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Microsoft's Pre-Inspire Reorg Raises 7 Big Questions for Partners

Many of Microsoft's most committed partners will be mostly stumbling in the dark on the basic facts of the company's massive sales and marketing reorganization as they arrive next week at Inspire, the Microsoft partner conference where they're supposed to get their marching orders and work out concrete business plans for a fiscal year that started July 1.

RCP asked Microsoft for a number of partner-related clarifications about the reorganization, but got only the canned response of the week from a Microsoft spokesperson: "Microsoft is implementing changes to better serve our customers and partners."

Here are some of the big partner questions RCP will be asking about at Inspire, the show formerly known as the Microsoft Worldwide Partner Conference (WPC), in Washington, D.C.:

Are partner categories and classifications changing related to the sales and marketing restructuring?
There are rumors of changes to the basic ways that Microsoft classifies partners and plans to go to market with them in fiscal year 2018. Some possibilities include no longer looking at partners as LSPs, VARs or CSPs, and instead viewing them by the categories of solutions they sell: Modern Workplace, Business Applications, Applications & Infrastructure, and Data & Artificial Intelligence.

The last time Microsoft substantially overhauled the competencies and other structures was a long time ago with the Microsoft Partner Network launch, so a big change is overdue. Yet, when that happened, Microsoft telegraphed the changes for several years in advance. With its increasing operational tempo, Microsoft spends a lot less time preparing partners for changes before springing new programs on them, so it's hard to say how major any changes to the partner program might be.

Did Microsoft settle the partner-facing employee structure with the One Commercial Partner in February or are there more changes to Microsoft's partner organization in the latest reorganization?
Effective Feb. 1, Microsoft consolidated its partner organization with the creation of the One Commercial Partner business within Judson Althoff's Worldwide Commercial Business Group. Althoff put former executive Ron Huddleston in charge of One Commercial Partner, and had Worldwide Partner Group leader Gavriella Schuster, Enterprise Partner team leader Victor Morales and ISV team leader Kim Akers all report to Huddleston.

In some ways, the move telegraphed the larger restructuring that followed this week. In other ways, it seems to run counter to it (see the next item). The big question is whether the February round of partner-facing team reorganizations was a setup for the new reorganization, or whether that partner team is now in for another big shuffle. Let's hope Microsoft did the One Commercial Partner changes in February partly to provide some stability for partner engagement at Inspire. After all, partners are Microsoft's key route to market, and every partner who goes to Inspire is making a substantial investment in their Microsoft partnership by attending the conference. Having Microsoft employees with no choice but to shrug and tell those partners, "Things are up in the air," would be very damaging.

How should enterprise partners engage?
There are always jagged edges within Microsoft's organizational chart, given the company's size and complexity. One manifestation of that right now, should the One Commercial Partner organization that was spun up on Feb. 1 survive the new reorganization, is whether enterprise partners deal with the enterprise operating unit or with the small, medium and corporate (SMC) customers unit. The enterprise unit, which we're hearing will also include the former corporate account managed (CAM) accounts, is being run separately. Yet in the Feb. 1 partner reorganization, enterprise partners were moved into One Commercial Partner, which we're hearing is going to be part of SMC.

Can partners who formerly played in the CAM and EPG categories still conduct business seamlessly while being managed in a different organization? The answer is probably yes. Dotted lines are nothing new in a Microsoft organizational chart, but the lines of authority need to be worked out.

What about partners who focus on the enterprise but aren't in one of the six categories?
A detail emerging about the reorganization is that the enterprise operating unit will be organized around six key vertical industries. They are manufacturing, financial services, retail, health, education and government. That's all well and good for partners who work in the enterprise and are in those six categories. What about all the other verticals? Meanwhile, are all education and government sales classified as enterprise now, or do government departments, state and local or individual school deals also fall under SMC?

Where does Microsoft Consulting Services fit in now?
Unmentioned in the reporting about Microsoft's internal memos laying out the changes is the role of Microsoft Consulting Services (MCS). Long a source of channel conflict and suspicion between Microsoft and its partners, the future of MCS is a key detail of the reorganization.

How fast will Microsoft settle the internal churn?
Although Microsoft hasn't confirmed anything, sources tell RCP that thousands of job roles will be eliminated, with others getting created and filled. (Update, 7/6: Microsoft reportedly began the process of laying off about 3,000 people on Thursday. Read about it here.) That's a tough situation for all of those employees at Microsoft, stressful even for those who will land new roles, and many Microsoft partners are expressing concern and empathy for their friends in the organization.

It also means the Microsoft field will start fiscal year 2018 completely flat-footed, focused internally on getting and filling the new positions rather than on winning deals with its partners. A key question for Inspire will be how long partners can realistically expect Microsoft to be absent as a force to drive business while they're getting their new house in order.

Is this the last time for this rodeo?
One curious thing about Microsoft is its continuing focus on the fourth quarter. Since 2010, Microsoft has been urging partners to go "all in" with the cloud. Yet, seven years later, Microsoft itself is reorganizing its sales and marketing structure at the beginning of the fiscal year, the same way it used to a decade ago. Q4 was sacrosanct, that period when Microsoft needed all hands on deck to close the year with a strong quarter of SQL Server 2005 or Windows Server 2003 R2.

In a cloud era, Q1 sales are four times as valuable as Q4 deals. Yet once again, Microsoft's big reorg will freeze the company and its partner ecosystem in Q1. It's forgivable if this is the big move that finally aligns Microsoft to a cloud-based, recurring-revenue orientation. If Microsoft needs another massive Q1 shuffle in a couple of years, though...

Posted by Scott Bekker on July 05, 2017