Striking the Balance in Partnership

Recognizing those "whoa" moments and those "vive la différence" between you and other Microsoft partners that you work and/or compete with.

"Partner" can mean many things -- buddy, co-investor, lover, co-conspirator among them -- but sooner or later most people engaged in a partnership realize that the partners' agendas are different. That can be a vive la différence moment or a "whoa" moment.

In the tech world, where alliances, dalliances, competition, cooperation and their variations are the rule, it's worthwhile to start out with a clear view of who is after what in a partnership, and to revisit that arrangement from time to time.

A large vendor like Microsoft, with a broad portfolio of horizontal applications, wants to make partner channels as broad as possible. Partners, on the other hand, prefer a narrow channel and exclusive territories and sales leads, to maximize the returns for their sales efforts. However, the optimal balance between a narrow channel and a broad one can't be decided by a simple formula, because the optimal choice for Microsoft will be different from the optimal choice for partners.

Before it introduced its new Partner Program a few years ago, for example, Microsoft had about 35,000 Certified and Gold Certified Partners in its Certified Partner Program.

When it revised the Partner Program, with a clear aim to broaden the partner channel, it created the no-fee Registered Member level. Now it has more than 330,000 partners, most of them in that entry-level Registered Member tier.

That's a "whoa!" moment for partners if I ever saw one.

At the same time, Microsoft maintained some substantial requirements for participation at the higher levels of the program. Competencies, Partner Points, customer references and other requirements are more rigorous and broader than previously required. Furthermore, many of them are annual: You need to come up with new customer references every year to maintain your level.

The combination -- stringent program requirements and a larger number of potential competitors -- starts to look bad for long-time partners. Except, as it turns out, Microsoft may have come pretty close to achieving that optimal balance between lots of partners and partner profitability. Look at recent numbers for the Microsoft Partner Program: In July 2005 (at last year's Worldwide Partner Conference), Redmond listed 4,600 Gold Certified Partners, 28,000 Certified Partners, and 266,000 Registered Members. As of mid-April, 2006, it had 6,997 Gold Certified Partners (up 52 percent), 23,287 Certified Partners (down 17 percent) and 310,430 Registered Members (up 16 percent).

Impressively, the highest -- and hardest -- partner level is seeing the greatest growth. That says those partners are seeing real value in the program. Even though their numbers are growing, the rewards they're getting from partnership also appear to be growing. For example, Gold Certified Partners get better visibility in Microsoft marketing programs and are more likely to show up first when customers query Solution Finder, a database that customers use to find a Microsoft partner.

Certified Partner numbers have gone down, but that may not be serious. Many of those partners are moving up to the Gold Certified Partner ranks, exactly what Microsoft wants to see. For another, if they don't requalify in 2006 as Certified Partners, they don't drop off the partner radar -- they merely become Registered Members, and when they check the Partner Membership Center they'll see that they're probably just a few customer references or a certification away from getting back to the Certified Partner level.

The Certified Partner level may prove to be a fast-changing intermediate stage for partners, as they improve their qualifications and earn Gold Certified Partner status, or their priorities change and they reduce their commitment. For example, Microsoft says more than 5,000 Registered Members have moved into the Certified Partner level in the last year.

Overall, it's an impressive performance. It suggests that, in spite of their different agendas, both Microsoft and its partners may have an occasion to say vive la différence.

About the Author

Paul DeGroot is principle consultant with Pica Communications, which provides consulting services for customers with complex Microsoft licensing issues.