I seldom write about IT or cybersecurity, but today I decided to make an exception.
There have been several publicly known ransomware attacks recently. The attacks against Colonial Pipeline and SolarWinds were eye-opening to many. The attack against Kaseya affected, according to the vendor, 1,500 organizations worldwide. The villains found a clever way to extend their reach by attacking vendors that provide tools for MSPs. Even my local golf club got hit in the Kaseya attack.
Ransomware attacks are nothing new, but what is new is that criminals are now better organized and have a larger and more devastating impact. They have also aligned their demands with how much their victims are prepared to pay.
You can never fully protect yourself, but you can make it harder to become a victim. Perhaps it's like when burglars scout houses to rob, avoiding the ones with high security. Here are eight ways to make sure that your "house" has a decent level of security:
- Scrutinize the tools you're using and think about how you can create silos in your environment to limit the impact of an attack. Think like the U.S. Air Force, which makes sure to have two separate fleets of tanker aircrafts. If one manufacturer's aircraft has an issue, the other can still fly and provide refueling services in the air. Operational capabilities remain intact.
- Make sure all your systems are updated -- that's probably the best protection against being attacked. But also make sure that updates are not infected (like what happened to Kaseya's customers). Most updates don't need to be installed right away; you can often wait a few weeks. And for business-critical systems, it makes sense to first install updates in an isolated test environment. Last, make sure the updates are authorized and published by your vendor. When in doubt, make a phone call to the vendor and verify.
- Train on how to roll back updates so you are comfortable doing it on servers, personal computers, SANs, firewalls, routers, etc. When there's an issue, you might be able to limit the impact with a quick roll-back.
- Make sure that you use complex passwords and implement two-factor authentication. Best practice is that your administrators should use personal accounts with the lowest possible level of access. Once they need a higher level of access, they should use another account just for that purpose, or get their access temporarily elevated, and then go back to the lower level of access for regular work.
- Separate your backups and make sure they are impossible to reach by someone with full access to your production environment. Ransomware attacks often involve attacking backups, but if they're separated and intact, you can get back to business quicker. Simulate restoring your systems with your backups as it's important to know exactly what to do when needed. When your backups are separated and you know exactly how to restore, you will be much more protected.
- Create a map of which systems are business-critical and if there are any alternative solutions when you're under attack. That might mean going back to manual routines or switching temporarily to alternative systems that you can get up and running within a number of hours.
- Evaluate your vendors on how seriously they take cybersecurity and how prepared they are. We are all in this together and no chain is stronger than its weakest link.
- Educate your staff in cybersecurity so they understand how they should act. This involves what type of pages to avoid, what information never to give and how to detect phishing e-mails.
It's a dangerous world out there. Follow these steps and together we can make it a little bit less scary.
Posted by Per Werngren on September 02, 20210 comments
We have all had a very different past year. We have all suffered and made sacrifices, and many of us have lost people close to us.
Yet our partner ecosystem has been highly innovative, and there has been a strong demand for digital transformation, which has benefited many of us.
Here are 10 things I see ahead for partners as we put the pandemic in the rear-view mirror.
- The digital transformation will continue. Even if we eventually go back to our offices, it will be part-time and demand will be strong for solutions that enable us to collaborate with others and carry out our work without physically leaving our homes.
- Telecommuting will continue to be very important. Outside of our ecosystem, it will drive high-speed Internet access and networking infrastructure.
- Our ecosystem will continue to benefit from Microsoft Teams and there will be more solutions that are built to be first-class citizens inside Teams. We will simply see smarter and deeper integration.
- Business transformation driven by artificial intelligence and machine learning will accelerate. Partners with deep insights in certain verticals will be able to make a big dent here. Charging not by the hour but instead taking a slice of the value of the improvements will be a winning business model for partners that dare.
- Microsoft's massive investments in its business applications portfolio will bear fruit. Partners should embrace low-code/no-code development platforms as they will enable them to more easily and quickly deliver applications and solutions that will give their customers faster ROI. Partners should invest in getting to know a few verticals and recruit subject-matter experts that can work more closely with customers. People that really know the ins and outs of a particular vertical will be in high demand.
- Hosters across the globe are rapidly becoming MSPs in the cloud; I call them virtual hosters. The game-changer last year was that the cost for running on Azure reached parity with hosting in your own datacenters. We see that the cost for hosting in Azure is going down further and the performance and functionality are going up. Partners with legacy datacenters should make a plan for shifting to Azure as that will help them increase profitability and grow their customer base. This is not an area where you can be nostalgic. The change is here now and creates opportunities for the bold.
- Digital presence and online marketing became much more important when we couldn't meet in person. Partners should invest in hiring the right people to take them on this journey. When you do it right, you will also discover that your geographical market increases because you can attract customer from far away.
- Talent is always important. When you are not bound to be close to an office, you can recruit people who are located farther away. This increases the talent pool and benefits both employers and employees. Some partners will want to hire people only in the same country, and others will take the opportunity to hire people residing in other countries. Whatever your preference, the geographical area for your recruitment efforts will be bigger -- and that is a great thing. I encourage partners to be flexible around working hours as the old 9-to-5 workday is not necessarily valid anymore. Being open to giving a bit of freedom will make you more attractive as an employer.
- I always talk about P2P, or partner-to-partner. Every year, I see that momentum increase. Partners that specialize will also see the need for P2P. I notice increased interest around P2P from Microsoft, Microsoft partners and other ecosystems, so my prediction is that this will continue and accelerate. My advice is to make P2P core to your DNA. Work on a structured approach where you get buy-in from senior leadership and where you plan and measure your success.
- Last is a wish for the face-to-face meetings that I really miss. Maybe in-person conferences will be able to restart at the end of this year. Who knows? I can only hope.
Posted by Per Werngren on June 02, 20210 comments
As a former president of the International Association of Microsoft Channel Partners (IAMCP), I had the privilege and honor of leading the team that took the IAMCP from four to 44 countries and reached an annual revenue of $10 billion in deals between our members. That experience gave me some visibility into what makes partner-to-partner (P2P) relationships and engagements successful.
Today's Microsoft ecosystem is highly vibrant. We see great innovation happening across the globe, which opens new opportunities. As our customers are increasingly global, we need to address how to sell and deliver to them beyond geographical borders.
By making P2P core to your strategy, you will accelerate your company's success, which translates into higher growth and increased company valuation. But, as with most things in life, you will need to make a full-hearted effort to make it fly, and it will take some time and structure before you get there.
Here's the recipe for a modern approach to P2P:
- Make a strategic plan for how to develop your partnership over time. My P2P Maturity Model is a great framework for how to create a structured approach toward successful partnering, and I encourage you to involve your partners in the journey, too. You can achieve some success by just being opportunistic and ad hoc, but long-term success demands a structured approach.
- Get full buy-in for P2P from the senior leadership in your practice, business unit or company (depending on your size). I've seen a few partnerships end in disaster when people lower in the organization were all on board but the senior leadership did not recognize the importance and failed to fully commit.
- Value sales through your partners as equal to sales generated directly. Your salespeople should get the same level of compensation for deals through partnerships as for deals done direct. Compensation drives behavior.
- Focus on what you are truly great at and ditch all efforts to sell and deliver in areas where you cannot honestly claim that you are world-class. Get rid of everything that is non-core and either let people go, or re-assign them so that they become part of your core focus. Perhaps you can sell your non-core practice areas to another Microsoft partner; that way you ensure that your redundant staff get a new and more suitable employer.
Today's environment is highly competitive, and you cannot afford to spend time and money on solutions where you don't stand out as a leading player. Here's an opportunity to be bold and make the right bets on what is core and let fellow partners help you with non-core needs.
- Forge partnerships with companies that can help you in the areas where your customers need help but that are outside your own scope. You should invest time in mapping your needs and create a longer list of potential partners that you then narrow down to a shorter list.
- Forge partnerships with companies that can help you sell and deliver in geographies where you are not present. This is less risky and costly than opening branch offices or subsidiaries yourself. And again, spend the time needed to map your needs and identify what you can bring to the table.
- Make your partners an integral part of your operation and build trust by being totally transparent under a formal non-disclosure agreement (NDA).
- Ensure that everyone in the partnership feels that the relationship is financially successful. If you sell each other's billable hours and services, the margin should be the same for both; nobody should get a better deal. Make sure that you're working with decent margins for all parties.
- Assign ownership. Someone in your organization needs to be responsible for nurturing and developing your partnerships.
- When things go bad, invest in resolving it in a way that makes the customer and your partners willing to continue working with you. Together with your partners, analyze what you can improve to avoid future problems. Long-term partnerships are the most profitable. By being willing to learn from problems, you can deepen your relations with other partners.
- Be proud of your partnerships and publish them on your Web site. CIOs love when specialized companies demonstrate willingness to work together, and this will help you win customers.
- Be generous and don't always strive to maximize profits. Instead, ensure that both parties are happy in the long run.
- Be faithful and don't sideline your partners or reduce their abilities to earn money within the relationship. I've seen multiyear engagements where one party felt that the company that made the sale is getting too much money from Year 2 and wants to cut the margin to zero. This is a bulletproof way to end a partnership as it demotivates building a business together.
- Evaluate your partnerships on a yearly basis and retire relationships that do not work or where you see little strategic value. The portfolio of partnerships needs constant nurturing and sometimes you need to make changes. Those changes are less painful and dramatic when you're annually evaluating how your partnerships align with your business goals.
- Capture your partnership arrangement on paper. This doesn't need to be complex, but you should document how you're working together and what the expectations are on both sides. And please review it together with your partners at least once a year.
Good luck, and please reach out to me and share your stories!
Posted by Per Werngren on December 21, 20200 comments
Remember when your customers had offices filled with workers and everyone had a PC on their desks? Remember when people met in person and the computer room in the basement hosted all the servers?
Most systems integrators (SIs) and value-added resellers (VARs) had a viable business with support staff onsite taking care of people and systems. Most SIs and VARs did a blended delivery, where only some of the support was delivered from a central service desk. Their livelihood was to sell hours in different packages. The Microsoft Office experience was delivered through local Exchange and SharePoint servers -- though, of course, many customers had made the switch to Microsoft 365.
It was a mix of offsite and onsite, and that worked out well for most. The ones with most of the services onsite had, of course, a much lower margin than the ones that leaned more offsite with processes handled by a skilled service desk.
But then came COVID-19, and since March nothing has been the same. Our customers no longer have staff working onsite and meetings are held digitally from the comfort of our homes. Customers are also less interested in having staff from external companies running around in their offices.
A significant consequence of COVID-19 was that all partners with a workforce of onsite support engineers had to let people go. That is always a tough decision. But when you need to choose between saving your company or keeping redundant staff, the choice is often easy to make, although it might be emotionally hard.
Perhaps we can see a distant light at the end of the tunnel even though we are not yet in the clear, as the pandemic is entering another wave. But our society has changed, business life has changed, and some of the changes mean that our businesses need to also change.
I think that this is a great opportunity for SIs and VARs to reposition their businesses and make a giant leap into something that is more modern and better-positioned for the new normal. That means that you should absolutely not go back to sending out support engineers to your customers because most, or at least a significant portion, will work from home. And to be honest, the profitability was never good, anyway.
Instead, take the opportunity to ramp up your service desk. One common mistake is to add lots of people to a service desk. My advice is that you should instead automate lots of tasks by having great support systems. That will keep your headcount down and profitability up. It starts with a system for support-ticket handling, where customers don't need to contact you by phone. Instead, they should be able to resolve lots of tasks via self-service. If they need to speak to an agent, you should encourage them to do it over chat or e-mail, as that will help you better balance your agents' workloads and increase both customer and employee satisfaction.
Taking care of servers and applications should also be done by a centralized team that might be part of the service desk organization. If you are a larger SI or VAR, you might want to split into several teams where each and every one is specialized on a certain area like servers, communications or apps for certain verticals. My advice for smaller partners is to be careful to split into multiple teams, as that always drives cost and you will need to be at a certain size for it to make sense.
This is also a golden opportunity to decommission your customers' server rooms and move workloads to Microsoft Azure. Because your customers' employees are mostly working from home, it is paramount that you enable remote access at scale, which is so much easier and more cost-efficient when you have everything in Azure. The new Azure-based Windows Virtual Desktop (WVD) is a great example of new technology that enables remote scenarios.
Taking your customers on this journey will be great for your business and will also future-proof your customers, as they will be much more agile and can more freely add apps delivered as Software as a Service (SaaS). This starts with a high-level discussion between senior salespeople and probably the CIO/CTO at your customer, and you need to make sure that you're well-equipped to have discussions like this.
The goal should be that all your customers get their workloads in the cloud, preferably Azure if you're a Microsoft partner, and that you service all users from your service desk without sending out support engineers. If you make this journey, you will be rewarded with higher margins and -- because you're no longer an SI or VAR, but instead a managed service provider (MSP) -- this will significantly increase the value of your company because buyers love a business with recurring revenue so that they can sleep well at night.
Posted by Per Werngren on November 05, 20200 comments
In Part 1 of this series, I covered the way the CIO job has changed and how partners can best help CIOs succeed in delivering on business objectives rather than just on technology objectives.
Now that you know the big picture, here are some thoughts for low-hanging fruit:
- Avoid risky and costly large projects that take ages to fulfill. Aim for smaller projects that support your long-term roadmap (and make sure that you actually have a long-term roadmap).
- Create a roadmap for all applications and make realistic plans for replacing as many bespoke and customized applications as you can. Make sure that your roadmap has a timeline! Aim to replace them primarily with modern applications provided as SaaS and secondarily as modules that are part of larger systems. Consider apps built with the Power Platform (currently Power BI, Power Apps, Power Automate and Power Virtual Agents) and integrate with Teams. Reducing the number of applications saves cost and modernizing with agile tools will increase competitiveness.
- Consolidate databases so that they need fewer virtual machines (VMs) and consider using SQL as a Service (or some other database as a service).
- Implement business intelligence and provide great dashboards to the business. It does not need to be fancy, just relevant, and with fewer systems and databases, it becomes easier to accomplish as you will not need to connect to a large number of data sources.
- Make a timeline for decommissioning servers on-premises and servers in external datacenters. Replace the servers with VMs and containers in Azure. Try to shrink the footprint by adopting SaaS as much as possible. You really do not want to operate physical infrastructure if you can avoid it, and Azure is a great virtual datacenter that is second to none.
- Reduce the number of vendors and go for "better together" rather than "best of breed." This will reduce the number of isolated systems, reduce the need for integrations and reduce the problem with vendors blaming each other. All of that translates to higher efficiency and lower cost.
- Make sure that you use processes and that they are documented and well-known. Update the processes as needed so they reflect reality. This will reduce dependency on certain individuals when generalists can handle tasks that were previously given to specialists.
- Audit your security on a regular basis and have processes in place for always updating your systems. Remember that cybercrime is a reality and it is only a matter of time before you are attacked.
- Test your backups on a regular basis so that you know that you are covered and can read back data within a reasonable time.
- Handle less yourself and rely on partners as much as possible where you pay for performance rather than hours. Aim for partners that are highly specialized and that have a proven track record of being able to work together with others. Stay away from partners that want monopoly and say that they can do everything.
Posted by Per Werngren on September 22, 20200 comments
Despite the ongoing coronavirus pandemic, we still need to be there for our customers and give them strategic advice. And perhaps this is more important now than ever.
If I were a Microsoft partner working as a strategic advisor to CIOs, here is what I would like to talk to them about.
The job of CIO has changed. A modern CIO knows and supports the business. The more integrated and closer to the business the CIO is, the better he/she will deliver on the business' goals. Make sure that you know what the business needs before they ask you (or go elsewhere). Be proactive and suggest how IT can better support the goals of the business.
A big and fundamentally game-changing trend that we have only seen the beginning of is robotized automation of all kinds that is driven by artificial intelligence (AI), machine learning and deep learning. This will revolutionize companies and help them to gain efficiencies by having fewer people involved. If you have never heard about this before, then I suggest you get up to speed because this is a true game-changer. Helping your CIO with this journey will make both you and your client heroes in the C-suite and Wall Street, but perhaps not win friends within labor unions!
As a strategic advisor, it is paramount to put your client first and your own business second. And that approach will indirectly benefit your own business in the long run.
You should help the CIO find the best partners for each specific need, and your network of trusted partners should be your most treasured asset. Helping the CIO navigate and find the right partners for the right job is where you can bring true value.
Technical skills are, of course, important when finding the right partner, but almost equally important is to find partners who are team players. Partners that are willing to work with others and that have a proven track record of being able to do so should, in my opinion, be prioritized. I have seen a few that have lacked the ability to work with others, and that always ends badly and does not give the customer the value that is expected and rightfully deserved.
In Part 2 of this series, I'll offer 10 low-hanging fruit ideas for delivering what your CIO customers need.
Posted by Per Werngren on September 15, 20200 comments
Getting employees working from home or at least in widely separated sections of the office, leveraging Microsoft Teams and watching your cash flow like a hawk are among the key measures to weather this pandemic, says channel community leader Per Werngren.
With the coronavirus affecting us all, both in our professional and our personal lives, it is important for Microsoft partners to take proper action in order to not fall victim to this crisis.
We need to take care of each other: our employees, our customers and our fellow partners. We compete every other day with each other, but right now is the time to be generous and help those in need. Don't try to make the coronavirus an opportunity to steal business from each other -- we're better than that and united we stand as a community.
The financial impact will probably be harsh. Partners that are selling hours and projects are facing severe challenges when it comes to selling new projects and delivering on existing projects. All this will have a negative impact on billing and cash flow.
Partners that have a large portion of recurring revenue will not face challenges with billing but will instead face problems with delivering their services if a large portion of their workforce becomes unavailable. Closely watching cash flow will be key to survival -- if you run out of cash, you will most likely run out of business.
Here are my 10 tips for what to do:
- Encourage your people to work from home if their role permits. Try to find solutions so that as many people as possible can work remotely.
- Encourage your people to stay at home if they get any kind of infection, and don't stop paying their salaries if they're sick or in quarantine. You absolutely don't want them to risk infecting others so they should stay at home, and it should not be a financial decision.
- Try to split teams that need to be in the office and locate them in two different locations or at least on different floors. If someone gets infected, you will still have half of the team in production.
- Split the senior leadership team in two different locations if they cannot work from home.
- Run daily briefings over Microsoft Teams so that you maintain a sense of community. Don't be shy about using video; it lets you see how everyone is doing. It is important to show leadership and keep your team actively engaged.
- Reduce all non-essential travel and don't visit customers in-person. This is a great opportunity to leverage Teams for all your meetings. By leading by example, you will probably also seal some new business related to Teams.
- Talk to your bank as soon as possible about extending your credit lines. Tell them that this is part of your contingency planning.
- Talk to your vendors and landlords and say that you don't have problems today but that you're preparing for the worst and taking precautions, and ask if they can prolong payment terms.
- Stop all investments if they give you a short-term negative cash flow, unless it is really essential and mission critical.
- Make sure that invoices to customers are being sent out as early as possible. You can probably increase the pace a bit. Pay close attention to customers that are late with payments and try to negotiate payments in part if they cannot pay the full sum at once. Actively watching your cash flow will be very critical.
Together we're strong. Together we will prevail.
Per Werngren is an RCP contributor who has held many roles at the worldwide level of the International Association of Microsoft Channel Partners (IAMCP), including chairman and president.
Posted by Per Werngren on March 17, 20200 comments
As we're well into the first quarter of 2020, I see four big trend-related opportunities for Microsoft partners this year.
Having been around this ecosystem for quite some time, I'm noticing that we are finally seeing great progress in embracing diversity.
Multiple networks for women in our ecosystem are doing great work, such as The WIT Network, Women In Cloud, International Association of Microsoft Channel Partners Diversity & Inclusion and a few more. The groups are expanding rapidly across the United States and abroad.
These networks are being run by enthusiastic and professional leaders, and their meetings are attracting a lot of people and clearly making an impact.
They get great support from Microsoft leaders, including One Commercial Partner (OCP) Corporate Vice President Gavriella Schuster, OCP Vice President for Go-To-Market Strategy Gretchen O'Hara and CEO Satya Nadella, who has made it a priority two years in a row to attend the annual WIT luncheon at the Microsoft Inspire conference.
There are many signs that this is a growing movement and something that is bringing real change to our ecosystem, so let's all help make it happen.
Why am I bringing this up? One reason is that it is great for businesses to encourage diversity. Our customers are diverse and in order to understand them better, it makes sense that your own organization is also diverse. A diverse culture gives you better insights, more solutions and more success.
Endorsing diversity also widens the talent pool, and with an open mindset in which you endorse diversity, you will more likely be able to find the skilled people that you need in order to compete successfully. I believe that you limit yourself if you only try to recruit people that are just like yourself.
The last reason is that it is just silly and wrong to discriminate -- and if we want the world to become a better place, we should give equal opportunities regardless of gender, age, faith, culture, sexual orientation, etc.
Another trend that I see for 2020 is that Microsoft Teams is continuing to gain momentum. When more people are well-informed and feel included, your teams will perform better. The market for Teams is growing rapidly, but the competition is advancing quickly, too. Partners will need to find ways to capture their IP, package it and resell it at scale in order to be competitive.
Thanks to the new Microsoft Graph APIs, partners will be able to make better integrations with Teams. Partners who bring their ISV solutions to Teams and make Teams the first choice for where to enjoy their solutions will become successful. I believe that it will be important to treat Teams as the primary application and as the place where people consume your solution. Weak integrations that take users outside of Teams will feel a bit dated.
The trend with P2P, or partner-to-partner, is enjoying tremendous success as a great path for higher margins, higher growth and better valuations, and we will continue to see partners becoming better at this. There are so many reasons why P2P makes sense and everyone knows that this is a true passion for me.
Virtual hoster is a concept that I started to talk about this past fall. It helps partners to understand how they can become successful in hosting without operating datacenters and instead focus on managing resources. By becoming asset-light, partners can focus on what they're great at and leave the actual hosting to Microsoft. It is early days for virtual hosters! We will most likely see a number of legacy hosters transforming their businesses, as well as welcoming new entrants in this arena. The bar for entry has now been lowered and there is lot of money to be made as a Virtual Hoster when you do it right.
Some of the paths to success in 2020 run through diversity, Teams, P2P and virtual hosting.
Per Werngren is an RCP contributor who has held many roles at the worldwide level of the International Association of Microsoft Channel Partners (IAMCP), including chairman and president.
Posted by Per Werngren on February 20, 20200 comments
Thank you for all the great feedback and wonderful discussions on my previous guest blog about the concept of the virtual hoster. I understand that this resonates well with both legacy hosters, as well as newcomers who want to enter this market.
As Microsoft prepares mechanisms and processes to incentivize partners who manage resources -- instead of only those who just handle the transactions -- we see that this will further boost interest from partners to be in this space.
The great news is that partners with different areas of specialization will be able to manage resources at the very same customers, as Microsoft plans to be able to give incentives on a granular level based on the exact resources being managed -- not a black-and-white scenario where one partner takes it all.
A less-known but very important announcement from this summer was the general availability of Azure Lighthouse. This is perhaps one of the best gifts of all time from Microsoft to partners in this space.
As a virtual hoster, you want to be able to manage all resources that are under your wings as efficiently as possible. Having run one of the most profitable hosters in our ecosystem, my personal experience is that you must always strive to reduce complexity and simplify. As part of this goal, I instructed my leadership team to reduce the number of vendors and avoid third-party software if they could. My stance is that there will always be some kind of wonderful point solution from a niche vendor, but over time, betting on Microsoft technology for management makes sense if you want someone to take responsibility for integration with other pieces of Microsoft technology.
With Azure Lighthouse, a virtual hoster will be able to manage all of their customers' resources and subscriptions that reside in Microsoft Azure. Your customer will be in control of granting access to you as a virtual hoster. As long as you have the access, you will be able to do your job more efficiently than ever before.
Azure Lighthouse is a terrific way to get everything into the same place. This will help you manage it all without logging in and out of different customer-specific Azure portals. By having it all in one place, you will be able to give your customers better service because you will be able to see problems earlier and take action more quickly. You will also be able to manage subscriptions and patch virtual machines and applications more efficiently.
What about the cost? This is no issue at all, because Azure Lighthouse is free. And even if it there were a cost associated with using the service, I would still recommend it because the rewards for a virtual hoster are substantial. This is simply a great tool to use if you are embarking on the journey of becoming a virtual hoster.
If I were leading a virtual hoster, I would give directions to my technical teams to implement and start using Azure Lighthouse as soon as possible.
Per Werngren is an RCP contributor who has held many roles at the worldwide level of the International Association of Microsoft Channel Partners (IAMCP), including chairman and president.
Posted by Per Werngren on November 18, 20190 comments
As the CEO of Interlink Cloud Advisors in the Cincinnati area, Matt Scherocman has been selling cloud for a long time. Having launched the born-in-the-cloud startup after observing the opportunity from inside Microsoft, Scherocman has navigated a lot of change in how Microsoft offers cloud services. In this guest post, Matt shares his secrets for selling to customers under Microsoft's Cloud Solution Provider model and for competing with Enterprise Agreement inertia.
Interlink has seen it all when it comes to selling Microsoft's Cloud Solution Provider (CSP) licensing program. We have had tremendous success over the last eight years of our business, but we also know the tremendous frustration it can bring. Licensing itself is constantly changing, and it can be confusing and complicated.
Microsoft and other partners often ask us what has made us successful and how we overcome challenges. Here are some pointers:
1. Figure Out the Solutions Before the Licensing Program
I know that it sounds simple, but it is amazing how tough this can be. Even I catch myself sometimes talking about a Microsoft bundle of products and what comes in them.
Instead, our success has come from spending more time talking about customers' needs. What initiatives do they have to accomplish this year? Then, take the customer's needs and guide them to the right bundles of products and licensing plan that could be the best fit.
2. Sell the Bundle
Microsoft's bundles are the key to selling larger licensing packages. Knowing what is included in the bundle is immensely important. How many of your salespeople can name the key components of Microsoft's Enterprise Mobility + Security (EMS) suite? Do they even know that the Identity and Threat Protection Bundle exists?
3. Invest in Education
A lot of success in CSP selling comes from real-life experience. Each program has its own challenges, strengths and quirks.
For example, say a customer purchases the Microsoft 365 (M365) bundle, which includes Windows Desktop licensing. The software licenses don't actually show up in the customer's portal until the CSP adds a zero-dollar SKU for Windows to the purchase.
4. Play Up Support
The CSP program's strength comes from the requirement that the partner provide the support. Local partners get to know their clients. They take great notes on what is in their environment and what things coexist with Office 365. We know customers' names when they call in and which support person they like to work with.
We frequently troubleshoot more than Office 365. One small example is an Enterprise Agreement (EA) customer who was on the phone with Microsoft support for more than 24 hours straight for a mail flow issue. When they called to get our help, we referenced their configuration and noted that they had a third-party spam filter. We then helped them troubleshoot the connection between the third-party and Microsoft -- and fixed the issue in less than 15 minutes.
5. Know How To Sell Against EAs on Price
Here are some key points:
- Since October 2018, the automatic discount for purchasing under the EA agreement is gone. This was an automatic discount of 3 percent that EA customers no longer receive. This means that the price of the EA out the door is the same as list price!
- Microsoft reps can offer negotiated discounts for a newly signed agreement. However, these discounts are frequently in the single digits and tied to the products that Microsoft is currently focused on. Those products are going to be the same ones that Microsoft is incenting partners to sell via back-end rebates. So, typically, partners can be competitive with EA pricing.
- The EA requires an annual payment for the entire year of usage of the subscription. Most customers hate the impact that has on their cash flow and would prefer a monthly subscription, charged as they use it.
- "From SA" is a discount that Microsoft used to offer to clients who moved from Software Assurance to subscription licensing. It is a programmatic discount of 15 percent, but it typically means that the CSP provider cannot touch the pricing offered with this discount. However, only a small percentage of clients have this discount.
- In July 2016, Microsoft increased the minimum user count of an EA agreement to 500 users, but it allowed companies a one-time renewal. Thus, partners should start to see a good set of clients with 250 to 499 users no longer being eligible for renewal in the coming years.
6. Know How To Sell Against EAs on Other Factors
Products on an EA are either locked in for the three-year term of the agreement or they can be modified annually. This gives CSP partners a tremendous advantage in that CSP solutions can be changed on a monthly basis. And practically, they can be changed during any month, versus the EA, where quantities of cloud SKUs can only be changed with notice at the anniversary date of the agreement.
Customers hate paying for licensing that they aren't using. So even things like summer interns can increase the cost of an EA agreement even though the licenses are only used a small fraction of the time. Additionally, Business bundles like the Premium offering and M365 for Business aren't available under an EA. These SKUs are limited to 300 users and don't include on-premises use rights.
For many clients, those limitations aren't a problem, or they find that a subset of their users are a great fit for these plans. The Business Premium plan and the E3 plan are more similar than they are different, and the Premium plan is considerably cheaper -- $12.50 per month versus $20. Not every user needs the features of E3, and it gives CSP sellers a $90-per-year cost advantage without sacrificing their margins.
7. Know Where CSP Is Lacking Versus EA
Four things to keep in mind here:
- EAs have step-up offers, in which a client can add single components of things. For example, a customer might have the M365 E3 bundle, but need the EMS E5 functionality added. On an EA, it is easily added for the incremental price. On CSP, it isn't so simple. A client would need to purchase the EMS E5 package, essentially paying twice for the EMS E3 components.
- The EA pricing for each particular product is locked in for the three-year life of the agreement. If prices are rising, the EA is the best platform. If they are falling, CSP is the best platform. So far, Microsoft has basically kept pricing steady and increased revenue by offering new features and bundles.
- CSP agreements don't include many of the traditional licenses and SA. Customers will likely need another agreement to hold onto these licenses with SA. However, licenses like SQL Server and Windows can now be purchased as subscription licenses, but customers who already have active SA won't want to lose the value of what they have already paid. Frequently, this means that a customer transitioning to CSP will need to keep a second agreement like a Microsoft Products and Services Agreement (MPSA) or Open Agreement for these particular licenses.
- Downgrade rights are also limited in CSP. Office ProPlus, for example, needs to be the current version from Office 365.
The CSP platform has a lot of advantages for customers when it's positioned properly. To do that, start with the basics by figuring out what solution the customer needs and then sell the bundles. Keep investing in education for your people, and make sure your customer appreciates the quality of your support. Finally, stay up to speed on the ins and outs of EA versus CSP pricing, and you'll be able to identify opportunities that are wins for you and for your customers.
Licensing can be challenging to navigate, but a large part of Interlink's success has come from following these seven secrets.
Posted by Matt Scherocman on October 17, 20190 comments
Being a hoster has been a phenomenal business model for many years. The concept was easy: You built a datacenter in your own building or rented colocation space elsewhere, and then you bought hardware and expanded as needed. It was a simple way to earn good money when you did it right with a structured, industrial approach.
For many years, I ran my own hosting company and it was the best of times. But times are changing! With the adoption of megascale cloud computing provided by Microsoft, Amazon Web Services (AWS) and Google, many local hosters are becoming obsolete and losing their customers. Some local hosters will still make a decent living for years to come, but they might benefit from special requirements in a certain vertical or geography.
One good thing is that thanks to the cloud, customers are more likely to accept the concept of moving away from owning and operating their own hardware, so the market for outsourced computing is growing at a rapid pace that should continue. But the odds are against traditional local hosters that are competing with, or duplicating, what Microsoft, AWS and Google are doing.
I have always made sure that my own companies have never been in competition with Microsoft. Instead of trying to play catch-up and come up with odd reasons for a customer not to use Microsoft Azure, it is far better to work with Microsoft and offer something that adds value. Let's be brutally honest: There is no way that a local hoster can keep up with the massive investments that Microsoft (and others) are making. Azure is great today; tomorrow it will become even better and further differentiate itself from the efforts of a local hoster.
If you're a traditional local hoster, what should you do? I think that you should become a virtual hoster and fully embrace the cloud.
Look at what needs your customers have besides just renting capacity. When you do it right, you will realize that the real value is in taking care of workloads, not just providing capacity. At that point, you don't need your own datacenters. When you understand where the real value lies, you can start to decommission your own hosting with little regret and instead use capacity in Azure.
Change your perspective to view Azure as your own datacenter that can offer massive scale, a large number of locations, top-notch connectivity, redundancy and outstanding flexibility when you want to expand or reduce your footprint.
What are the characteristics of a successful virtual hoster? Here's the checklist:
- Owns no datacenter and rents no (or very little) colocation space/hardware.
- Takes responsibility for the application layer and for all dependencies between servers and systems.
- Has written standard operational procedures (SOP) for everything so that tasks are performed in the same way regardless of who is involved.
- Knows advanced networking inside and out.
- Monitors 24/7 and is ready to engage in incident management anytime and anywhere.
- Is a master of prescriptive maintenance and, when systems go down, is best-in-class in incident management so that systems come up in a jiffy (and always does a "post-mortem" and delivers a written incident report).
- Knows how to migrate workloads.
- Knows how to mix virtual machines, containers and software-as-a-service (SaaS) in order to maximize ROI for the customer.
- Has deep knowledge in a few verticals (optional).
- Constantly seeks ways to optimize based on the needs of the customer.
When you see Azure as your best friend and not a competitor, you can become a virtual hoster that is fit for the future. Your people will still be key to your success, as their knowledge is also needed in the era of the cloud. With this approach you will also be able to discover new ways to successfully partner with Microsoft that can elevate your business to new heights.
Per Werngren is an RCP contributor who has held many roles at the worldwide level of the International Association of Microsoft Channel Partners (IAMCP), including chairman and president.
Posted by Per Werngren on September 17, 20190 comments
Over the years, it has been very lucrative for partners to look at where Microsoft is making investments and to make sure that their bets are aligned with Microsoft's.
The level of investment from Microsoft that goes into engineering, readiness, marketing and sales means that partners who make sure to align their businesses with those priorities have a lot of wind at their backs.
For those of us who attended Microsoft Inspire in Las Vegas this past July, there is no doubt that Microsoft Teams has grown in importance. Microsoft is betting hard on Teams and so should Microsoft partners.
Because Teams is already included with Office 365 and isn't available as a standalone product, you can't really become successful with Teams by reselling it. The opportunity is around adding apps that help companies become more efficient and that improve communication internally and with trusted parties.
There are an increasing number of ISVs that are building apps for Teams, and many of them will have a bright future as the market will grow fast. But Teams is also a great opportunity for custom development -- especially with a vertical twist.
Here's a list of five ways to build offerings with Teams beyond just license sales:
1. Implementing Teams
This is often pretty basic, but it is important to make it happen and to make sure that Teams has the right structure for your customer so that it becomes integrated in the business.
2. Reselling ISV Apps
This is an area with great traction right now, and we will see the number of apps multiply rapidly as more ISVs get involved. Your customers will need someone who knows what works best for them and knows how to implement.
3. Building Customer-Specific Apps that Integrate with Teams
Here's a useful link for how to start. I encourage you to especially look at how to add apps built with Microsoft's low-code platform, PowerApps.
Once you have built an app that works really well, you should consider if you can become an ISV and sell a generic version to other customers.
4. Consulting on How To Make Teams Support the Customer's Business Processes
This will require people with specific business vertical knowledge, and you are likely to be able to bill accordingly if you have the right people.
5. Training on Teams
Training services are always a great opportunity, but don't scare the customer and make it too complicated and expensive. Teams probably calls for less classic classroom training and more one-to-one coaching of super users.
Beyond these ideas, I strongly suggest that you start to use Teams internally. Make sure that you do for yourself what you suggest to your customers. It builds trust when you successfully support your own business with Teams, and it makes it much easier to sell to customers when you can talk about your own experiences. It's also an inexpensive way to educate your own people.
Good luck and please share your success stories!
Per Werngren is an RCP contributor who has held many roles at the worldwide level of the International Association of Microsoft Channel Partners (IAMCP), including chairman and president.
Posted by Per Werngren on August 12, 20190 comments