Among our top 350 Microsoft partners in the United States is an awardee that was also among the first members of the original Microsoft Certified Solution Provider program in the early 1990s. Its pioneering nature continued as it adopted Azure when it was still code-named "Red Dog." It also lists the development of its own cloud adoption framework before Microsoft's as further evidence of its leadership.
Applied Information Sciences (AIS) clients range from startups to Fortune 100 companies and include state and local governments, as well as defense and national security agencies. It approximates a sales mix of 50 percent government and 50 percent commercial. It also estimates that 95 percent of the services it delivers are centered around Microsoft technologies with a focus on building solutions that impact its customers' mission.
Broad Engagement
AIS engages broadly with Microsoft, with its marketing manager working closely with its Microsoft Partner Development Manager (PDM). Its salespeople participate enthusiastically in co-selling activities with Microsoft. Its office of the CTO -- which includes solution directors, architects, solution specialists and others -- maintains close relationships with counterparts in the Microsoft technology community. Its CTO is a Microsoft MVP who has worked with Microsoft for more than 20 years. And its chief consulting officer maintains strong active relationships across Microsoft's executive leadership.
It also has dedicated teams for various vertical industries such as insurance, financial services, health and life sciences, and government, who align closely with their counterparts in the Microsoft industry-focused teams.
AIS executives regularly participate in partner advisory councils (PACs) to help guide Microsoft's partner program development. It's also a member of the Business Apps Inner Circle.
Competencies and Awards
AIS' impressive array of competencies and record of awards won speak volumes to its commitment to Microsoft technologies and customer success.
Having recently grown from 500 to 700 employees, AIS has earned over a dozen Microsoft Gold Competencies, including Application Development, Application Integration, Cloud Platform, Cloud Productivity, Collaboration and Content, Data Analytics, Data Platform, Datacenter, DevOps, Messaging, Project and Portfolio Management, and Security.
Starting in 1996 as Microsoft Partner of the Year, AIS has consistently excelled over the years, most recently winning 2013 Regional Azure Partner of the Year, 2017 Worldwide Partner Award for DevOps, 2018 U.S. Partner of the Year for Azure Performance, 2019 U.S. Partner of the Year for Business Applications - Dynamics 365 for Sales, and the 2020 Worldwide Partner of the Year for Power Apps and Power Automate Award.
Investments: Partnering Beyond the Partner Program
AIS Chief Growth Officer Aarish Gokaldas says, "We don't ever come to an exchange with Microsoft empty-handed," emphasizing that the key to an effective Microsoft relationship is to always maintain a solid quid pro quo in which Microsoft supports AIS and AIS supports Microsoft. "We are investing heavily in resources," explains Gokaldas, "in terms of strategic personnel with technical talent."
Given the current shortage of available skilled individuals, Gokaldas adds, "We are investing heavily in training. We bring in individuals that don't know anything about the Microsoft ecosystem and we provide internal training and professional development to get them spun up to the point that they're able to then go support our clients and have a mission impact.
"We invest heavily in intellectual property," he continues."We are building out our own IP that we're overlaying on top of Microsoft's technology. And then we invest in things like our marketing in campaigns to get get the message out that provides mutual success to both AIS, as well as Microsoft."
Gokaldas concludes, "And we're investing heavily in our sales and proposal side, putting skin in the game in terms of building out solutions, building capture with client engagements. We are never just sitting on the sidelines and relying on Microsoft to go in and do the work, relying on Microsoft to go out and build out the solutions. We're in lockstep with them. Or in some cases, we are leading."
To Boldly Go
"We're not afraid to venture into the unknown," explains Gokaldas. "We were an early adopter of Azure before it was called Azure. We understood the value of cloud, the value of migrating off-premises. And we were an early adopter."
AIS values its role as a beta tester for many Microsoft initiatives, including the early Azure, Power Apps, Power Automate and more. "We developed and built out a business dedicated to Power Platform of things like Azure Kubernetes. We saw beyond the value when it was created to the value that would would eventually be achieved when it matures.
"We are very much working in conjunction with Microsoft at the forefront of the technological landscape," concludes Gokaldas. "So things like our cloud delivery framework, our cloud acceleration hub, our...product focused around self-service, cataloging for the Azure environment, are all things that we're able to bring to bear to a client that helps accelerate their Azure journey."
Posted by Howard M. Cohen on August 20, 20210 comments
This is not the first "exit interview" I've ever done with a senior Microsoft official; in fact it's one of quite a few recently. But it feels very different than the others, so I'm going to write about it somewhat differently.
For one, I'm writing it in first person which I seldom do, but this issue is very personal to me so I feel it warrants it. I've been in the channel for quite some time -- in fact, since it was first referred to as a "channel" back in 1981. In that time I've had the honor of knowing and working with many people who held Gavriella Schuster's position as Microsoft channel chief, which was, generally speaking, a corporate vice president of the Microsoft Worldwide Partner Group/One Commercial Partner, etc. That includes Phil Sorgen, Jon Roskill, Allison Watson and Sam Jadallah. In fact, it goes all the way back to Jon Shirley, who was the closest thing there was to a channel chief from 1983 to 1990 when he was president and COO of Microsoft.
Gavriella is also the latest in a stream of senior executives making their exit from "the mother ship." Other recent exits include Dave Willis, Kate Johnson, Toni Townes-Whitley, Margo Day, Brad Anderson, Kurt DelBene, Peggy Johnson, Harry Shum and Watson.
Friends of the Channel
One thing that can be said for most of those who departed is that they were considered friends of Microsoft channel partners. That is by no means a prerequisite for global channel chiefs, as many of those serving in that role elsewhere often demonstrate.
It does seem, however, that even if those replacing Schuster and other partner-facing executives like Willis have been channel-friendly in the past, it doesn't seem like those are their new marching orders. We'll come back to this before the end of this article, but let's first say thanks to Schuster for her service.
What Do Partners Mean in a Cloud World?
Schuster explains that the partner ecosystem was not considered to be flourishing when she first started in the role seven years ago. People were asking what the role of partners was in Microsoft's future, what partners meant in a cloud world where customers could subscribe to the services online. Amazon was going all-direct on everything -- why couldn't Microsoft?
There was the question of what partners would actually do in this new cloud world. Cloud required no real implementation. They didn't have to do any hosting because Microsoft did that for them. Distribution was pretty much cut out by cloud, too. No need for logistics in the cloud. "All those things are true, we don't need them to do those things anymore," recalled Schuster. "But it doesn't mean we don't need them."
She saw her mission as needing to lead the team to redefine what partners actually do. "I had seen through my then-20 years at Microsoft that partners move pretty quickly. When you tell them, 'Here's the opportunity, here's what your business could look like,' they're pretty agile, way more agile than we are. So I guessed that if we pointed them to the north star, they would get there before we do."
Seven years later, she looks back with pride and declares, "We have another thriving ecosystem. It looks very different than it used to. I think partners are, amazingly, through all of this pandemic, more profitable than they've been in the past. They see more opportunity ahead. And I feel really proud of that."
Effective Partnership
Schuster's position is that "effective partner engagement is about making sure that you understand how you're going to get to profitability for everybody involved." She counsels channel managers to understand what the core of somebody else's business is. What is that particular partner really good at? Then you need to figure out how you help them make that even better and get to higher levels of profitability and differentiation.
She points out the important difference between being simply transactional and being a partner, describing the latter -- consistent with classic Microsoft philosophy -- as requiring an active quid pro quo in which the partner understands what Microsoft needs from them, and Microsoft understands what the partner needs to accomplish.
"I think partners are, amazingly, through all of this pandemic, more profitable than they've been in the past. They see more opportunity ahead. And I feel really proud of that."
Gavriella Schuster
"When you understand that, then you move beyond this being some transaction or utilitarian thing. It's a partnership. So I understand what we bring to the table, I understand what you're trying to accomplish, and how we can help you do that. And here's how you can help us accomplish what we want. When we do, everybody is more profitable. Everything works."
Don't Be the 'Pipeline Police'
Refreshingly, Schuster acknowledges that being a Microsoft channel manager "was a horrible job for somebody." She is careful to point out that they didn't function that way because they wanted to, but rather because of the way they were measured and incented. She refers to it as little more than "partner sales execution." Her perspective was that the team needed to be given a longer-term view of what they were required to accomplish.
Why She's Leaving and Where She's Going
Schuster attributes some of her reasoning for leaving to her experience during the pandemic. The pandemic meant not being able to visit with partners, which was the part of the job she loved most, and being relegated to more administrative duties. The fact is that few remain long in her role. Her seven years was only slightly exceeded by Allison Watson's eight, but most move on after two to four.
Since our interview, Schuster officially left Microsoft after helping her successor Rodney Clark with the transition in Microsoft's April-June fourth quarter. She formally announced her post-Microsoft plans in mid-August. "I have joined forces with several prominent organizations poised to address one of the most critical blockers in future technology innovation -- diversity, equity and inclusion," she said Wednesday in a blog post on the site of her new company, Gavriella Schuster, LLC.
She will pursue those aims as a member of the boards of several leading organizations, including Women in Cloud, Women in Technology Network, International Association of Microsoft Channel Partners, the SHE community, the Women's Business Collaborative and Corent Technology. She is also chairman of the advisory board for Artificial Solutions and a strategic advisor to Berkshire Partners.
Where Are We Going?
It has always been pleasant and interesting to interview Gavriella Schuster. One of the reasons it was so particularly interesting at this particular time has to do with the many conversations I've had with various partners across the ecosystem. They don't necessarily agree with Schuster that Microsoft and partners are working closer together than ever before.
And please remember that most of the partners I get to speak with are prominent members of the ecosystem -- people active in the IAMCP and partners listed in the RCP Top 350. People who make it their business to know and participate in what's really going on.
Some complain bitterly about encountering direct competition from Microsoft on deals they've been working. Several describe being "boxed out" of some deals. They report that all they hear when they complain is nothing more than "lip service." Many also describe how Microsoft is making it harder and harder to actually be a partner. More requirements. More expensive programs to buy into.
But the observation that struck me so profoundly, so personally, is that with Schuster's departure, it seems that Microsoft has now lost another senior executive who could be considered a friend to the channel. They claim that much of Microsoft's recent official messaging to partners seems to be very specific about their expectations of partners and that, to borrow a phrase, resistance is futile.
My Hope
My good friend Richard Losciale, a longtime leader in the ecosystem, describes the partner's relationship with Microsoft as being "patriotically adversarial." Remain true but speak truth, no matter how brutal. Now it sounds like the time for that may be over.
If they are correct, and I sincerely hope they're not, this may be a transition out of a period of friendly channel relationships with Microsoft into something new. If that's truly the case, then I must say I'm proud and fortunate to have enjoyed that relationship for a solid 40 years. A relationship of mutual interest, honesty and friendship. Sure hope to see it continue.
Posted by Howard M. Cohen on August 19, 20210 comments
For RCP 350 partner AvePoint, the company's level of co-sell achievement with Microsoft is a point of pride.
"AvePoint is one of the leading co-sell partners globally, and we're shooting for number one," says Christian Buckley, AvePoint's Microsoft go-to-market director. AvePoint is on the RCP 350, a qualitative list compiled by Redmond Channel Partner of the strongest Microsoft partner companies in the United States.
By co-sell, Buckley is referring to Microsoft's latest evolution of its constant commitment to partner-to-partner (P2P) partnering. According to Microsoft's definition, co-selling is any collaborative engagement between Microsoft and its partner ecosystem in a process involving building demand, sales planning, sharing sales leads, accelerating partner-to-partner empowered selling and delivering marketplace-led commerce.
Buckley, himself a Microsoft MVP, adds, "We're trying to shake the tree and make sure that internally at Microsoft, they're aware of what we're doing broadly, especially on the channel side."
This strategy is a key co-selling component for a partner like AvePoint, which has long provided other Microsoft partners with a wealth of software products designed to enhance Microsoft platform projects. Starting decades ago with SharePoint utilities, AvePoint today delivers augmentation products for Azure, Office 365 and Teams.
Covering All the 'Big Bets'
Successful longtime Microsoft partners have always known what the current "Big Bet" was, from Lync, the original predecessor to Teams, to SharePoint and others. They always knew investing in the Big Bets would put them right in the flowing stream of Microsoft marketing investments. AvePoint has clearly identified and focused on the three current Big Bets: Azure, Teams and Office 365.
As an ISV, AvePoint also realizes that its own best bet is to package its own intellectual property into products other Microsoft partners can resell. "How do you help the channel ecosystem transform from being resellers to trusted advisors?" asks Jason Beal, AvePoint senior vice president for Global Channel & Partner Ecosystems. "How do you help them moving from reselling single solutions to really developing intellectual property or building a business around the ecosystem? And that's exactly what we do."
As the Microsoft business has transformed from a licensing-based market to consumption-based transactions, AvePoint has successfully adjusted its mission to focus its efforts on increasing Azure, Office 365 and Teams consumption.
"AvePoint was among the earliest ISV partners to really make investments in the cloud long before the masses started to move in that direction, so we've been in this space longer than most," Buckley says. He also points out that AvePoint solutions are all built on the Microsoft stack for the Microsoft stack.
Deep Believers in the Co-Sell Motion
Beal believes it's critical for partners to fully adjust to the difference between consumption and procurement-based models. "Partners need to maximize the ecosystem opportunity, the services, additional ISVs, creating their own intellectual property. Those that seem to be doing the best, and seem to be expanding their market, have picked certain verticals," he says.
His formula includes combining Microsoft technology, AvePoint solutions and proprietary software specifically designed for a vertical and packaging it all as a repeatable solution they can sell over and over to customers within that vertical.
Buckley connects this to his core strategy for working well with Microsoft to optimize the return on that relationship. "Whoever you're working with at Microsoft, understand their commitments, what are they measured on. As a partner, you want to get more business, you want to get leads. That'll happen organically," he says. "The more you can align your activities and what you're trying to accomplish with helping them achieve their numbers to meet or beat their annual commitments, the more you're going to get responses out of them. That's the kind of the secret to work with Microsoft."
Posted by Howard M. Cohen on June 01, 20210 comments
Visitors to the Queue Associates Web site are immediately greeted with the declaration that it is "a global Microsoft Gold Certified Partner and leading Microsoft Dynamics 365 consultancy, in business for three decades."
No mistaking its commitment to Microsoft technologies.
When asked why he thought RCP listed it in the RCP 350 for top U.S. Microsoft partners in 2021, Founder and Managing Director Jeff Goldstein replies, "I would think for two reasons. Number one, last year we had a record year, despite the pandemic. Number two, we moved a lot of our clients to the cloud, so we did a lot of business transformation, moving existing clients from on-premises applications into the Microsoft cloud."
Goldstein, who served as president of the U.S. board of the International Association of Microsoft Channel Partners (IAMCP), proudly points out that Queue is the Largest Microsoft Dynamics partner in the New York metro area supporting customers worldwide. The company has offices in New York, Atlanta, Phoenix, London, Hong Kong and Osnabrück, Germany.
Reflecting further on the impact of the COVID pandemic, Goldstein points out, "When you're in front of a client, it's much easier to interview them, identify the requirements, do a whiteboard session, do the training. When you're doing it remotely, it's more difficult keeping the customer's attention."
On the other hand, he feels working from home has literally forced his people to be far more efficient than ever. "If a consultant had to take the train into New York to visit clients, they could only visit perhaps two clients a day. If they're lucky they'd really only get in four to six hours worth of work. Now sitting at home in front of their computer, they can easily schedule 10 one-hour sessions. And everybody is so very attentive for that one-hour meeting, they're not late, always on time. And then when the meeting is over, the meeting is over. The boundaries are very, very, very clear, in terms of what the time constraints are for a meeting. It has actually forced more structure. Our people are more efficient, because they can serve more clients in a day. There's no wasted time.
"What this pandemic has done is that all of our prospects who were on the fence about the cloud, the pandemic pushed them over the fence, and made it a must. When people come to our Web site, and they call us, they already know what they want. They say, 'I want Microsoft Dynamics 365 Business Central Essentials, Teams seats, and they know the prices.' When they come, they're already sold. It's just a matter of why should they work with Queue as opposed to somebody else."
As for the bet-the-business commitment to Microsoft, Goldstein credits Microsoft's scale and stability as one of the biggest companies in the world. "Microsoft generates a lot of opportunities for us. People used to say, 'Nobody ever got fired for buying IBM,' right? Well, now, it's the same way with Microsoft. People go out and say, 'Listen, I selected Microsoft. That's the best. It's the gold standard. So Microsoft is the new IBM, nobody ever got fired for buying Microsoft.'"
At the same time, it can be tough for a partner to navigate an organization as huge as Microsoft. Goldstein finds advantages in being selected as a managed partner.
"My perception of Microsoft is going to be only as good as the guy I deal with every day, right? If I work well with the guy and the guy takes care of us, I love Microsoft. If the guy doesn't take care of us, blows us off, then I don't like Microsoft. That's what it comes down to. I'm not working with Satya Nadella. I deal with one guy who manages 20 partners. When I have a problem, I call him and he takes care of my problem. And that's why I love Microsoft," Goldstein says. "Basically, people partner with people."
Posted by Howard M. Cohen on May 20, 20210 comments
The Henson Group is fully onboard with Microsoft's pledge to become carbon negative by 2030.
Microsoft made the commitment as a company in January 2020, setting a 10-year deadline to capture more planet-heating carbon dioxide than it emits. The company also pledged that by 2050 it would remove the equivalent of all the carbon dioxide it's released since 1975 when the company began.
"We're now a carbon neutral company!" Henson Group declares on its Web site. "Henson Group is committed to operating sustainably by continuously working to measure and reduce our carbon footprint across the globe, including leasing office space in Green Certified buildings, minimizing business travel, purchasing energy-efficient equipment, and many more carbon-neutral activities."
Henson Group is an award-winning Microsoft partner with gold status in several solutions competencies, including the exclusive Azure Expert MSP designation. In business for more than 15 years, Henson Group today has more than 600 employees and affiliates servicing hundreds of clients in dozens of industries delivering cloud services, on-premises solutions, support, licensing and more for clients worldwide.
Its strategy of hiring architects, engineers and developers who are former Microsoft personnel, like CEO Greg Henson himself, helps lead to relationships with Microsoft product groups and executives that give it access to code and knowledge not generally available to competitors.
With his company named in the RCP 350 list of the top 350 Microsoft partners in the United States, Henson attributed much of its success to its commitment to diversity and inclusion. "We have a pretty diverse group of folks. In fact, women and minorities make up half of our senior leadership team. So I'm proud of that," Henson said.
But he also believes the carbon neutrality will be a differentiator in the near future. "We're a carbon-neutral Azure Expert MSP," he said.
Henson takes great pride in being an Azure Expert MSP and points to it as a primary reason he feels his company was selected. "It's the best of the best, the cream of the crop, when it comes to Azure migration. There are a lot of gold partners out there, and anyone with five or more employees can really go out and get a gold competency," he said. However, there are only about 70 Azure Expert MSPs, making it a valuable badge for a partner. "It's definitely a prestigious and grueling attainment."
How grueling is the Azure Expert MSP program? Among other more routine requirements, Azure Expert MSPs need to bring on third-party auditors, sit for multiday audits and go through the renewal on an annual basis.
Obviously, not every partner can earn the Azure Expert MSP badge, but Henson has advice for ways other partners can gain visibility within Microsoft.
Just as it promotes its Microsoft certifications and capabilities to prospective customers, the team at Henson Group similarly actively promotes the same to Microsoft's reps throughout the United States, including field sellers, inside sellers and vertical sellers. Henson pointed out that the value of this visibility is to reach out to the Microsoft sales folks to engage them on their opportunities.
One of his challenges has to do with frequent changes in the people he works with locally, and at Microsoft headquarters, as well. While he acknowledges the value of building relationships with channel chiefs and other executives, you need to be ready to rebuild those from scratch every few years. This is another reason he places so much value on building relationships with the field sellers and inside sellers: They expose you to more opportunity over a somewhat longer period of time.
Henson is also excited about the ISV, health care, retail, nonprofit and other verticals Microsoft has begun emphasizing. "A lot of partners are very vertically specific. Now they have those dedicated sales teams, those dedicated verticals and now dedicated clouds."
Finally, Henson recommends aligning with Microsoft's civic causes when those mesh with your own social priorities. Their carbon-neutral status is just one example of that, demonstrating that The Henson Group is a committed Microsoft partner in more ways than one.
Posted by Howard M. Cohen on April 22, 20210 comments
After 28 years of brilliant service devoted to the partner channel and customers, David Willis has retired as Microsoft's U.S. channel chief .
Dave's is a record of ever-increasing success in which he served as vice president of Small and Midmarket Solutions & Partners (SMS&P) in Canada, and eventually moved to the same channel chief role in the United States, after stints as Eastern Region VP for SMS&P and as U.S. Dynamics VP. He's been running Microsoft's U.S. channel since 2013, although the organizational name changed in 2017 to become U.S. One Commercial Partner (OCP).
Delivering More Than You're Asked For
Dave always endeavored to give you more than you asked him for. Once, when I was Eastern Region Chair for the International Association of Microsoft Channel Partners (IAMCP), I asked Dave for the names of some partner executives in various cities who might make great chapter leaders to help us expand. Instead of simply furnishing a list, Dave invited me to his next Partner Account Manager (PAM) meeting so I could speak directly with the PAMs who managed the best partners in each area -- more insight than I could have ever hoped for.
When we sat down for a brief exit interview, it felt odd to be saying goodbye to someone who has been so much a part of the Microsoft experience, and such an outstanding partner for so long. Dave explained that after spending half of his life at Microsoft, he decided it was time to achieve a bit more of a work/life balance. "I've always lived this work hard, play hard attitude. But there was a heavy emphasis on the work thing for the last 28 years. I'm looking forward to balancing that out with a little bit more play," Dave says.
Pointing out that "life's too short," the first thing Dave mentions planning to spend more time on is his family after moving them four times during his Microsoft career.
"Take the time to understand Microsoft's overall vision, our strategic direction, our product directions, all the different programs. And then really taking the time and effort to plug in and leverage them."
David Willis, Former Microsoft U.S. Channel Chief
Products. Partners. People.
Speaking on what has driven him over the past 28 years, Dave says, "There's so much really cool technology, but it really is the great Microsoft people I've worked with over the years that have inspired me, and the incredible customers when I was in customer-facing roles, and, of course, working with partners. Ultimately, the last number of roles that I did were very partner-oriented, because that was the area of the business that I was getting so much out of."
Guidance: Break It Down
It's classic Dave Willis to take a large subject and break it down to a specific number of smaller parts, then tackle each part. What's most outstanding is when you realize that none of it is just coming off the top. Dave has invested tremendous time in thinking these things through to make his message as accessible as possible to as many partners as possible.
Asked for his final guidance to the partner community, Dave nets it out to three things.
Superpower
"Really have a clear understanding of what we refer to within Microsoft as a superpower. What do you do better than anybody else -- your specific solution? Automating specific business processes, industry or vertical expertise, or even technology expertise, as well. But how do you differentiate, and how do you separate from the pack? How do you deliver unique value to customers? And how do you explain it in a clear way?"
Once partners understand that superpower, it's critical to think about how to convey it. "Even though partners do have some really strong capabilities, they often don't explain as well to customers or to Microsoft or to other partners. And getting all of their employees to rally around it. And so I think that that superpower piece, I think is so important."
Put the Customer at the Center of Everything
"I have found a lot of partners will work with Microsoft expecting to get leads, which is definitely something we want to focus on. But everybody needs to be focused on the customer." It's been a process for Microsoft, he acknowledges. "Putting the customer at the center was not something, back in the early days, that we did very well. And we still need to improve, I think."
He recommends obsessing about customers, being maniacal about their satisfaction, driving their loyalty, and understanding their business with its challenges and opportunities. "If you do all that, it's a great way to get repeat recurring business, which is lower cost of sale and just merely helps a business overall."
Align with Microsoft
"Take the time to understand Microsoft's overall vision, our strategic direction, our product directions, all the different programs. And then really taking the time and effort to plug in and leverage them. As I look at different programs in the amount of funding we have, some partners do a great job taking advantage of that and many, many don't. It takes time and effort. At Microsoft and OCP, we do our best to try to expose it out to partners. There's only so much we can do. We need partners also to be really proactive."
On Opportunities
Dave remains bullish on the channel opportunity, pointing out, "If you look at just the total addressable market for digital transformation, for cloud solutions overall, it's in the trillions, right? Everything's going digital. In many ways. I think the pandemic has accelerated the need for clouds, remote working and that's only going to going to continue. But it's not about just doing transactions, it's really moving more and more to higher-valued solutions and services, around the superpower."
Specialize more and keep moving up the value chain, he adds. He recommends "moving from transactions or more traditional project-oriented services to more managed services, more developing repeatable IP that you can deliver to customers and then scale. That's where we're seeing the partners drive the most growth and the most profitability, as well."
Posted by Howard M. Cohen on April 20, 20210 comments
Tyler Bryson was recently announced as the new Corporate Vice President of the Microsoft U.S. One Commercial Partner organization, replacing longtime partner champion David Willis who is leaving Microsoft after 28 years.
Bryson, himself an 18-year Microsoft veteran, sat down to talk with me recently about his vision for the channel and the industry as he takes up these important reins.
I launched into our conversation with what I always feel is the most obvious question to ask a channel chief.
Cohen: What do you look for in a channel partner? What makes a great channel partner?
Bryson: As I think across our various types of channels and partners, from the work we do with ISVs and systems integrators and resellers and managed service providers, each of them is at a different stage on their own journey of transforming to create a different quality and just a different outcome for our customers together.
I'm looking for partners who are evolving their business model with us to better service customers. That means, in many cases, that they're shifting and becoming more able to run a managed service business, and to really take this innovation and convert it to real customer business outcomes.
I'll give you just one example. We're investing a ton of money today trying to build a better digital marketing and nurturing system globally. We're building better tools that are automated. And when I meet a partner that says, "I'm not ready yet to invest in nurturing leads or uncovering and developing opportunities," I quickly realize they're not transforming yet with us. That's back to that equal handshake of, "Hey, we're investing, are you?" We both want new business, but we're going to have to meet in the middle to make that happen.
So what are the things that you look for when you want to tell the difference between somebody who's with you and somebody who's not? What do you look for in that channel partner?
One is investment in skilling and capability-building. This is all moving so fast. If we don't have partners that are building skills and people to meet this capacity, that's one that's top-of-mind for me. You can't win the customers of the future with the skills of the past, right?
Number two, I mentioned marketing and the ability to capture, work, nurture and develop leads. That has to be a muscle that we work on together. The flow, the communication, the privacy, the maturity to have good privacy and processes so that our customers trust us.
Three, back to that idea of a managed service. I know you could sign an agreement with them. But I'm really not looking for a signed agreement to run Azure. I'm looking for a customer that's growing and successful with Azure, so that we're all winning together.
Finally, I need feedback. I need a channel partner that is able to work with us in a way where we're iterating together on what's working and what's not. I love it when I see a partner that's got feedback not grounded in, "Just fix all these things." But, "Hey, let's go work together on this." This market opportunity we've still not met yet. So those are four things.
One of the challenges Microsoft has always faced as far back as I remember is that on the one side, you have people who just want to complain. They don't have any good foundation for it, but they just want to complain and they don't get it. They don't understand your message.
At the other end of the spectrum you have sycophants, people who think that Microsoft expects them to blow as much smoke up your skirt as they possibly can.
There's a healthy level of tension we need together, right? And there's a fine line between what's healthy and what's just not productive.
We can be the source of needed change. We have many issues that we've got to work on, but as I get kind of rooted in, it's that constructive tension [where] I care enough about you that I'm going to speak the truth to you and you care enough about me that you're going to speak the truth. We're losing because of this. That's always a great place to start versus maybe things out of context.
What are we losing?
We're both losing a chance to service these customers. This is probably the greatest moment of our channel lives. The whole business model [is] being rewritten, and there are going to be massive winners and losers. It's going to be those that get the right service to the customer and are in it for their long-term success, what we call customer success. Ironically enough, we didn't even have teams with those titles five years ago. Now we have thousands of people working in those roles, because that's the consumption economy.
"Underpinning all of this innovation is a need for our partners, whether they're Dynamics partners or Azure partners or Microsoft 365 partners, getting and building a data practice. Everybody needs it. Everyone!"
Tyler Bryson, Corporate VP, Microsoft U.S. One Commercial Partner
You mentioned several times the ability to run an MSP business. Take that in the context of the tremendous push over the past 10 years to have partners declare their competencies and really specialize, really focus. Concomitant with that, you're going to have to find other specialists who can fill the skill gaps in the projects you attract that you no longer do. How do you see that?
You remember when customers would ask, "What do you do?" And you'd ask, "Well, what are you buying?" And however they answered, you'd say, "Yes, I do that."
That may have been true in a more transactional or a more of a license-driven world, but now more than ever, our business model is more aligned to our customer outcomes than ever. We don't get paid if it's not being used!
You need partners that are great at executing and delivering those outcomes. But the breadth of it is so massive that there has to be an ability for partners to work together. Having someone say that they are an Azure partner, to me, is kind of like saying, literally, I know how to navigate the world's oceans. There is just infinite depth, and it's only growing.
So what I'm looking for is more and more people who are saying, "I'm great at helping customers understand and unlock data." Of course, there's a whole world of infrastructure and security you may not be great with. That's OK. Somebody else is working on that. And the customer is just fine having more than one partner engaged.
So you would agree that the partner who understands the importance of driving Azure consumption is a preferable partner.
If my goal is to finish my project and get paid versus having delivered outcomes the customer appreciates? In the old world, we would integrate and deploy Microsoft Exchange and say, "OK, let us know how it goes." We're now in the world of business productivity and collaboration on a continuous cycle forever with that customer.
Remember, back in the day, it was shelfware. There was a constant push to get it off the shelf and deploy it. We don't care. If they haven't figured out how to use it, you'll show them ways to use it. It was similar, though there wasn't as much on the line, I think, as there is now.
Fortunately for our customers, they have choices. If the service isn't working for them or the partner that manages it isn't giving them good service, they'll just shift over, turn off the service and go to a new one. That's a healthy reality that keeps us all focused on keeping our customers happy. No, no more shelfware.
We've talked about expectations that you have for your partners and what a good partner looks like, and there's some good guidance there for partners to focus on if what they want is the best possible Microsoft relationship. Let's swing it around. What do you feel are the priorities right now, in terms of enablement of partners? What do you think they need most from you right now? What can you be doing that will better prepare more of them to focus on driving consumption through driving better business outcomes?
We have to have an ecosystem at Microsoft that helps our partners get great at data.
Underpinning all of this innovation is a need for our partners, whether they're Dynamics partners or Azure partners or Microsoft 365 partners, getting and building a data practice. Everybody needs it. Everyone!
I was meeting with a customer last week and the discussion was about them optimizing their store worker labor productivity or what they called revenue per labor hour. A Microsoft seller could show up there with a partner and say, "We're going to deploy Microsoft 365." Does that really improve labor dollars per hour? Maybe. But until we get back to, "What does the data say?" Where are all these islands of information that they're working from today? The average store worker is working with seven applications. One for labor or time tracking, one for processing forms. I need every practice of our partners -- we need to empower them -- to get great data and tell that story.
When you say build a data business, what are the kinds of experiences that partners can expect you, particularly, to be driving toward them to help them do that?
I don't know if I have the right answer yet, but I know we need to work on skilling at three levels.
One is we need to help our partners understand the skills of modern Big Data platforms. This isn't about scrolling together nine different relational databases into a Big Data warehouse, putting a flag on it and saying, "Query away." That is what we did 10 years ago. Today, it's about building a practice that allows us to collect, ingest and transform data into a repository with the flexibility to ask new questions.
Let's say you're a security partner, you're living in the world of data. We have 19 different security applications, all of them streaming data to us about what's going on. How do we make sense of this data? That modern Big Data capability, it's not that everybody has to be able to go out and build machine learning and artificial intelligence, but they need to come to the customer with the ability to help them get their arms around this data with modern tools.
Then look what's possible. The best thing about that is if we establish that baseline, that partner then has the ability to start expanding the view. I want to do more than just deploy Microsoft 365. I want to branch out into workplace analytics or building Power Apps. The data gives them the capability. So that's number one.
The other skill set I think we need to be better at empowering is security and compliance. This is not going away. This is only going to be a more important skill and capability to differentiate our ecosystem. I want our ecosystem to be the ecosystem of trust. I want to differentiate on the idea that when you work with a Microsoft partner trust comes with it. Because we're empowering you with the practices, the skills and, of course, the platforms, not just in Azure, not just in Microsoft 365, but left-to-right, to be a secure conduit of transformation. Nobody transforms their business until first they're secure.
We need to connect the dots.
So what I hear you saying is you're embracing a complete stack approach, really, going back into our roots in technology at every layer of the stack and...
It's an open stack. Thank goodness, right? What we didn't have at Microsoft years ago, it is truly a left-to-right open stack.
Let's help them see the path to transformation. The other thing that our customers tell me that they need from our partners is better roadmapping and phasing of their journey. We come in and show the glossy presentation, give them five great customer examples of how Walmart did it or whatever, though they're a midmarket retailer and then they're just like, "Ah, I've got three people in it."
You've got a great partner who's going to take you on kind of a journey of business? And are you familiar with our catalyst framework that we have now? It's a standard way that we do business exploration and technology architecture. Our partners all have versions of this in some way, but we're finding that our customers really, really appreciate it. [It shows them] what they need to do, and it needs to be phased out for them. It's an example of one of the ways we're empowering the channel with some new language tools.
You mentioned the data business. Several years ago, you had an initiative to teach more partners about data science. And now it has morphed and it's no longer front-of-mind for everybody. But it was a great initiative. It was the right thing that was needed and I think it serves today.
We should have gone faster, we should have gone faster, that's what I'm realizing. We have built for 25 years this amazing customer base that relies on us for data. Of course, there are many competitors but for most of our corporate customers and even our enterprise customers, our database technology is ubiquitous. And now we need to activate our partners to go modernize that. We have to because it's waiting for what's next -- data warehouses and report systems rather than intelligence systems.
If a partner heard that and asked you, "What's in that for me, why should I really go out there and campaign to promote Microsoft's vision of the more modern interface? And the more advanced database solution?" What would you tell them is in it for them? What's the value to them? And what's the value they can offer their customer?
The value to them is this is the stickiest work possible. The stickiest workload of all. No one is saying, "Come out, do this project, and leave," anymore. My data is constantly changing. We have new questions for our business. "Hey, what we thought we knew -- now we we've added these new data sources."
And what's in it for the customers is rather than rearview analytics, we're getting intelligence and prediction and forward-looking capabilities. That's the big breakthrough. It's the world of statistics and correlation being in the past and the world of machines learning and thinking in the future.
The power of this for me is that we've heard this for many years, but it's actually commoditized now where it's a workload that many thousands of customers could be using. That's why I just have this urgency right now to get to this to our ecosystem and invite them.
Posted by Howard M. Cohen on March 01, 20210 comments
Today's managed service provider (MSP) is faced with a challenge: The downright glut of refugee resellers that have migrated to the MSP ranks without doing the hard work is making it very difficult for those who have done the work to rise.
Some refer to it as a "race to the bottom" for MSPs as they try to deliver excellent service while competing with ridiculously low rates set by those who have no idea what they are doing.
It's really very simple: Great service providers beat out the rest because they know their costs. That's it! They know how much of the rent, phone, electric service and everything else to burden into their cost calculation so they can target a specific margin and arrive at a reasonable price. Without knowing how to burden their costs, companies can't afford to keep operating. So they cut corners, short-change customers and sully the name of MSPs everywhere.
It may be that some of the bottom-feeders will learn their lesson and rise to a reasonable level of professionalism. Others will go off and do something else. In the meantime, great MSPs find themselves challenged to find ways to distinguish and differentiate themselves.
My Mother Always Wanted Me To Become a Doctor
Those who have been reading my work over the past decade or so know that I'm a big advocate of developing IT to become a true professional practice like law, accountancy or medicine.
Over the next several months, this blog will serve to encourage MSPs to follow the example and the business model of medicine. That is, become specialists.
Cisco, Microsoft and others have re-imagined their partner programs to encourage specialization. Follow that lead. Seek to specialize and find your focus, your niche. Buy deeply into the reality that "you can't be all things to all people." You don't want to; it's too expensive and you end up being just like everybody else.
The Evolving MSP will offer many directions in which to differentiate -- specialties to adopt and make your own. These will include:
- The Cloud Services Provider (CSP)
- The Data Scientist Service Provider (DSSP)
- The Software-Defined Services Provider (SDSP)
- The Automation Services Provider (AuSP)
- The Artificial Intelligence Services Provider (AISP)
- The Internet of Things Service Provider (IoTSP)
- The Universal Communications Service Provider (UCSP)
- The Vertical Services Provider (VSP) -- many flavors!
As always, I seek to foster a productive, useful conversation. What are some specialties you've been considering? What do you think are the obstacles? Where do you think you'll need help from vendor-partners? What's your vision for your future? Let me know at [email protected].
Posted by Howard M. Cohen on January 04, 20210 comments
It's the IT equivalent of alchemy -- magically turning a large cost-center into a big profit-producer for client after client and, by doing so, dramatically increasing efficiency and effectiveness in their organizations without adding capital investments.
You take something often considered to be a "necessary evil" and convert it into one of the greatest strategic weapons in your client's arsenal. And you turn one of their biggest frustrations into your greatest illustration of innovation.
When you speak of alchemy with your clients, you are speaking with them about their business, not technology. You speak of efficiency improvements and productivity gains, and how they translate into profit contributions. More and more clients have come to expect this level of conversation from you. Here's a perfect framework for you to get in front of that expectation.
Measure, Manage and Mature Your Client's Use of Business IT
There are many, many IT maturity models from many different sources that you may want to embrace. Before you begin using this consultative approach, do a survey of as many as you can find. Based on what you learn here, evaluate each of them and determine which one you feel most aligned and comfortable with.
Generally, each IT maturity model will take your organization through the following roadmap:
Level 0: Ad Hoc
Everything must start somewhere, and business IT is no exception. Companies in start-up mode will very naturally purchase computers; they're considered a necessity. But most will do so with very little direction or planning beyond choosing their preferred operating platform and hardware manufacturer. Some formal IT maturity models refer to this as the "chaotic" or "ad hoc" stage.
Level 1: Reactive
Realizing that computer support is draining many people's time, organizations start to put more formal structures in place responsive to their frustrations. Many IT maturity models refer to this as the "reactive" stage. These assignments tend to create IT silos where different departments use different applications, data structures and protocols. Often, the outcome of this is a great deal of firefighting and lost time.
Companies that remain at Levels 0 or 1 for any length of time end up with personnel who are very frustrated with the "IT department," even if there isn't a formal one. They continue to view IT as a "necessary evil" that may often impede their progress.
Level 2: Proactive
Level 2, often referred to as the "proactive" stage, is where the real work begins. It won't be sufficient to simply improve on what was done at Levels 0 and 1. The company will need to learn to do new things, gaining proficiency in new skills like network management, user support planning and standardization.
To be impactful at this stage, the silos must come down and be replaced by standardized platforms, applications, data structures and toolsets. Level 2 shifts from a focus on efficiency to effectiveness. Level 2 is more about business integration than just performance.
Level 3: Defined
At Level 3, the IT department's goals shift to maximizing the value that can be derived from information, technology and technology-based initiatives for the business. People in the business begin to see IT as a service to their department. Most companies implement departmental chargebacks for IT usage at this stage, further incorporating IT into each department's P&L.
Level 4: Optimized
Frequently referred to as the "optimized" or "value" stage, this is the level at which IT must be fully integrated into the actual operation of the business. Usually led by a C-level executive, the Level 4 IT organization's services are inextricably linked to specific business processes. No longer is performance reported in terms of uptime or other technological metrics. Instead, the IT department reports on the success of its business outcomes and contributions to the overall operating profitability of the company.
Here at Level 4, the main concerns are flexibility, business agility, scalability and extensibility to rapidly respond to any new business opportunity IT may be challenged with.
Moving to Successive Levels
The following are suggestions for how to best prepare for each move up the IT maturity model.
Getting from Level 0 to Level 1 requires someone in your organization taking control of IT. Systems will need to be identified to help formalize monitoring and incident handling. Diplomacy will be at a premium as the attempt is made to get leaders of the various silos to work well together.
Prepare to move up:
- Evaluate existing policies as compared to IT industry policies.
- Make sure you're fully compliant with government or industry regulations.
- Provide extensive user training on IT policies to improve governance.
The next step to Level 2 will require greater familiarity with professionally led service management processes and project management.
Prepare to move up:
- Focus on how you protect your users' devices and your network's endpoints, including not only laptops, desktops and servers, but also tablets and even smartphones.
- Patching and updating operating systems, applications and security systems are critical. The only thing that can threaten your network more than failing to install a new patch or update is installing one that hasn't been properly evaluated to ensure that it won't disrupt any of your systems.
- Implement a constant vigil on user password practices. An astonishing proportion of users still uses the word "password," "123456," their spouse's/children's/pet's names or quick fixes like "qwerty" as their password.
- Some of your servers may need even higher levels of protection.
- Standardize, standardize, standardize.
At Level 3, fully formalized IT service management (ITSM) processes must be implemented before value can be realized. The executive responsible for incorporating ITSM must be able to function in the C-level suite and participate in strategic business planning, enabling IT to be woven into the fabric of every key decision.
Prepare to move up:
- Ensure all policies are enforced.
- Establish a routinized system for evaluating and distributing approved patch updates across your network for known vulnerabilities in operating systems and applications.
- E-mail must be archived in compliance with company policies. To avoid legal exposure, e-mail must be stored with provisions for rapid search and retrieval.
- Adopt a belt-and-suspenders approach to data backup.
- Implement software to help you identify behavioral anomalies that may indicate a user has had their identity stolen, or they are acting outside of accordance with established policies.
- Eliminate root access and administrator rights for anyone who should not have them.
Level 4 requires real vision at the level of innovating new applications for new and existing technologies that will fulfill the goals and objectives of the organization. Many IT departments become strategic profit centers at this level, so vision must reach far beyond just the technologies.
Prepare to move up:
- Provide the ability to view security incidents in real-time across the entire IT environment and correlate security events to discover root causes and prioritize remediation efforts.
- Combine data from multiple places in the network and deliver role-based dashboard reports to demonstrate proactive compliance and drive necessary remediation efforts.
While reading this, it may occur to some of you that it would be a good idea to figure out where your own organization currently falls on an IT maturity model. You're right.
Posted by Howard M. Cohen on December 28, 20200 comments
The quest for relevance continues. When you first became an integrator it was pretty straightforward. You were considered superior based on your ability to identify the best choice of server, storage, router, switch and other network components, and bring them together to build a better system solution, preferably at a lower cost.
Then came the cloud.
Suddenly, most of the components you brought together, and sold, were being operated somewhere else by someone else. You still got the opportunity to integrate routers, switches, firewalls and other networking components, but the servers and storage were pretty much lost to you.
Then came COVID-19. All of your users went home and were gone. They no longer needed your networking infrastructure. Every user was using their own residential infrastructure to communicate with a network core that was in a cloud datacenter or datacenters.
Feeling marginalized, are we?
Have You Ever Found Yourself 'Tech-Envious'?
Anyone who has ever operated a datacenter has probably experienced this and can tell you about it: You're at a conference or some kind of meeting of your peers. One of them tells you about this great new tech they recently added to their datacenter. Immediately, your mind starts spinning through all the ways your users could benefit from that tech.
But you don't have the budget for it, so you put it out of your mind. Still, it sure would be nice to have.
Yes, You Can Have It All
By now, you've probably extended your datacenter by integrating it with cloud resources instead of buying more hardware. Or you've simply migrated some workloads -- maybe more than just some -- to a cloud service.
Which cloud did you choose? Azure? Amazon Web Services? Google? If you've been there a while, you've probably started a wishlist of features and services you wish that cloud would provide, but doesn't.
So what? If the service you're seeking is available from another cloud provider, why wouldn't you use it? This simple question begins the drive to multicloud.
Each of the major cloud providers offers different services. Some are more focused on developers. Others are more focused on artificial intelligence (AI). With all cloud providers continuously expanding their menu of services, it stands to reason that they wouldn't all be the same. Some are unique to one provider or another. In some cases, the names are different but the services are the same. Some providers have subtle differences in the way they deliver a specific service. Each has its own idiosyncrasies, its own protocols, its own security requirements.
Sounds like something that would benefit from an expert integrator!
The New Integration that's Not So New
News flash: We've been doing multicloud for, well, as long as we've been doing cloud. Since the very beginning, we've been pointing out to customers that they can have the best-of-breed of each cloud service by identifying which one is best and subscribing. So you've been sourcing a productivity suite from one vendor, data backup from another, unified communications from yet another and so on.
This is not really different. You subscribe to the services you need from the cloud providers who have them. Your value proposition returns to what it has always been: You're the expert at how to make services from different providers work with each other seamlessly. You help your client select the right provider of the right services, configured in the way that will serve them best. Then you provision and deploy that service appropriately.
Being an MSP as well as a cloud solution provider (CSP), you then dutifully add it to your customer's monthly recurring bill so you can maintain and manage it.
Many platforms are emerging to make it easier to manage multiple cloud services from multiple providers. Mastering some of these, in addition to becoming fully versed in the differences between services from various clouds, potentially represents the next evolution of cloud integrators.
Posted by Howard M. Cohen on December 22, 20200 comments
Are you doing everything you can to get your clients to see you as their trusted technology partner? Stop. You're selling yourself short and severely limiting the revenue and profit you can be generating from each client.
You absolutely want to be trusted; anybody in business wants to be trusted. Trust is a core component of any lasting business relationship. But by focusing on technology, you're not positioning yourself where you need to be in today's IT industry.
What does a trusted technology partner do? If you're a client you probably think of the following:
- Helps select technology products that work well together and give great performance.
- Prepares those products, configures them, tests them and probably has them installed and integrated, as well.
- May offer some security programs, cloud services, storage networks, power protection, etc.
- May build and help maintain datacenters.
Is that really what you want to be known for?
Many MSPs have successfully occupied the space that a chief information officer (CIO) would were the company large enough to justify the expense. They do so by offering a "fractional CIO" strategy in which many clients share one CIO or virtual CIO (vCIO), and each pays a fraction of the cost. When you add up all of those fractions, they should total to much more than the fully burdened cost of that professional.
In a large corporation, the CIO is part of the executive team, a C-Level executive. Their responsibility is not limited to making the technology work -- that's usually assigned to a chief technology officer (CTO). Instead, the CIO helps the executive team apply technology solutions to achieve the overall goals and objectives of the company. They are fully involved in developing and setting strategy. Their job is not just the technology, it's the entire business.
Trusted Business Partner
To achieve positioning as a client's vCIO, you must earn the right to be considered their trusted business partner. You must be fully versed in how businesses succeed, and how each client is endeavoring to do so. You need to know their challenges, their aspirations, their goals, their objectives and their SWOT -- strengths, weaknesses, opportunities and threats.
You must be expert at applying technology solutions to support these, and to solve challenges to them. You must also constantly remain fully informed on emerging solutions, making your clients aware of those that may be of value to them.
You must be brand-agnostic. By not advocating for any particular brand of product or service, you demonstrate the objectivity required to ensure that you're always selecting the best qualified solution for each challenge.
You know you are succeeding when client ownership and executive management consistently include you in key decision-making processes -- especially, but not necessarily limited to, those involving technology.
Emanating from your Attitude
When people ask you what kind of company yours is, do you find yourself answering "VAR," "SI," "MSP," "CSP," "reseller," "computer company" or some variant of those?
Do you ever think about referring to yourself as a consulting firm? Do you think of yourself as having sufficiently deep and broad knowledge to call yourself a professional consultant? A real consultant -- not just the kind that went to the business card printing store and had them put "Consultant" under their name. Do you feel you conduct yourself as a professional consultant does? Do you have a clear image of what that looks like?
Your ability to promote and sell your firm as a professional consultancy begins with the mindset, the confidence and the concern you exude for your clients' success. Don't worry -- soon enough, clients will let you know if your confidence is warranted or not.
Maturity
I called this column "The Evolving MSP" because that's what I see MSPs doing. As with any large group, some are leading the pack, maturing at high-velocity. They're adding consultative services. They're selling engagements. They're leveraging project management, agile methodologies and many other strategies to improve the way they deliver value to clients.
And that's what they deliver to clients: value.
There are also many in the middle still focusing on technology, but offering more services and profiting from them. Then there are the laggards who still think they can make a living selling stuff.
Going forward, this maturity leadership will become more and more critical to your survival and growth. Clients know they can go to office supply stores to purchase technology products. If they're going to pay someone else for what they do, they'd better provide real value.
What value are you providing to clients? I'd really love to hear from you about your journey to truly becoming a CIO for SMB companies.
Posted by Howard M. Cohen on December 17, 20200 comments
It's no secret that your experience, your skills, your expertise are valuable -- very valuable. They're the result of big investments. The mystery is why you'd ever give away any of the service value those investments have created. Yet MSPs often offer up their capabilities at no charge.
Learn how to leverage the art of assumptive selling to always receive the fees you've earned. What do you sell? There are so many ways to answer that simple question, and the way you choose to answer it says a lot about who you are, where you're at and what you should be thinking about next.
Are You a VAR?
No matter what you may think, the answer to "Are you a VAR?" is "No." It has been impossible or at least unwise to be a VAR for about 35 years now.
The description "value-added reseller" emerged from what I often refer to as "The Time of Becoming Really Stupid" for the young channel. IBM first called us resellers in August 1981 because "nobody but IBM can sell IBM." As ridiculous as that sounded to us, IBM did give us 41 percent margins at least on most IBM PC products, and everything was selling at list. Try to imagine that. Stop shaking.
It wasn't long before Compaq, Toshiba, RadioShack and others joined in. Realizing that customers could buy these products at list price from anyone, the first question we asked was, "What can we do to convince customers to buy from us instead of our competitors?"
We "cleverly" came up with the idea of giving away services along with the purchase of computer hardware. We would assemble, configure, burn-in, test and prepare systems. We would install them onsite. We'd load software. We would do whatever we could to beat what our competitors -- who had come up with the same ideas -- could do.
These were the short-lived VARs. We added value to the purchase to compete.
The Death Spiral
I was working at The Computer Factory at that time. It may very well be that we were the first -- or at least among the first -- to discount products. The death spiral began immediately and it didn't take long until we all found ourselves with margins of 1 percent or less.
If you were thinking about it, you realized you couldn't afford to give away services anymore if you didn't have the big margin to fund it. Some of us thought faster than others. Those who didn't went out of business pretty quickly.
Within maybe two years, the age of the VAR had come and gone.
The Rise of the Solution Provider
Yeah, that's my Luke Skywalker moment, and now it's over. This brings us back to the question of what it is you sell. If your answer is "Computers," good luck to you. You now know how long it's been since that made anyone any money.
If instead your answer is that you sell what you do well, you're on the right track, so full steam ahead. We're living in the age of the service provider. Maybe someday that will morph into "technologist" or something more akin to "doctor" or "lawyer" than "repair guy." For now, though, those who are making money identify themselves clearly as service providers. They sell the services they've become good at providing. Some examples:
- You're good at selecting, combining, provisioning, configuring and managing cloud services, You're a cloud service provider (CSP).
- You're good at data and network security. You're a managed security services provider (MSSP).
- You're good at monitoring and managing customer networks and remotely resolving anything that goes wrong. You're a managed services provider (MSP) along with almost everybody else and their brother-in-law.
Behold the xSP: The Service Provider of Tomorrow
One thing all successful service providers have in common is they give away nothing for free ("free" is, indeed, a four-letter word). They know there's real value to what they do and they look to be compensated for providing that value. That's professionalism.
I earlier alluded to one of the biggest problems they face. There are simply tons of MSPs who transitioned away from being resellers. Not all of them have that one thing in common that we just identified. They give services away -- sometimes for low, low rates and sometimes for f-f-free. Whether they charge for it or not, they're not very good at providing services. They would have been better off opening up a pizza place (people gotta eat).
Market forces will eventually filter out the wheat from the chaff -- the great MSPs from the other kind -- but there will still be a large crowd of MSPs to compete with.
Over the next several months we're going to explore answers to where great MSPs can go from here -- how they can differentiate themselves, find their niche, specialize in something and be well-known for it. How they can define their space, occupy it and make bundles of money.
Here are some of the future possibilities that await innovative, enterprising MSPs looking to rise:
- The cloud services provider (CSP)
- The data scientist service provider (DSSP)
- The software-defined services provider (SDSP)
- The automation services provider (AuSP)
- The artificial intelligence services provider (AISP)
- The Internet of Things service provider (IoTSP)
- The universal communications service provider (UCSP)
- The vertical services provider (VSP) -- many flavors!
Some of you may have already figured out that this is where we started with this column, "The Evolving Channel." That which does not evolve simply dies. I wanted to talk about the future, the possibilities, where today's MSPs can focus on going to next. Hope you'll join this journey and get some great ideas along the way. I look forward to hearing about the new, innovative practices and services you're creating, and the ideas you'd like to see this column explore.
Posted by Howard M. Cohen on November 12, 20200 comments