Fewer NSIs Generating a Lot of Revenue

Microsoft is throttling back on the absolute number of National Systems Integrators (NSIs), but the elite group of U.S.-based, high-growth partners continues to have an outsized effect on Microsoft ecosystem revenues.

To qualify as an NSI in 2010, U.S.-based systems integrators generally needed to meet revenue bars and pipeline bars reportedly in the seven- to eight-figure range, have more than 50 Microsoft-focused employees, and meet a "law of threes" -- engaging in three or more locations, customer size segments or vertical markets (read "Microsoft Partners, Meet the NSIs"). Benefits included a national Business Development Management or NSI Partner Account Manager, special market development funds and other advantages that come from being top-of-mind for the Microsoft field.

Microsoft started fiscal year 2011 (in July 2010) with about 40 NSIs. The company is starting its fiscal year 2012 this month with 34, said Jenni Flinders, vice president of U.S. partner business development and sales in the U.S. Partner Group at Microsoft. Microsoft has been gradually upping the requirements and paring the list of NSIs since launching the designation in 2006 with about 70 partners.

Examples of major U.S. partners currently identifying themselves as NSIs include Perficient, ePlus Inc., PointBridge, Azaleos Corp., Tribridge, Catapult Systems, iLink Systems, Slalom Consulting, En Pointe Technologies and Magenic Technologies.

In an interview at the Microsoft Worldwide Partner Conference this month, Flinders provided some metrics on the revenues that NSIs are posting:

• NSIs recorded $4 billion in annual Microsoft-related consulting revenues last year, for an average of about $120 million per NSI.
  
  
• NSIs influenced about $1 billion in Microsoft revenues over the course of the year, and Microsoft reports the average per NSI is $36 million.
  
  
• The estimated influence pipeline for all NSIs right now is also about $1 billion.

Also over the last year, NSIs -- along with the rest of the Microsoft partner community -- have been focused on switching over to the Microsoft Partner Network. "We've landed MPN with the NSIs," Flinders said. "Partners are transitioning to the competencies that are important right now." Those areas of focus for Microsoft include online, virtualization and unified communications competencies, she said.

According to Flinders, NSIs have earned an average of seven to 11 competencies.

Posted by Scott Bekker on July 18, 2011