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Microsoft Shakes Up Partner Priorities for 2021

Partners can expect less blue-sky transformation and more down-to-earth optimization when it comes to the programs and incentives Microsoft presents for fiscal 2021.

When Microsoft unofficially kicks off its 2021 fiscal year in July with the Inspire partner conference, the message will be shaped by COVID-19. On a surface level, that's because the live event in Las Vegas was canceled due to the novel coronavirus and replaced with a virtual event.

On a deeper level, all the programs, products and incentives are re-ordered, re-oriented and re-prioritized by the public health and economic changes forced by COVID-19.

"We're completely adjusting what our fiscal year '21 plans were to focus on what we see [for the] recovery," said Gavriella Schuster, corporate vice president of the Microsoft One Commercial Partner program, in an interview with RCP.

For anyone who has tracked Microsoft's communication to partners over the last few years, the messaging will be a notable shift. Out, or at least sharply de-emphasized, will be the talk of digital transformation and the charts about nearly $2 trillion in market opportunity. In will be discussions of short-term opportunities around remote work and longer-term focuses on operations optimization.

Schuster provided the detail on 2021 priorities as she was providing her "State of the Channel" update. Normally that discussion about the calendar year ahead is delivered in late January. The significant public health and business disruptions caused by the global pandemic pushed that annual update back by two months.

"Customers are going to be focused on cost savings. They're going to have to tighten up and figure out what's really important and how they drive cost savings and operations optimization in their business."

Gavriella Schuster, Corporate Vice President, Microsoft One Commercial Partner

As Microsoft has monitored the effect of global events on business and the channel and tried to forecast what businesses will need in the aftermath, digital transformation-related initiatives will take a back seat.

"Some of the things like long-term application modernization, which was on our roadmap, is probably not the thing customers are going to be spending their time on," Schuster said.

Spending now and for the first few months of Microsoft's fiscal year are all about getting through the current moment.

"The good news is that, directionally, a lot of the things that we had been investing in with our partners over the last two years around worker productivity, remote work, around security, around business continuity -- a lot of those things have been very helpful right now, and so our partners have been able to jump in with a lot of offers and a lot of things that they'd already been doing and just do more of them," she said.

With worldwide economies facing a severe recession and many questions about how long it will last, Microsoft expects partners to be selling into a very different reality in the second half of calendar 2020 and into next year.

"Customers are going to be focused on cost savings," Schuster said flatly. "They're going to have to tighten up and figure out what's really important and how they drive cost savings and operations optimization in their business. So we're prioritizing for our fiscal year '21 things that we believe will deliver cost optimization for customers."

What that means for specific initiatives will depend in the nuances of markets. While application modernization will get less emphasis, for example, a related initiative around eliminating datacenters may continue.

"We were already working with many customers on getting out of their own datacenters. I actually think that may be something that accelerates, because the cost of real estate is a real drain on their P&L," she said.

One area Microsoft is watching especially closely is the health of its partners focused on small and medium-sized businesses. The SMB customer sector is struggling the most, is near the back of the line for government assistance programs worldwide, and is 100 percent partner-served in the Microsoft channel.

"We're looking at how do we fortify those partners that service our SMB customers," Schuster said. "Co-op funds generally go 70 percent to events, and they're not going to be able to run events. What would they do? And how would you structurally change the programs to support them to do the things that they're going to need to do now? It's things like assessments. Many of our SMB partners had run those assessments on-site. We converted several of those to be virtual assessments, and we're looking at how we convert all customer assessments to virtual."

Across the Microsoft Partner Network, Microsoft is working on several changes to programs and tools in the run-up to FY '21. The company provided a few hints in a blog post, including new options to differentiate skills and expertise through new competencies and advanced specializations, new reward models that emphasize customer results, on-demand support, broader access to the co-selling programs, and continuing enhancements to the new Partner Center.

Posted by Scott Bekker on April 14, 2020