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.
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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.
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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.
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Posted on January 25, 2016 at 10:41 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, we asked Josh Waldo, vice president of partner strategy and programs at Nintex, to discuss the implications of a Nintex study released last month about trends among IT buyers.
A lot has changed from the time when the modern day IT services channel emerged to what it looks like today. Outsourcing, reselling and project-based services were the key value propositions for decades and the buyers were invariably IT decision makers. IT and the business units became very interdependent and, at the same time, highly contentious with each other.
Throughout all of this, an incredibly large and thriving IT channel has grown and profited with a primary relationship targeted squarely at IT.
Technology has since evolved, primarily fueled by a mobile-first, cloud-first reality. The IT consulting landscape is also evolving because with the innovation in technology comes an exciting and disruptive innovation in business models where consumption, recurring revenue and valuation can be captured in ways never before possible, but where traditional project-based and outsourcing models are challenged.
This disruption in both availability of enterprise-class technology and the new consumption-based OPEX models for procurement have provided an avenue for the line-of-business (LOB) decision makers from departments such as HR, finance, marketing and sales to procure capabilities without as heavy a reliance on IT. We now live in a world where the buyer is looking for capabilities to solve business challenges versus a buyer who is looking for technology to serve a set of constituents within his/her organization.
At Nintex, we are seeing LOB present in core decision making about 40 percent of the time, and that is only going to increase. Our most successful partners have established a value proposition to solve business challenges and find new ways to bridge IT and LOB in their evolving role as advisers and partners to their end customers.
My advice: If you don't yet have a strategy to sell to LOB, you need one now!
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Posted on January 22, 2016 at 10:45 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, we invited Cindy Bates, Microsoft's vice president of U.S. Small and Medium-Sized Business & Distribution (SMB&D), to point to some opportunities for Microsoft partners.
We start 2016 with the mantra, "The power is in your hands." There are more opportunities available to partners and customers than ever before, and new innovations are coming at a rapid pace, whether they're new cross-platform plays like Office 365 on iPads or with the new Office 365 SKU, E5.
E5 brings new value through the most comprehensive set of productivity, collaboration, analytics, security and compliance capabilities in Office 365 to date. (Read more about it here or watch this video.)
We expect the SKU will fill gaps in SMB solutions, particularly as a PBX replacement option. I think E5 should be a great opportunity for all of us, whether you focus on upselling cloud voice and conferencing capabilities, or reaching new customers with advanced security and compliance features, or building practices around new scenarios.
In the year ahead, the Microsoft Cloud Solution Provider (CSP) program will continue to enable the partners of the future. The model of a successful partner has moved away from those who are simply transacting. Profitability and long-term success lie in building managed services provider (MSP) practices and ultimately integrating unique, repeatable and highly profitable intellectual property into your solutions.
With the CSP program, you have the ability to sell and provision solutions such as Office 365, Enterprise Mobility Suite (EMS), Azure and CRMOL. However, simply selling the products is just the beginning. After packaging up your deployment and migration services and adding in ongoing managed services and support, you will have created a recurring revenue stream that keeps you engaged with your customers.
In recent years, changing market dynamics have forced partners to elevate marketing to mission-critical status. Thanks to the current SMB tech revolution, there's unprecedented opportunity to take advantage of long-term annuity business. Yet, competition has grown on both a national and local level, and recent surveys show that as many as 90 percent of technology products or professional services sourcing begins with a search engine. Through the Ready-to-Go marketing portal, Microsoft offers a wealth of resources to help partners stand out among competitors and generate more leads. Within that portal, I would specifically call out our highly successful SMB Live training events, which help partners hone their marketing skills selling to small and midsize businesses.
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Posted on January 21, 2016 at 10:41 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, David Smith, vice president of Worldwide SMB at Microsoft, explores the partner opportunities in the SMB market.
With the rapid advancements in new technologies, 2016 will be an exciting year for business of all sizes. Modern technologies that utilize cloud and mobile are becoming increasingly important in helping our small and medium business (SMB) customers compete and be more productive. However, many SMBs struggle with determining what technology is right for their business and how to take the first step.
In 2016, our partners have a huge opportunity to position themselves as trusted advisers that can not only help solve SMBs' business challenges and remain competitive, but also allow them realize the greatest return on their technology investments.
Help Customers Leverage Technology To Stay Competitive
According to recent research from Techaisle, cloud, mobility, collaboration and security emerged as the top trends for SMBs when defining their path to success. With that in mind, it's clear that for SMBs, staying current with modern technology should be a business priority. With productivity tools like Office 365, partners can help SMBs arm their employees with the technology needed for real-time collaboration -- both in the office and away from it. And since Office works across all platforms, together with Windows 10, it has the ability to take productivity to a whole new level for those who use it.
In addition, with the explosion of Bring Your Own Device (BYOD), there's huge potential for partners to help SMB customers protect their company data across multiple devices. To help with this, Microsoft has developed the Microsoft Enterprise Mobility Suite (EMS), a comprehensive solution that helps protect information assets across user identity, content, applications and cloud services, and devices. Combined with Office 365, EMS offers native protection for services SMB customers use daily.
Own the Customer Relationship Lifecycle
Programs like the Cloud Solution Provider (CSP) program help partners more easily provide these cloud-based solutions to their SMB customers. CSP allows partners to own the entire customer relationship lifecycle, which provides more opportunities to not only realize revenue faster, but also to sell in their own IP to meet customers' unique needs. Not only that, but this model enables partners to further establish themselves as a trusted adviser for their customers by positioning them as the single point of contact.
The SMB market represents a huge opportunity for partners in 2016. Partners that want to capitalize on this opportunity need to make sure they are not only offering the types of solutions SMBs are demanding, but also that their business model supports cloud and mobile solutions in a way that will ultimately lead to maximum profitability for their organizations.
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Posted on January 21, 2016 at 10:44 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, we invited Phil Sorgen, corporate vice president of the Microsoft Worldwide Partner Group, to share his top advice for Microsoft partners this year.
Over the last year, we've made some significant investments in our channel -- in tools, resources, program updates and product offerings -- to enable partners to take advantage of the vast customer opportunities across cloud and mobile technologies. And the opportunity is huge. In fact, IDC forecasts spending on public IT cloud services to reach $127 billion in 2018.
In previous years, we've focused on moving partners and customers to the cloud. But the truth is, many have already made this transition and are already realizing many of the benefits of cloud computing. This year, we're focusing on partner and customer success in the cloud -- enabling our partners and mutual customers to harness the full value of cloud and the associated devices, data and applications to truly transform their businesses.
Here are three areas where partners can focus their energy to deliver the greatest impact this year:
- Build differentiated IP. You have to set yourself apart from your competitors. Successful partners are developing a culture of innovation and building annuity businesses on top of first-party IP. IP doesn't have to be an app offered directly to businesses or consumers -- there are many ways to monetize IP. To name just a few examples, you could incorporate first-party IP into managed services, you could build SaaS extensions offered as a subscription, or you could leverage a unique, repeatable methodology to enhance project services. The need to stand out isn't new, but in a cloud-first world your options are virtually unlimited, and you can bring a new offering to market quicker and easier than ever.
- Grow your digital marketing muscle. Customers are changing, and research shows that by the time a potential customer gets to you, they've already done their research. You and your solutions need to show up where they're looking. Knowing where to start can be difficult, but we're investing heavily to connect you with the resources that can help. New resources on Smart Partner Marketing along with a dedicated ISV portal, a new and improved ModernBiz platform, and brand-new MPN experiences are all designed to help you develop a digital marketing strategy that will get you in front of customers.
- Focus on customer lifetime value. Capturing new customers through scalable, online marketing is step one, but profitability isn't about the deal anymore. It's about securing long-term relationships to maximize the lifetime value of each customer you develop. We've created research-based profitability scenarios, financial models and training to help you identify the opportunities best suited for your business and your existing customers.
I'm excited by the great partner momentum we saw in 2015 -- from expanding the Cloud Solution Provider (CSP) program to 131 markets, to extending our Surface channel distribution from a few hundred to a few thousand partners globally -- and I can't wait to see what we will accomplish together in 2016.
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Posted on January 20, 2016 at 10:45 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, Gavriella Schuster, general manager of the Microsoft Worldwide Partner Group, weighs in on paths to success in the cloud.
Over the past year, we have seen more and more customers move to the cloud and partners adapt their business models to take advantage of the many opportunities the cloud has to offer. IDC helped illustrate the potential, citing cloud partners realized 1.6 times the recurring revenue as a portion of total revenue versus other partners.
With this business transformation, we spent last year focused on helping partners grow their cloud business and find their path to profitability. For example, we announced major changes to make our cloud competencies more valuable for our partners. We also expanded our Cloud Solution Provider (CSP) program, which gives partners expanded capability to directly manage the entire lifecycle of their customers' cloud subscription, to 131 markets.
When I think about what's on the horizon for 2016, I see tremendous opportunity for partners to flex their muscles in developing new ways to solve customers' problems and to take advantage of the freedom the cloud provides in growing and scaling businesses in ways not possible before. Below are two ways in which partners can gain real momentum with their business in 2016:
Become the trusted advisor. Like all paradigm shifts, the rapid acceleration to new, more powerful technology is creating new opportunities and challenges that weren't there before, and many customers now realize they can't ignore the need to be in, or at least moving to, the cloud.
Today, customers are looking for partners to be the expert and help them understand their options. They need a trusted advisor to guide them on an ongoing basis as new technologies and opportunities arise to be successful. This requires a significant shift in how partners do business. Business models that rely on continuously securing large one-time projects to bring in a quick burst of revenue are becoming antiquated. As the cloud transforms businesses, partners are shifting more and more to managed services. To be successful today, partners must focus on helping customers build effective deployment and retirement plans, understand and help customers maximize new technology usage while minimizing disruption, facilitate overall security needs and provide ongoing managed services. Partners that successfully adapt to this new world will realize more stable, long-term revenue streams.
Look for strategic partnerships. We've seen strategic partnerships become a real game-changer for partners in the past, but a recent IDC study helped to reinforce their value. According to the study, when the right partners join forces, three things are bound to happen:
- They are able to build total solutions,
- Their business grows, and
- They beat out the competition.
Strategic partnerships can be effective in helping partners reach geographical markets where they may lack a physical presence or where they have language or compliance barriers to entry. Partnering can also help care for a customer's lifecycle end-to-end -- with some partners focused on front-end deployment and others on back-end support. Additionally, partnering can help identify other IP solutions that knit together a full customer solution and optimize each customer engagement or customer socket.
With cloud innovations continuing into 2016, our partners have a tremendous opportunity to help customers realize their full potential while creating new business models that drive increased profitability.
I can't wait to see what new market opportunities our partners will help create for customers and how the world will change in 2016 as a result of the technology innovations and creative implementations of our partners.
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Posted on January 20, 2016 at 10:44 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, RCP blogger and columnist Barb Levisay addresses a major marketing trend.
While cloud has gotten all the press the past couple of years, there has been an even more profound shift affecting your business. Business strategy and technology have become inseparable. Today's strategic objectives are executed through technology -- from product engineering to customer interactions. That fundamentally changes the role that you, as IT service provider, play.
In your client's leadership meetings, the conversations about IT have changed. Regardless of how big the company, business leaders are trying to figure out how to use technology to disrupt, augment and extend their services and operations. Your clients need you at the table to participate in those conversations...and then they need the rest of your team to deliver.
As a leader in your own organization, you are probably perfectly comfortable having strategic conversations with clients. That's a great first step, but strategic objectives aren't achieved in the executive suite.
For partners, the transition to the cloud has to be accompanied by the transition from technology consulting to business consulting. The time has come for everyone in your business to switch from comparisons of server capacity to conversations about business process. It's not going to happen overnight and it's going to require investment in education and training.
Each role in your organization will need help and motivation to change the way they work.
- For salespeople who have spent their careers talking about hardware, the transition may be the hardest, if not impossible. Attempting to drive behavior through compensation alone sets them up for failure. Consider outside coaching from someone who has helped others make the transition.
- Consultants and support techs are probably more tuned in to the business process changes that technology drives. As their work becomes increasingly intertwined with business operations, they will need training to be able to provide guidance on issues like compliance and industry best practices.
- You may need to hire a different type of consultant than you have ever employed -- a business analyst. The role of a business analyst is to act as translator between technology and the business processes that support strategic initiatives.
- Don't overlook your marketing people. They need to understand the change in your buyers' perspective. Send them out with salespeople and consultants to see for themselves how the conversations with clients are changing.
While it's easy to focus on the cloud as the transformer of your future, it's not the biggest player. Yes, the cloud is enabling many of these technologies, but it's just the platform. The real revolution is how business strategy is being reshaped and driven forward by technology. And that's where you should come into the conversation.
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Posted by Barb Levisay on January 14, 2016 at 10:42 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, we invited Keith Lubner, managing partner of Channel Consulting Corp. and a former RCP columnist, to share some channel management tips.
Our company made great strides in 2015, especially toward the later part of the year. In all honesty, the beginning part of the year was difficult for us because of the mass amount of potential opportunities and directions we could have taken our business. We made a conscious decision to focus as summer ended and fall began, and it made all the difference in our business.
We also started making recommendations to clients based on what we did internally, and believe this will be a mantra moving forward for everyone in the market in 2016.
This year should be about your ruthless prioritization on every project or initiative you take on. Here are the areas we believe you need to prioritize this year in order to accelerate your momentum and differentiation in the channel:
- Enablement: We see organizations treating enablement and training as an afterthought. They put together half-baked programs and expect to get top-notch results. It doesn't work that way. You need to prioritize enabling your internal people, as well as your external channel partners with cutting-edge, impactful programs that teach people to interact better, to build higher levels of trust, to qualify opportunities better, and to create more meaningful relationships. We call this "adaptive partnering" and it's the way organizations will excel in 2016. Those that can't adapt to the new business paradigms of cloud will fail. Plain and simple.
- Sales Process: People are stuck in the old way of selling and they need to shift in order to align to the buyer's process. Prioritization, therefore, lies in the hands of the sales manager to make sure their sales people keep trying to change the way they sell. If not, competitors will start lapping you and buyers won't keep buying from you.
- Intellectual Property Capitalization: In 2016, we will see an acceleration of solution providers bringing to market more intellectual property and trying to sell these new "products and services" through a channel. We see this a lot. It's our business. What we recommend to people is to plant a stake in the ground and commit, or not commit, to marketing and selling your new initiative. If you commit to selling, then prioritize the programs, the people and the processes around how you will bring this product to market. Don't make it an afterthought or a side business because it will never get off the ground.
Prioritize ruthlessly to make it happen in 2016!
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Posted by Keith Lubner on January 13, 2016 at 10:42 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, we invited Michael Desmond, editor in chief of MSDN Magazine, to provide insight on what to watch for in development this year.
JQuery, Dojo, Angular, Backbone, Knockout, Ember, React -- the list of frameworks literally goes on and on. Which is great if you are a Web developer looking for just the right resource to streamline your code effort and provide nifty capabilities like two-way data binding, dependency injection and sleek UIs. It may not be so good, though, when you have to actually manage and maintain code.
The frantic pace can't go on forever (can it?), but it will continue at least for the short term. For developers, don't fall victim to paralysis by analysis. Find a framework that addresses your needs and verify that it's being actively developed and enjoys a sizable following. That will help future-proof your framework-dependent code.
Also consider open source frameworks, which can be freely tailored to suit a specific need.
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Posted by Michael Desmond on January 08, 2016 at 10:42 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, we invited Keith Ward, founding editor of RCP sister publication Virtualization Review magazine, to weigh in on top trends in virtualization.
When I helped found Virtualization Review magazine in 2008, server virtualization still had that new-car smell. Many companies were dipping a toe into the technology, but few had jumped into the deep end of the pool. Caution was the word of the day; virtualization was so disruptive that companies were wise to take it slow.
Today, of course, server virtualization is standard in almost any company of any size. It's now just plumbing: Leave it alone and only take a peek when something goes wrong.
In 2016, software-defined xyz is what server virtualization was in 2008. IT admins and developers know what it is, have read about it, and have likely done some testing with it. They're hesitant to dive into the deep end, too, because it is also disruptive. But it's time to implement software-defined technology for your customers to help them get the big benefits that come with it.
Two areas to start with: software-defined networking (SDN) and software-defined storage (SDS). They have some of the biggest immediate benefits for the typical company, in terms of increasing efficiency and moving to the cloud. Are they complex? You betcha. Do the positives outweigh that negative? Most certainly.
Also look at what VMware is doing in moving companies to the ultimate software-defined goal, the software-defined datacenter (SDDC). It's one of VMware's chief focus areas, and with good reason; as the virtualization leader, it knows that server virtualization is at (or nearing) the saturation point, and it needs new revenue streams.
It's more than financial, though: VMware also recognizes that for companies to truly embrace the future, software-defined technologies have to be part of it.
That goes for you, too.
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Posted by Keith Ward on January 07, 2016 at 10:46 AM0 comments