Making the Grade

In 2003, Microsoft announced a sweeping, risky overhaul of its partner program. Three years later, many partners give the changes passing marks.

Tim Huckaby remembers the mood among his fellow Microsoft partners back in October 2003—and it wasn't good. "Most of the partners were kind of panicked," says Huckaby, CEO of InterKnowlogy LLC, a Microsoft Gold Certified Partner and provider of custom application development and network services based in Carlsbad, Calif.

That alarm stemmed from the first Worldwide Partner Conference, held that autumn in New Orleans, where Microsoft executives unveiled plans to completely revamp the company's partner relationships. For years, Microsoft had maintained separate offerings for solution providers, business solution resellers, training centers and other channel segments; each program had its own, often loosely defined system of regulations and benefits. But, partners learned at the event, Microsoft would offer one big program covering Microsoft's entire channel, effective in January 2004.

There were other changes as well. To earn Certified or Gold Certified status, partners would have to rack up "partner points" by, for example, submitting customer references and earning technical certifications. Partners with expertise in specific disciplines could showcase their capabilities by qualifying for competencies in fields such as networking infrastructure and data management. Meanwhile, a new Registered Member level, free of annual fees and prerequisites, would be made available to anyone willing to submit a brief profile and endorse a simple agreement.

To smooth the transition, Microsoft grandfathered partners in at their current levels, giving them until their 2006 re-enrollment dates to actually meet the requirements for Certified and Gold Certified status. Just the same, recalls Huckaby, lots of partners had the jitters. Take those new competencies, for instance. "Say you were bragging you had a big practice in information
worker [solutions]," says Huckaby. "Suddenly you had to prove it."

There must have been sweaty palms back in Redmond as well. Microsoft's channel produces 96 percent of the company's revenue. Tinkering with an asset that valuable is always risky. Would partners bridle at the slew of new rules and requirements? Could the its solution-oriented Dynamics partners co-exist peacefully under one roof with its volume-oriented "classic" partners?
Fast forward to 2006, when the mood is distinctly different. Three years after the launch of the new Microsoft Partner Program (MSPP), members generally give it a thumbs-up. Most partners have complaints and concerns, and some voice their opinions with something closer to contentment than delight. But Huckaby sums it up for many with this assessment: "So far, it's worked pretty damn well, " he says. "It's not perfect by any means, but all in all, it's been a great thing for the partner community."

Reading the Report Card

If partners were to issue a report card on the Microsoft Partner Program, here's how their grading might look:

Registered Member: Judging by the 280,000 firms that have signed on as Registered Members to date, the benefits of this entry-level MSPP tier far outweigh the low (as in non-existent, so far as fees are concerned) costs.

One Big Program: Herding all its partners under one tent has helped Microsoft nurture a culture of partners helping partners. But whether one program can successfully house both Dynamics partners and "classic" partners remains an open question. A-
Competencies: Partners who have earned competencies call them a great differentiation mechanism. Partners who haven't are often unwilling or unable to spare the resources necessary to earn them. B+
Partner Points: Partners hail the point system for replacing arbitrary performance assessments with uniform standards. But they also criticize the system's complicated rules and awkward management tools. B

One Big Umbrella
According to analyst Paul DeGroot of Directions on Microsoft, the Kirkland, Wash.-based research firm, Microsoft had no shortage of reasons for overhauling its previous partner offerings. First, many partners found the sheer number of programs bewildering. In addition to the Certified Partner program, the company's biggest, Microsoft maintained dozens of other, sometimes tiny, programs, which often had vague or overlapping missions. "There were literally partner programs that had exactly one partner in them," recalls DeGroot. Additionally, he says, rules were sometimes poorly defined and benefits inconsistently delivered: "You had situations where one partner would look at another partner who had announced some kind of special deal and [the first partner is] wondering, 'How do I do that?'"

Information overload was also a problem with partners complaining that they were drowning in partner program e-mail, much of it irrelevant. Meanwhile, for thousands of potential partners that were either unable to meet program requirements or unwilling to pay membership fees, the problem wasn't too much contact but too little. Such companies had no formal way to engage with Microsoft.

The new MSPP was a direct assault on these problems. To make partnering with Microsoft less confusing—as well as to promote cross-channel teamwork—there would be a single, integrated program for everyone, company executives explained. Partner points would provide a clear, uniform basis for measuring achievement and doling out rewards. Competencies would help Microsoft deliver more targeted information to partners, while simultaneously helping them highlight their skills. And the new Registered Member tier would give even the smallest companies a way to partner with Microsoft.

Now, nearly three years later, many partners say the MSPP's structural reforms have worked out pretty well. For example, bringing Microsoft's entire channel under one umbrella has unexpectedly spurred a sharp rise in cross-partner collaboration. "We're talking with more partners about more and different things, and from those conversations are coming more opportunities that we weren't seeing before," says Todd Shelton, president of Netdesk Corp., a Seattle-based Gold Certified Partner specializing in learning solutions. Same goes for Infinity Info Systems Corp., a Gold Certified Dynamics CRM reseller based in New York City. Infinity now regularly shares leads and projects with other firms. "It's a win-win for everybody," says Yacov Wrocherinsky, the company's CEO. Like Shelton and many others, Wrocherinsky gives his partner account manager (PAM) credit for introducing his company to firms with complementary skills and encouraging them to join forces.

Meanwhile, many Dynamics VARs who worried that joining Microsoft's vast army of other partners would erode their close-knit community say their fears have so far been unfounded. "Actually, Microsoft has gone out of their way to keep that culture intact," says Ed Cowen, president, CEO and sole employee of TTD Enterprises LLC, a Dynamics GP (formerly Great Plains) reseller and Registered Member based in Schaumburg, Ill. Microsoft, Cowen notes, continues to stage events such as the Dynamics GP Technical Airlift in Fargo, N. D., which he attended in April. The experience, he says, was exactly like attending a Great Plains conference back in the days before Microsoft acquired the company: "[There were] 600 of us from all over the world, and all we did was talk about what's going on with Great Plains."

However, DeGroot cautions that the jury is still out on how comfortable Dynamics partners will ultimately be in the MSPP. Microsoft, which has historically favored mass sales of individual products, has yet to fully embrace the Dynamics channel's hands-on, solution-selling model (for more on the Dynamics initiative, see "Getting Serious About ERP," June 2006). "We're seeing this type of wrestling going on where [Dynamics] is supposed to be a narrow, specialized channel or a broad, horizontal channel," says DeGroot. He warns that Dynamics partners won't be pleased if Microsoft goes the horizontal route: "It could lose a lot of those partners if it erases the difference between [Dynamics] partners and the general run of the partner program," he says.

A Lot of Benefits
Erasing differences is exactly the opposite of what Microsoft is attempting with its competency framework, which helps partners promote their distinguishing strengths. Huckaby remembers thinking when he first heard about competency requirements that, finally, Microsoft was offering partners a way to differentiate themselves.

Without some kind of categorization, Microsoft has too many partners for its local offices to keep straight, Huckaby argues. Grouping firms by specialization enables salespeople to more easily zero in on the right partner for a given opportunity. In InterKnowlogy's case, at least, the upshot has been more leads. "Doing the work isn't the hard part," says Huckaby. "Getting the work is the hard part. One way we get the work is by that legion of Microsoft employee s recommending us." Thanks to competencies, he adds, "that's dramatically better than it was three or four years ago."

Even so, convincing partners to invest time in qualifying for competencies remains an ongoing challenge for Microsoft. For example, Tim Donaldson, director of marketing at Gold Certified Partner ICONICS Inc., a Foxboro, Mass.-based provider of visualization software for manufacturers, sees strong value in competencies. But time and resource constraints have kept ICONICS from earning more than one, in ISV/Software Solutions, to date. "We look at that as more opportunity for us," says Donaldson.

By contrast, recruiting Registered Members hasn't posed much of a challenge for Microsoft. DeGroot remembers a Microsoft Partner Program spokesperson telling him in 2003 that the company hoped to attract 100,000 Registered Members. Today, according to Sherle Webb-Robins, general manager of the Microsoft Partner Program, there are a whopping 280,000. "What we're seeing is huge, huge [numbers of] partners coming into the Registered level," she says. "They're really liking it because it's more tailored to how they serve small-business customers."

The Pros and Cons of Points
Partners offer somewhat more guarded praise of the MSPP's new point system. On the plus side, they say, partner points have added consistency to a channel landscape that once sorely lacked it. In the past, says Huckaby, Gold Certified status "was a very arbitrary thing that someone at a district level would just anoint you with. The new system actually has metrics around these different levels of partnership." Netdesk's Shelton agrees. "The point system makes it practical to organize the investments that different partners make in a rational way," he says. "To that extent, I think it makes a lot of sense."

Still , many partners concur with Ronni Schorr, vice president of marketing and strategic alliances at InfoGenesis, a Gold Certified Partner and hospitality industry ISV headquartered in Santa Barbara, Calif. She calls the point system an effective way to measure partner achievement, but adds: "It makes things a little more difficult sometimes." Many MSPP members say that gathering and submitting proof of their latest achievements can be a time-consuming chore. And some partners question the valuations Microsoft places on those accomplishments. "Some points weigh a little more heavily than they should and maybe vice versa," says Huckaby, who would like to see fewer points awarded for technical certifications and more points granted for influencing a volume licensing purchase.

The Make-a-Wish List

Partners contacted for this article named a variety of channel priorities that they'd like to see Microsoft focus on in the future. Here are just a few:

Take the field to partner school. Ronni Schorr, of InfoGenesis, says she spends too much time educating Microsoft's field salespeople about what her firm does. She argues that Microsoft's partner program team should share more of that burden: "I'd like to see them strengthen that and have [field staff] be more aware of what partners bring to the table."

Think nationally. In the United States, every Microsoft sales office picks its own partners. Rafael Costa, of Vis.align, wishes there was more uniformity across districts. "Microsoft would benefit from more of a national level of support for specific solutions, "because the districts still spend quite a bit of time sorting through who are the right partners for this or that," he says.

Better yet, think globally. Tim Donaldson, of ICONICS, says that because his company's U.S. branch is Gold Certified, its overseas offices should enjoy Gold privileges too. "But they can't get that same level of support," he complains. That's a disconnect Donaldson would like to see Microsoft correct. — R.F.

Huckaby is careful to characterize such concerns as minor. But Darren Bibby, senior analyst for software sales channels at IDC, the Framingham, Mass.-based IT research firm, wonders whether dissatisfaction with the point system will become more widespread now that Microsoft's two-year grace period for fulfilling Certified and Gold Certified requirements has expired. "There might be frustration, because some partners may not be able to get to that Certified level any more," he says.

Assessing the Impact
The point system isn't the new partner program's only source of gripes. Many partners complain that the program's rules are too complex. "In terms of doing the work to understand how the partner program works, there are more moving parts these days," says Shelton, of Netdesk. Online tools are another common sore point. The first version of the MSPP's enrollment tool proved so unpopular, in fact, that Microsoft was forced to replace it less than a year after its debut.

Meanwhile, though Microsoft hoped that competencies would help it target communications more precisely, few partners have noticed a significant drop in the number of e-mails they're receiving. Donaldson, of ICONICS, receives about 20 a week. "And I'll be honest with you," he says. "I probably read one or two of them." Wrocherinsky, of Infinity Info Systems, gets more like 50 messages from Microsoft weekly—and says the number used to be even higher. The danger of such an e-mail avalanche, many partners say, is that security alerts and other critical messages may well get lost in the shuffle.

Still, despite such grievances, most partners feel they're getting more back from the MSPP than they're putting into it. Can Microsoft say the same? "That's an important question," notes DeGroot. "In many respects, I'm very impressed with the Partner Program. The question is, what actually has been the impact on the company's sales?" Not much, DeGroot suspects. "It's helped them, [but] it's not clear that the company's top-line revenue has been dramatically expanded," he says.

For her part, Webb-Robins says that the MSPP's pay-off for Microsoft has been substantial: "Our partner satisfaction has been going up, our customer satisfaction has been going up, and also Microsoft's revenue is still growing." All three trends, she maintains, can be at least partly attributed to Microsoft's new and improved channel program.

Rafael Costa, executive vice president for marketing at Vis.align, a Microsoft Gold Certified Partner and solution provider headquartered in King of Prussia, Pa., has no special insight into Microsoft's revenue or customer approval ratings. But Costa, whose company serves the manufacturing, wholesale distribution and consumer packaged-goods industries, can verify that the MSPP has improved at leas t one Microsoft partner's satisfaction. Vis.align has been partnering with Microsoft for four years, and "every single year they have improved what the relationship gives to us," says Costa. "I don't know if I'm the exception, but I'm very pleased with Microsoft as a true partner."