number of channel luminaries, including top Microsoft channel executives, consultants, Microsoft partners and other regular RCP contributors. This entry comes from Per Werngren, chairman of the International Association of Microsoft Channel Partners (IAMCP).
Remember a few years ago when Microsoft partner account managers or PAMs (now called partner sales executives or PSEs) asked partners to sign up for new competencies? If you tried to resist, you often had a problem convincing your PAM to agree.
But times have changed. We see that the most successful partners are the ones that specialize in doing only a few things -- and doing them well. Less is more!
The "jack of all trades" era is over, and by specializing and being great at something -- rather than mediocre in everything -- you will see your margin go up and your market share increase. It will also make it easier to recruit because if you're running the best team in your area, you can be pretty sure that the best people will want to play for you.
We see a wave of consolidation in our industry and I foresee that this will continue. Buyers are eager to pay top dollar for great companies that are successful and well-known for their specialization. Generalists are not what they are looking for unless you have massive scale, but that's an exception reserved for only a very few.
This is clearly reflected in valuations. Having sold my specialized cloud hosting company this year, and having seen several of my good friends doing the same, I speak from experience.
Here's where "Partner-to-Partner (P2P) as a Practice" is needed. If you want to serve your customers well but still be specialized, then you will see that by working with trusted partners you will be able to increase your profits and keep your customers even happier. You will be part of a team of specialized companies catering to your customers' needs and that will ensure that you can keep your narrow specialization but also be part of delivering projects with a much wider scope.
P2P as a Practice is clearly in fashion as more and more partners realize that it makes great business sense for many reasons. Microsoft is embracing P2P as Practice, PSEs are helping partners specialize, and the IAMCP is educating and connecting partners.
A few years ago I worked with IDC to create the "P2P Maturity Model" (PDF here) as a framework for structuring P2P activities. Stay tuned to RCP in 2017 as I share insights about that framework and other tips for driving success in your P2P activities.
Posted on December 27, 2016 at 7:40 AM0 comments
What should you do to make the most of technology business opportunities in 2017? For this "Marching Orders" series, we put that question to a number of channel luminaries, including top Microsoft channel executives, consultants, Microsoft partners and other regular RCP contributors. This entry comes from Aziz Benmalek, vice president of Worldwide Hosting & Cloud Services at Microsoft.
We truly have "crossed the chasm" and are in the "early majority" stage of the cloud-adoption curve. Cloud is disrupting traditional IT faster than we think, which means increased opportunity for cloud service providers.
One of the biggest opportunities for partners moving into 2017 is helping customers navigate the superior functionality of cloud offerings, and managing their production workloads running in the public cloud. In fact, 451 Research indicates that cloud managed services are projected to be a $43 billion market by calendar year 2018, growing 60 percent faster than infrastructure-only services.
Whether your primary business model is IT consulting, systems integration, managed IT services, datacenter hosting, outsourcing or value-added resale, cloud managed services give you an opportunity to add a new, higher-margin business line that can provide a more stable, steady stream of recurring revenue.
Managed services are not a new business model. For more than 20 years, large enterprises have relied on service providers to manage their IT assets. Whether they're an outsourcer, a remote monitoring and management (RMM) provider or a managed IT provider, service providers have been managing their customers' workloads -- either in their own datacenters or those operated by their customers. Cloud, however, requires a new method of management because of its focus on scale, elasticity and automation. For CIOs, cloud represents a paradigm shift in the way they think about embracing IT, and they are demanding a new way to think about data governance and security.
The hyperscale nature of cloud provides a completely new meaning to scalability, elasticity and resiliency, and has redefined how applications are architected and delivered. Device and data proliferation means customers can do so much more with their IT assets, with cloud providing the computing resources to do so. The pay-as-you-go model provides a fail fast, agile method of app development. In fact, DevOps has completely changed the way applications are developed and maintained.
In addition to the benefits provided to customers, managed services ensure you have a constant revenue stream as opposed to a project-based method. With the consumption-based model, service providers are providing monthly billing to customers for managed services packages and adding to the packages over time as the customers' cloud needs grow. Margins are typically higher, too, compared with professional services and just reselling services. Managed services also provide the opportunity to diversify a service provider's portfolio and add new offerings like cloud dev/test, cloud backup and data recovery, cloud-native app design, et cetera.
Amidst the sea change the cloud has enabled, MSPs have a huge opportunity to help customers transition to (and embrace) this paradigm shift in technology by guiding customers in all aspects of their cloud journey. From consulting to migrations to operations management, customers rely on cloud MSPs to show them all the benefits that come with cloud adoption. As a cloud MSP, you have the opportunity to truly engage with customers to meet their needs end to end. Whether around cloud migrations or net-new app development in the cloud, you have the opportunity to truly become a trusted adviser.
Last year, Microsoft launched the Cloud Solution Provider (CSP) program specifically for partners looking to tap into this booming opportunity. This year, we hope you'll join the more than 500 partners providing managed services on Azure via the CSP program.
Posted on December 26, 2016 at 7:34 AM0 comments
What should you do to make the most of technology business opportunities in 2017? For this "Marching Orders" series, we put that question to a number of channel luminaries, including top Microsoft channel executives, consultants, Microsoft partners and other regular RCP contributors. This entry comes from Ken Thoreson, RCP columnist and president of Acumen Management Group.
Thinking about 2017 versus the past two years, I envision that most Microsoft partners will begin propelling their organizations to new levels of success.
In most cases, the business models have already been worked on during the past two years, and if those partners have focused on the right actions, 2017 should be highly profitable.
During the past two years, we have worked with many organizations on their partner cloud acceleration strategies and business-velocity tactics. In the new year, the words I would use to describe partner marching orders would be: "Brilliant Execution: Finding Leverage, Fine-Tuning Business Models and Enhancing Management/Sales Training."
Brilliant execution means a careful and consistent focus by management on every aspect of your business. Ask the following questions: Is it working? If not? Why not? And what will you do to fix it?
Fine-tune your business models; building KPIs is essential for tight management systems that will work well in the new environment. Margins have changed, so costs and productivity must be managed more carefully. You must know what levers you can pull to alter your profits.
Finding leverage means knowing the ways to extend your sales team, your marketing programs and your business resources without simply adding more staff. Check out the Microsoft Community Connections program, for example.
Enhanced training means raising the bar on management/leadership and sales. After 19 years of consulting with Microsoft partners, I know that those partners that focus on excellence from their teams exceed their goals and win market share. Check out ChannelEQ.co as an example of how to improve performance.
Posted by Ken Thoreson on December 23, 2016 at 7:15 AM0 comments
What should you do to make the most of technology business opportunities in 2017? For this "Marching Orders" series, we put that question to a number of channel luminaries, including top Microsoft channel executives, consultants, Microsoft partners and other regular RCP contributors. This entry comes from Howard M. Cohen, who writes this publication's "The Changing Channel" column.
My "marching order" for all Microsoft partners is stop and ask yourselves the hard questions. Realize that the relationship between you and Microsoft is changing rapidly, and you need to face the brutal truth of those changes and adapt.
Where will you and your company go?
At its Worldwide Partner Conference this past July, Microsoft introduced the Microsoft Professional Degree (MPD) program. After it was pointed out to Microsoft that this training did not lead to a legitimate "degree," that was changed to the Microsoft Professional Program (MPP). The first course offering is in Data Science and, indeed, this is an exciting, lucrative and high-demand direction that partners may choose as they abandon their infrastructure businesses. More courses are yet to come.
Fewer and fewer customers will be standing up servers and storage on their own premises as they migrate to the cloud. What will replace those sales in your business? Customers still seek experts who can help them:
- Manage their IT environments for greater efficiency and lower cost.
- Manage their user experience for greater consistency and robustness.
- Manage their security and regulatory compliance.
- Manage their data and related analytics.
In RCP next year, I'll be focusing on viable alternatives for transitioning partners.
- Microsoft has finally embraced open source. We'll be exploring why and what incredible opportunities are available to partners who manage open environments for their customers.
- We'll explore other major platform partner programs. Even those of you who are enjoying success in Microsoft's Cloud Solution Provider (CSP) program will need a much bigger toolkit for satisfying your customers.
- We'll explore how you can go that alone, or what partners you can engage to accelerate your process.
It's time for a business-model transformation. Now that we know why, let's figure out how!
Posted by Howard M. Cohen on December 22, 2016 at 8:29 AM0 comments
What should you do to make the most of technology business opportunities in 2017? For this "Marching Orders" series, we put that question to a number of channel luminaries, including top Microsoft channel executives, consultants, Microsoft partners and other regular RCP contributors. This entry comes from Eduardo Kassner, CTO of Microsoft's Worldwide Partner Group.
Organizations across all industries are recognizing the value digital transformation can have in propelling future growth and it's driving the explosive demand for cloud-enabled solutions. With Microsoft Azure premium services revenue, we have seen triple-digit growth for the last eight consecutive quarters. In 2017, it will be more important than ever to make investments in cloud training for your most valuable resource, your employees.
We want to make it as easy as possible for every partner to get the skills they need to address the growing market opportunity. To help close the skills gap in the high-tech industry, at our Worldwide Partner Conference this past July, we announced the Microsoft Professional Program (MPP), the first of its kind to offer employer-endorsed, university-caliber curriculum for professionals at any stage of their career.
MPP is a Microsoft-led initiative that provides professionals with real-world knowledge and hands-on experience to grow their skills in critical fields. All courseware is available on the edX platform. The initial curriculum, designed with input and participation from industry leaders, universities and our learning partners, is focused on data science to provide critical skills and experiences in this rapidly evolving industry.
In September, we built on the program by announcing open registration for the data science track of the MPP. Whether employees are just starting their career or are looking to diversify their skill set, these courses teach the skills and provide the practical experience needed to be successful.
To help drive awareness of training achievements, in October, we announced that we have partnered with Pearson VUE to make digital badges broadly available for Microsoft Certified Professionals (MCPs). Any person who has passed a selection of exams or earned designated certifications will now have the tools needed to share achievements more broadly and attract new business.
Whether you are just getting started in your own business transformation, are looking to differentiate yourself as an expert, or are proficient in another cloud solution and are looking to explore ways to become a multi-cloud expert to address any customer need, this training will help you become more profitable with the cloud.
In the coming months, we will share new investments we're making, such as Big Data engineering and front-end Web development, to help you address the growing market opportunity and capitalize on the explosive cloud demand in 2017.
Posted on December 21, 2016 at 8:24 AM0 comments
What should you do to make the most of technology business opportunities in 2017? For this "Marching Orders" series, we put that question to a number of channel luminaries, including top Microsoft channel executives, consultants, Microsoft partners and other regular RCP contributors. This entry comes from Gavriella Schuster, corporate vice president of Microsoft's Worldwide Partner Group.
Cloud technology is no longer a nascent trend -- it's the new normal. Last spring, IDC research found that 80 percent of businesses are deploying or fully embracing the cloud, and that number will only continue to grow.
The opportunity in 2017 and beyond for partners is huge. In fact, IDC also found that public cloud services spending is forecast to hit $195 billion by 2020, with greater cloud spending hitting $500 billion in that same timeframe.
The numbers are exciting to see, but here's the amazing thing: Even that is just a start.
Customers are fundamentally changing how they use technology to drive their business forward, bringing technology out of the back office and embedding it in every aspect of their business, moving IT spend from OpEx to COGS. Every business will become a digital business, and that's digital transformation.
Customers are building their own visions of what technology can do for them, and they're looking for partners who can bring that vision to life. They're looking for partners who can deliver a full-service solution, not an individual product or project.
For partners, the opportunity lies in leading, not following, that digital transformation. I see three areas where every partner can focus in 2017 to put themselves firmly in the driver's seat.
When technology is everywhere, the possibilities for specialization are virtually endless and can be overwhelming. That's why it's so important to define the unique core of your business -- what you alone can offer to customers that no one else can.
Maybe your unique core is a specialized app solving a specific business need. Maybe it is unique IP that enables multiple applications to work together. Maybe it's a connected solution that pulls from multiple online services. Maybe it's the managed service that you've tailored to a certain industry. Specializing isn't just about writing unique code.
If you're not sure where to start, look at the industries you've worked in, the types of solutions you've perfected, or the business model you've built. There are opportunities in the work you're already doing to tease out your unique differentiators that build on the business you have without starting from square one.
One great way you can build a unique offer is by partnering with your peers. As you look to modernize sales and marketing and evolve your modern partner capabilities, consider partnering to specialize, verticalize, for IP opportunities and for building out your managed services. The first step is to just start having the conversations.
If you're an ISV or app builder, consider all the ways you can go to market without necessarily having a direct conversation with a potential customer. We're here to support you in thinking through your value prop, building your brand and creating a digital marketing strategy, all of which make you an attractive business partner for a solution aggregator, especially if you're plugged in to our Cloud Solution Provider (CSP) model. Moving existing on-premises apps to cloud or hybrid and working toward certification on our marketplaces are also great ways to get in front of customers and potential business partners.
Leading digital transformation will be difficult if you're still operating in the past. Your own business may be ready for a shakeup to meet the demands of customers of the future. Are you and your employees ready to help customers capitalize on the next generation of business?
Make a plan to keep your team's skills current. The pace of change is so fast, and skills that were core to the job even a few years ago just aren't relevant anymore. We're releasing new courses on our learning platforms, including Partner University and Microsoft Virtual Academy, all the time. Make sure you're equipped to handle any scenario a customer can imagine.
Earlier this year, we sponsored a series with IDC all about the four pillars of modern, profitable partners. If you haven't already reviewed those e-books for ways you can start your own digital transformation, I encourage you to visit aka.ms/modernpartner to check them out.
Posted on December 20, 2016 at 10:17 AM0 comments
What should you do to make the most of technology business opportunities in 2017? For this "Marching Orders" series, we put that question to a number of channel luminaries, including top Microsoft channel executives, consultants, Microsoft partners and other regular RCP contributors. This entry comes from Jeff Hilton, founder of Alliance for Channel Success.
There is a big drive for organizations to achieve greater digital maturity.
When organizations use technology-led initiatives and digitally managed processes to drive performance, they gain strategic assets and distinct competitive and effectiveness advantages. They gain new ways of finding, engaging and working with clients and co-workers.
Forward-looking business leaders are aware that at some point, digital immaturity becomes a distinct disadvantage.
This is a perfect practice area for partners. Partners can leverage their technical expertise to help organizations find new ways of working with the technology in place and guiding them with implementing new technologies.
Partners can develop this practice by learning from their own internal use of technology. How do you use the technologies you sell? How do you make your organization effective and efficient? How can you take these insights out to your clients?
Don't make the mistake of thinking an organization's ability to achieve this kind of change may vary with the age of their workforce.
There are about six generations living in the United States today with baby boomers, Generation Xers and millennials making up the majority of the population and the workforce. All three of these generations are very familiar with the current stew of technologies. We're already experiencing a digital transformation, along the way to digital maturity.
Being born into a digital world or being a high-volume user of digital technologies doesn't confer technical expertise or digital maturity. It's much more than using technology; it's the ability to innovate with it. And this ability is readily found among all the generations in the workforce.
Your role as a partner is to integrate new technologies and processes that enhance your clients' ways of working across all generations. Get this right and you have a killer practice in the making.
Posted on December 19, 2016 at 9:31 AM0 comments
Editor's Note: A big challenge for longtime Microsoft partners is managing the transition from providing on-premises services and billing to getting profitable in the newer cloud models. In this guest post, Tim Wallis, founder and CEO of enterprise Office 365 and SharePoint consultancy Content and Code, describes how the U.K.-based firm made the switch from a project-based business to a managed service provider.
In my business, it pays to embrace change, and in this day and age I think that has never been more true. As we continue to face ever more uncertainty -- both economically and politically -- the need for a business to be flexible is not only an advantage, but is becoming a fundamental necessity.
Today, I want to talk about my experience of this "new normal" of business flexibility, and show how to take advantage of the opportunities it presents. I'll show how my company moved from an on-premises business to a cloud business, from project-based services to a managed services model. I'll talk about overcoming the resistance we encountered, how we customized our client approach and restructured our workforce to turn us into one of the leading Microsoft Partners in the United Kingdom.
Content and Code started out as an applications service provider (ASP). Essentially, we took Microsoft software and built our own private cloud infrastructure, then rented out this space to various tenants. Back in 2001, we were the only company doing this in the United Kingdom with Microsoft Content Management Server and SharePoint. And what was great for us was that we were able to successfully take advantage of the weak financial climate around after the dot-com crash in 2001, where people wanted to rent rather than buy.
Then from 2004 to 2007 the economy improved and we mainly delivered on-premises solutions as clients had money and wanted to buy rather than rent.
Fast-forward half a decade, and Microsoft released Business Productivity Online Services (BPOS, the precursor to Office 365). This provided a lot more than collaboration and publishing. We knew this was the start of something big, and we realised that by moving our business and our clients to the cloud, we could build a bigger business that could really change the way the world works.
Moving our business to the cloud has been, ultimately, very beneficial for us. Nonetheless, the move itself caused a considerable amount of initial internal resistance with our employees. Understandably, they were worried about what such a change meant for them.
I can break it down into three areas:
For Content and Code Developers
The early versions of the cloud platform didn't allow as much development and customization as they would have liked, and a very large percentage of our staff are developers who love to customize and tweak the products. So, moving to the cloud meant that the projects weren't as interesting for them and there was less scope for them to flex their creative muscles. Luckily, nowadays, the cloud versions offer more than the on-premises equivalents.
For Our Project Management Office
Our PMO was used to scheduling big, on-premises SharePoint projects that we were very much in control of. We built the SharePoint environment, developed for many months, then launched an amazing digital workplace. When you move to cloud, Microsoft and the client are more in control over the infrastructure and you tend to work in smaller, more iterative work packages. From a scheduling point of view, running a cloud practice is much more "bitty" with shorter-term, incremental engagements.
The Quality of Early Cloud Products
Finally, the early cloud versions of products -- Office Communications Server, Lync, et cetera -- just weren't the polished products you see today. The vision was there, but essentially Microsoft had taken its on-premises products and put them in the cloud. Today, their products are purpose-built for the cloud and are consequently of a much higher quality. Innovation now happens much faster on the cloud products.
In terms of the structure of the company, a much higher proportion of our revenue now comes from managed services, which for us are a range of activities aimed at helping clients get the most out of their cloud investments. This has required building a managed services team, including a specialist managed services salesperson and a new Head of Managed Services to drive that part of our business. Today, our managed services business is growing at about 20 percent a year, which is a testament to how much we have adapted.
Our other difficulty in moving from large, project-based work to a managed services focus was resistance from our clients. It can be hard to convince your client of the value of an ongoing managed service over only a project. People understand big projects -- there's a tangible thing at the end of the process -- whereas managed services are more incremental or iterative, meaning their impact is often harder to measure. Microsoft sales teams also promise free support with Office 365, so it can be difficult for a client to differentiate between Microsoft's limited free support and our managed service model that covers adoption, analytics and a whole lot more.
It may sound obvious, but customizing your approach for different clients is a huge part of getting them on board with change. Some clients might be starting out with Exchange Online e-mail first, others with SharePoint. We build a customized "value journey" for our clients that focuses on getting the full value from their Microsoft investment. This is not only about IT deployment, but far more around change management and user adoption. For example, our managed service offerings are more about user analytics of a particular piece of software -- what they are (and are not) using and, based on that, delivering better ROI for the client.
With the change in method and technology comes an inevitable change in staffing. We restructured from employing (principally) development-focused, technical people to a more business-focused team. It wasn't easy, but we had to change our offerings, because often we are doing less technical work for clients and a lot more adoption and change management. As a result, many of our employees are now change management-certified via Prosci. Of course, we still have all the technical staff, but have a greater emphasis on business-focused staff now.
One of our unique features has always been about user research and understanding how people interact with technology -- how they use it today and how they should use it tomorrow. We want to change the way the world works and the changing landscape has prompted us to reevaluate and remodel how we provide for our clients. Our method was to first build the capacity and then restructure the company, essentially, into five teams:
- Our engagement and program management team helps our clients manage and run digital transformation projects and ensures we deliver great ROI for our clients.
- The client success team includes business-focused change management, user experience and user adoption experts.
- The enterprise strategy and architecture team houses our technical consulting staff.
- Development, which does what it says -- development, quality assurance and application lifecycle management.
- Underpinning it all is the technology enablement team that covers infrastructure from identity and access; to Skype for Business; to OneDrive, SharePoint, Exchange; and all the security offerings.
Continuous Change Management
Change can be hard to bring about, so we message our change very carefully. It's vital to make sure your employees know what's happening in the organization, and so we talk about it as much as possible every week during our inclusive companywide meetings. Staff need to know the "why" of what we are doing because people do get confused, and any change within an organization can unsettle people so it needs to be communicated as widely as possible.
The continued evolution of Office 365 means we have to make sure our people are skilled at working with new and evolving Microsoft tools such as OneDrive, Planner, Office 365 Video or Sway. Keeping up with the pace of change can be difficult, but we have put in place a number of processes to help accommodate our people's continued learning:
- Lunch & Learn and Beer O'Clock, where individuals present what they are working on and new concepts and ideas in a relaxed, informal atmosphere.
- Using Yammer internally to make sure everyone is talking about what they are doing.
- Training courses and subscriptions to continuous-learning Web sites.
Creating Change in Your Business
There's no blueprint for success with the cloud because it evolves so fast. The biggest issue for us was getting everyone on board, and that comes from following best practices:
- Focus on metrics. Saving money on mobile phone bills and travel costs by using Skype is a big thing. But if you don't measure it, you don't know how much you are saving. Share these metrics with staff so they see the benefit of the change, which will really boost your internal adoption.
- Drink your own champagne. You also need to provide user training for new products to gain the value of the change. Unless your staff really use and believe in the technology, they won't be able to be the trusted adviser to clients.
Differentiation Is Key
Clients can often view the various partners they talk to as potential "removal men," viewing the cloud as something managed by Microsoft and all you're doing is picking up their apps and content and moving it to the cloud. It can be difficult for clients to see how you are different. But differentiating is absolutely key.
Make sure you have a very specific value proposition and clear intellectual property around what you are doing. At Content and Code, we have a lot of intellectual property around our methodology, our digital value report and Fresh, our digital workplace accelerator. These things highlight our differentiation. So, differentiate rather than being just another "removal company."
Find out more about Content and Code and its story here. You can also follow Tim's latest Tweets @timwallis.
Posted on September 14, 2016 at 9:22 AM0 comments
Editor's Note: Throughout the month of January, we'll be running installments of Marching Orders, our annual collection of advice and predictions from channel luminaries about what to do and what to expect in the year ahead. For this entry, Mike Harvath, CEO of Revenue Rocket Consulting Group and a longtime RCP columnist, makes a counterintuitive recommendation about contract lengths in this recurring revenue age.
Beware the curse of the long-term contract.
We're going to offer some advice for the coming year that on its surface seems counterintuitive, but when looked at practically, makes a great deal of sense. It's the fallacy of the long-term (i.e., three-year) contract. Say what?
Standard advice for IT services executives is to lock in that long-term contract, thereby assuring a steady stream of recurring revenue for at least the length of the deal. Sounds right, but hold on and think for a minute about an alternative. We've been advising our clients to get behind the idea of a one-year, evergreen contract, automatically renewed annually, with built-in price increases to cover the cost of inflation and with a one-month termination clause. Here's why.
- Long-term contracts don't necessarily add value to the business. What adds value is the stability of your client base and the class of revenue derived from the technologies and services you offer that are of value to your customers. Contracts no longer guarantee this stability. Customer satisfaction does.
- Customers tend to shop their business more often at the end of a three-year contract than at the expiration of shorter contracts. Things change, clients get antsy, new technologies emerge, and it simply seems the right thing to do to see what else is out there.
- Three-year contracts aren't the security blanket they are made out to be. Customers have been known to terminate a contract before its expiration date, and the truth of the matter is there isn't too much you can do about it. Sure, you could take legal action, but that costs time, money and frightful PR if the fight goes public, at which point prospects might decide to pass on doing business with your company.
- Short-term contracts can dramatically shorten the sales cycle. It can take two to three months to negotiate a long-term contract -- months with no revenue coming in the door. Multiply that by the number of new customers you are taking on, and it can add up to serious dollars. Shorter-term contracts tend to be less complicated with fewer objections and obstacles, and therefore they get executed quicker, resulting in a faster path to the recurring revenue.
- Companies with long-term contracts can get lulled into a false sense of complacency about servicing the business. With a one-month exit clause, you've got to earn your stripes every day. Think of it as a built-in incentive to drive excellence in customer satisfaction -- which, when all is said and done, is the primary driver in keeping and attracting customers.
For your next contract negotiation, give this alternative approach a shot. You may discover a competitive advantage appealing to your customers and beneficial to your company. If you're a bit hesitant and need some more ammunition to go forth, give us a call. We'd be happy to share with you our experiences in these types of contract negotiations.
More Marching Orders 2016:
Posted by Mike Harvath on January 28, 2016 at 1:18 PM0 comments
Editor's Note: Throughout the month of January, we'll be running installments of Marching Orders, our annual collection of advice and predictions from channel luminaries about what to do and what to expect in the year ahead. For this entry, longtime Microsoft partner Matt Scherocman, president of Interlink Cloud Advisors, provides some peer-to-peer tips.
In my opinion, Microsoft is changing faster than ever before. Customers are changing their business plans and processes quickly and the industry is rapidly evolving.
As partners, we are always in the middle between the vendors and the clients -- which can be painful! We all know that vendors, including Microsoft, are going direct to clients more than ever before. My marching order to my own team is to integrate tighter than ever with field teams at Microsoft. We know that there is painful change happening. Staying close allows us to better predict and react to changes.
One major initiative is ensuring that we are communicating back our value to showcase where we are having success selling, deploying, innovating and partnering. Microsoft is driving more direct customer touch in the CAM and CTM field teams. The days of just assuming they knew what good work we were doing are over. We have to show our value.
Our team must continue to be curious about how Microsoft is going to market today and how that will evolve for tomorrow. Are we helping the individual reps at Microsoft exceed their revenue targets, hit their scorecard objectives and take great care of clients? Only when we care about their goals will they begin to care about ours.
More Marching Orders 2016:
Posted on January 27, 2016 at 2:53 PM0 comments
Editor's Note: Throughout the month of January, we'll be running installments of Marching Orders, our annual collection of advice and predictions from channel luminaries about what to do and what to expect in the year ahead. This entry comes from someone at the center of the changes and challenges in the hosting world -- Aziz Benmalek, vice president, Worldwide Hosting and Cloud Services, Microsoft Corp.
We're in an exciting period of change and opportunity for cloud and hosting service providers. These partners represent one of the fastest-growing channels for IT delivery with new providers being created and growing every year.
A study released by 451 Research during last year's Microsoft Cloud and Hosting Summit revealed that nearly 70 percent of the opportunity for cloud service providers now sits above infrastructure. The increasing demand in areas such as managed services, application hosting and security services represents an opportunity for partners to drive net-new business and address a broader set of customer needs. Customers are turning to partners not only for services like disaster recovery and application development, but for management of their cloud migrations and operations, as well.
Microsoft is focused on offering resources and support that enable partners to take advantage of this new era as customers become more mature in the cloud and move up the stack.
The Microsoft Cloud Solution Provider (CSP) program is an opportunity for service providers to capitalize on this trend, allowing partners to complement existing offerings and value-added services with Microsoft first-party cloud services and solutions. While the program itself is relatively young, we are adding over 100 partners each month and have more than 4 million Office 365 seats deployed through our service providers and have expanded the program to include solutions such as Azure, CRM Online and Enterprise Mobility Suite (EMS). Combined with the unique ability to deliver hybrid cloud solutions that seamlessly bridge the gap between customer datacenters and hosted cloud environments, it provides an opportunity for partners to differentiate and deliver the additional value-added services that customers are demanding.
With the Microsoft Cloud Platform, CSP and Azure Hybrid Services, our partners can deliver an unparalleled amount of flexibility and choice -- tailoring solutions for specific customer needs. There is a huge opportunity to seize this moment and stand by your clients as they make their cloud decisions. The future is bright for service providers, and I look forward to sharing more about how we'll continue to drive growth together.
More Marching Orders 2016:
Posted on January 25, 2016 at 10:41 AM0 comments