2008 Marching Orders

The new product launch wave hits early in 2008, so what's a partner to do? Microsoft insiders and partners point out channel opportunities and challenges in a year without Bill.

When people at Microsoft talk about 2008, the word "new" pops up a lot. You'll hear plenty about new product launch waves, new approaches to software delivery, new benefits for Microsoft partners. Above all, you'll hear about new opportunities for the entire Microsoft "ecosystem."

In this article, channel leaders from inside and outside Redmond's walls share their recommendations about where partners should focus their efforts for 2008 and beyond.

Prepare For The S+S Evolution

Darren Bibby
Senior Analyst, Software Sales Channels, IDC

2008 will be the year that Software as a Service (SaaS) and partners collide. With new offerings coming to market, Microsoft's own Software plus Services (S+S) strategy will hit its stride sometime this year. To stay ahead in the race, partners need to begin adapting to both the challenges and opportunities created by this new model. Consider the following steps:

Add business-consulting skills. SaaS eliminates much of the IT complexity that traditionally generated ongoing services work, so partners need to think about where else they can add value. Some savvy partners are realizing considerable revenues through business process consulting and user-training.

Aim for more, but shorter, engagements. SaaS is bound to drive customer expectations for shorter implementation cycles and faster evidence of business impact at reasonable cost, regardless of deployment model. Organizations will no longer have the patience for yearlong projects. Smart partners will look to promote faster, but iterative, projects.

Add hosting capabilities. It's not for everyone, but many companies have found new revenue opportunities through hosting both vendor services and their own complementary value-added offerings. This approach, typically known as a managed services provider (MSP) model, is clearly one where Microsoft will be focusing. Solutions providers may choose to partner with MSPs to avoid large up-front capital costs.

Re-think sales compensation. The economic shifts that may accompany SaaS (e.g. referral fees, smaller up-front deals) may also affect salesperson compensation. It may be difficult for salespeople used to earning commissions on larger one-time software license sales to shift to earning lower commissions up-front with recurring rewards over time.

Be aware of potential new rivals. Vendors may have been supportive in the past, but those selling SaaS applications may now become competitors. Partners should also be aware of new, alternative channels such as banks, law firms, marketing and travel agencies that certain vendors are approaching because of their strong existing customer relationships. Finally, consultancies with vertical or line-of-business knowledge will become more and more attractive to business users who are evolving into software-purchase decision makers.

Hedge Your Portfolio

Harry Brelsford

CEO, SMB Nation Inc.

A well-published technical colleague known as Tcat Houser starts one of his certification success books by noting that bulls get rich and bears get rich -- but pigs get fat. His point: Properly hedged, you can make money whether the market is up or down. In fact, real traders despise Goldilocks markets where everything is "just right."

How does that philosophy apply to Microsoft partners in 2008? Two words: mixed signals. On the one hand, there's the constant barrage of discouraging economic news: the credit crunch, a pending economic slowdown, volatile oil prices and more. On the other, you've got Microsoft touting 2008 as a huge year, with its server family creating plenty of new opportunities for partners.

Because things could go either way, it makes sense for Microsoft partners to "hedge their portfolios" for either occurrence. Ramping up for a big year of customer deployments in the second half of 2008 seems like a reasonable strategy. But what if adoption rates for the new server line are slower than expected due to market acceptance or general economic conditions? If the economy remains stable or picks up, do whatever you've always done to spur growth (it's easy to look like a brilliant leader when times are good). But if the economy stumbles, focus on the basics. In any downturn, spending on luxuries declines but spending for necessities stays the same. So if things slow down in 2008, consider investing more on marketing and possibly acquiring competitors to increase your market share, attracting more customers who need those necessities.

And if you're risk-averse, take heart: You can still focus on helping customers get more out of what they've already got. For instance, you may be able to boost your billable hours by training clients to make better use of their existing software.

Build Integration Skills
Paul DeGroot

Senior Analyst, Directions on Microsoft

Hockey great Wayne Gretzky once explained his success on the ice as a matter of "knowing how to skate to where the puck is going to be, not to where it's been." That's a good game plan for Microsoft partners as well.

But Microsoft itself is struggling with where it's going to be. Its huge investment in on-premise software makes Microsoft reluctant to jump with both feet into the new services-oriented world. Partners can't be certain about where Microsoft will go in 2008, but at least the company's slow adjustment to the inevitable reality of SaaS gives partners time to adjust as well.

That time would be best spent building integration skills. Expertise in maintaining Windows Server, a network and basic desktop applications -- once sufficient for small partners -- can no longer be regarded as a sustainable business.

The objective now: Deliver the most IT bang for the buck. Today's partner needs to be skilled in the interplay of Internet, specialty server and desktop products that can be tailored to fit the requirements of even the smallest customers. Tomorrow, those requirements will include not only a reliable network and locally installed software, but minimal costs, maximum flexibility and painless collaboration.

New services from Microsoft, and from its partners and competitors, will make all that possible. Consider Office Live. It costs less than Small Business Server, is always on and accessible from anywhere, and can be managed remotely. It doesn't do much out of the starting gate, but time spent exploring its nooks, crannies and programmable features can yield the ability to deliver customized offerings with great functionality and low startup costs. Every time you solve one customer's problem, you gain reusable -- and re-billable -- knowledge that separates you from the crowd still using last-generation technology.

Larger partners should focus on solutions rather than technologies. Setting up SQL Server or SharePoint will become commodity skills. Look at hosting them and creating value-add customizations. Alternatively, become an agent for a hoster, where you can create a recurring revenue stream and customization expertise.

Finally, remember that new technologies are likely to positively affect software acquisition and licensing costs, leaving customers with more money for training and customization.

Get Ready to Go
Robert Deshaies

Vice President, U.S. Partner Group, Microsoft

Microsoft and the partner channel have a promising year ahead, thanks to the new product launch wave. To ensure their success this year, partners should engage with Microsoft's readiness initiatives involving both technology information and sales and marketing training. All are designed to support the tremendous opportunities for partners in the advanced-infrastructure and business-intelligence spaces.

Microsoft has made a significant commitment to partner readiness, planning to reach more than 400,000 U.S. partners this fiscal year. We've trained more than 120,000 so far, and we anticipate training an additional 135,000 on Windows Server 2008, SQL Server 2008, Visual Studio 2008, Forefront and System Center. Meanwhile, more than 24,000 partners have attended TS2 events and webcasts on unified communications and the upcoming launches; we've also reached 15,000 partners via TechNet activities.

New possibilities abound for Microsoft partners in 2008, including software-powered communications and collaboration in Unified Communications (UC), and continued opportunities with Windows Vista and Office 2007. Partners can expect Microsoft to keep working with them to drive the value of Vista and Office in the marketplace through 2008.

Microsoft is refreshing all seven of its fiscal year 2007 "Ready-to-Go" campaigns -- and releasing 10 more campaigns. The choices include campaigns focusing on Windows Server 2008, SQL Server 2008, Visual Studio 2008 and UC, among others. We estimate that these campaigns will help partners reach more than 9 million incremental customers and generate 150,000 marketing-qualified prospects.

This year, U.S. partners will see Microsoft continue to increase Telephone-Based Pre-Sales Technical Support (TPTS) for Certified and Gold Certified Partners. We began revamping these services last year, and we believe they can help partners become even more successful in competitive sales situations in 2008.

Another improvement partners will see in 2008: streamlined communications. We've already changed our newsletter frequency from weekly to twice a month to reduce the "noise level" coming at our partners. We're exploring ways to simplify the partner portal and increase the level of personalization for serving users with role-appropriate content. And to help partners more easily access the right resources, we've consolidated relevant launch materials and programs in one location on the partner portal.

Take Five Strategic Steps
Mike Harvath

CEO/President, Revenue Rocket Consulting Group

As a growth-strategy consultancy that's worked with more than 200 Microsoft partners, we offer the following general recommendations for 2008:

  1. Fix what's broken in sales. Focus first on a technology solution set, second on geographical location and third on vertical or functional areas. Find the sweet spot where all three converge with the goal of becoming the #1 or #2 provider in your market. Specialize, focus and dominate is the lesson here.

  2. Fix new account acquisition. This hinges on doing well with the first step above. Many partner companies do a great job of holding onto existing clients but a poor job of finding new ones. To remedy that problem, we recommend a combination of these approaches:

    One-to-many: Sell to multiple buyers at once by, for instance, conducting seminars at your local Microsoft office, seeking out speaking engagement and offering webinars and white papers.
    One-to-one: Make appointments for yourself and your sales team with executive-level buyers of your services.
    Many-to-one: Use your extensive business network to develop a formal referral program, targeting sources (such as Microsoft staffers) who can help you reach the right buyers.

  3. Expand your service lines. Many partner companies focus too much on technology consulting and too little on dealing with customer business problems. Successful companies must offer services along the full system-development lifecycle.
       First, provide domain-specific management-consulting services early in your client relationships. This helps you deal with business-process optimization, define the business problem and assist with designing technology solutions that solve customers' problems.
       Next, provide the actual technical consulting and development solutions (as you already do).
       Finally, convince your customers to outsource to you the maintenance and support of your solutions.
       Many of our clients have successfully implemented what we call "applications managed services." This approach involves the outsourced maintenance of implemented solutions—and it usually comes with a multi-year contract.

  4. If you're a VAR, move towards selling services. With the shift to Software as a Service and other subscription-based models, the era of shipping software to clients and implementing it for them are quickly winding down. The good news: Microsoft solutions will continue growing more robust and complex with each release—and the need for knowledgeable services-based companies that can customize and build out those solutions will grow as well.
  5. Consider a merger or acquisition. Look for a company that's both a strategic and a cultural fit. But keep in mind that the best candidates may not be for sale -- and, for that reason, it might be appropriate to seek outside counsel for this step.

Manage the Coming Changes
Arlin Sorensen

President/CEO, Heartland Technology Solutions, Gold Certified Partner

2008 promises to be a year of major opportunities for partners serving the small to midsize business (SMB) space. We can expect 2008 to be our best year since the Y2K-driven madness of 1999.

Next summer, Microsoft will change the landscape with the release of Windows Essential Business Server. Windows Server 2008 and a host of other products will come to market earlier in the year. Meanwhile, Hewlett-Packard Co. has released its "Shorty" blade chassis, targeted to SMBs.

In addition to those opportunities, we need to monitor some other trends driving change in our industry in 2008 and beyond:

• Virtualization will mature and begin to penetrate the SMB market.

• Social networking will become an accepted way of doing business.

• Customers will increasingly expect continual connectivity to all their resources anytime, anywhere, using any device.

• SaaS, hardware as a service and hosted apps will begin to take hold in our space.

• Managed services will become more commoditized and customer expectations will increase.

• Business-process consulting involving approaches such as Six Sigma, lean manufacturing and others will begin to impact the SMB space.

Initially, it's easy to be overwhelmed by all these trends. But while these changes require channel partners to adapt, they represent significant business opportunity as well.

Our work is really about change management. These trends are happening now, and they offer us a real chance to make a difference as we guide our SMB clients through the uncharted waters ahead.

Ask -- and Answer -- the Right Questions
Ken Thoreson

Managing Director, Acumen Management Group Ltd.

To help you prepare to make 2008 your best year ever, Acumen recommends that you reflect on these questions:

• What specific issues and challenges are you facing in 2008?

• What assumptions did you make about the market in 2007?

• What assumptions did you make about your product offerings in 2007? Are they still true?

• What assumptions did you make about your company's capability in 2007? Are they still true?

• What went well in the past year?

• What didn't go well?

• What are your five key business drivers?

• What are five key metrics that help you know that you're on track?

• What business risks do you face?

• What are the new business opportunities that you can implement?

The answers will help you assess where you've been and determine where you need to head for the coming year.

Next, estimate your 2008 revenue or margins:

• from existing products/services to current customers

• from new products/services to current customers

• from existing products/services/ practices to new customers

• from new products/services/practices to new customers.

Knowing those numbers will drive your marketing campaigns, compensation planning and development of metrics.

A final recommendation: We often see partner companies failing because they don't emphasize consistency and accountability. We recommend that partners make sure they've got well-coordinated business models and reporting systems. At the same time, we remind them to focus on building belief in their companies and what they're selling -- and to have fun.

New ISV Resources
Naseem Tuffaha

Senior Director, ISVs, Worldwide Partner Group, Microsoft

With the upcoming launches of Windows Server 2008, Visual Studio 2008 and SQL Server 2008, ISVs have an opportunity to deliver genuine innovation to the their customers.

Heading into 2007, we saw that many ISVs who were first to take advantage of technologies such as Microsoft Office SharePoint Server 2007 gained competitive advantage in the market. A similar opportunity exists with this upcoming platform-product launch wave, the largest outreach to IT developers and professionals in Microsoft's history.

ISVs will find numerous Microsoft resources to help accelerate their efforts. For instance, they can leverage the Innovate On portal as a resource to help plan, build and test solutions.

But this year isn't just about the technology -- it's also about growing businesses through effective sales and marketing efforts. The Microsoft Partner Program has invested in numerous sales and marketing benefits specifically for ISVs. One example: a Search Engine Optimization service that helps ISVs optimize their Web sites so that they appear on the first pages of organic search results. Because research indicates that 84 percent of technology buyers begin their online quest for solutions using a major search engine, it's critical for Microsoft's ISV partners to have access to the best tools and analytics for driving potential buyers to their Web sites.

In response to feedback from ISVs about the challenges of building their channels, Microsoft has invested in something called the Channel Development Service. This service is delivered through a group of third parties with deep expertise in channel development and management. Microsoft ISV partners who turn to the service will get help in identifying, qualifying and recruiting the best possible partners for expanding sales coverage and penetrating new markets.

Look Ahead to IO and S+S
Allison Watson

Corporate Vice President, Worldwide Partner Group, Microsoft

Last year, I recommended that partners install and use Windows Vista, the 2007 Microsoft Office System and Microsoft Exchange. This advice came during the largest wave of innovation in our history, when it was especially critical for partners to experience the software themselves while starting to develop solutions for their customers. Now, as momentum for those products continues, we're in the midst of another amazing wave of innovation.

Last quarter, we launched Microsoft Office Communications Server 2007 and a host of new online services offerings, including Microsoft Office Live Workspace, Microsoft BizTalk Services and Microsoft Exchange Labs. In the first half of 2008, we'll release SQL Server 2008 and Windows Server 2008, the next generation of our Web and application platforms. Together, they'll drive huge partner opportunities in areas such as UC, security and systems management.

Today, my call to action for partners is to again use and get ready for the technology, build new solutions and take advantage of Microsoft's Infrastructure Optimization Models to help customers get the most value out of their investments.

In addition, I encourage partners to think about how the shift toward S+S will impact their businesses. As individuals and companies demand rich experiences bringing together the best of software and Internet services, partners must look at their own delivery models to identify the right combination of client-based programs, server-managed software and online services. Microsoft is 100 percent committed to a channel approach, and in July 2007 we unveiled a channel framework and supporting white paper to help drive consistency and transparency around the partner opportunity in these engagements.

My last piece of advice: Live in two time zones -- now and the future.

First, continue improving what you're doing today. Get trained for the current wave of innovation; take advantage of resources available through the Microsoft Partner Program.

Second, build S+S into your long-term plans. Think hard about how your business can adopt S+S to better serve customers and drive top- and bottom-line growth.

Although the shift to S+S won't happen overnight, it's clear that customers will expect increasing flexibility in how software and services are delivered -- and partners must be ready to meet their demands.

Stay Out in Front
Lee Pender

Senior Editor, Redmond Channel Partner, and Editor of the Redmond Channel Partner Update E-Mail Newsletter

So maybe after reading the other marching orders and poking around in the trade press, you're thinking that 2008 is the year to develop your SaaS strategy. If that's the case, you're already behind.

SaaS isn't what's coming in 2008; it's what hit in 2007 (and before, really), with Google Inc. and Microsoft both fleshing out their strategies and Inc. roaring ahead with its hosted customer relationship management applications.

Of course, SaaS isn't a done deal yet; there's still time for you to develop a profitable SaaS strategy. But it's important to make it a top priority right now -- especially if you work with SMBs.

However, RCP's real 2008 marching order is even broader and more basic than recommending that you get ready for SaaS. It is, quite simply: Keep up.

Hey, we know you're busy running your companies. But it's important to make sure that you don't get so caught up in the daily business routine that you miss the next big industry trend as it comes barreling toward you. That happens to plenty of companies -- after all, Microsoft nearly fell into that trap years ago with the Internet browser. Fortunately for Microsoft, it had the Windows operating system and plenty of other resources that it used to crush its biggest competitor. You're probably not so fortunate. You need to know what's happening before it happens, not when it's bearing down on you.

If you find yourself scrambling to get your SaaS plans in order, at least make sure that you're ready when the next trend appears on the horizon. Read RCP and the RCPU newsletter. (Did you really think you'd finish this package without getting that advice?) Check out industry news from other sources -- if you must. Go to Microsoft conferences; if you can't afford to attend in person, learn from them online. Pepper your Microsoft contacts with questions about what's coming from Redmond. Network with other partners in your area on your own or through peer organizations such as the International Association of Microsoft Certified Partners.

Be proactive; be on top of things; be ahead of the curve. Be anything but behind.

More 2008 Marching Orders

Get Serious About the Stack
Bill Anderson
Vice President of Marketing, ePartners Inc.

Dynamics partners should be sure they're taking the Microsoft stack story
seriously this year from both the messaging and delivery perspectives.

We've spoken for years about the vision and value proposition associated with Microsoft Office and business intelligence. But the fundamental go-to-market strategy for most resellers continues to revolve around operational efficiency and reporting improvements. Even partners with vertical or solution messaging tend to treat business intelligence and true office integration as complementary or add-on offerings.

Our clients depend on us to improve the decision process and provide visibility at all levels of the organization. The latest round of new products (especially Microsoft Office SharePoint Server and Microsoft Officer PerformancePoint Server) is creating greater customer expectations for us. It's not just about being comfortable with how these tools work, but effectively incorporating them in the design and development process.

Designing workshops to improve the solution development process is one great way to prepare. Retaining dedicated business intelligence architects, developing relationships with other partners that bring complementary expertise to the table and updating design methodologies should also be part of your 2008 game plan.

Keep Tabs on Three Key Trends
Bill Breslin
U.S. President, International Association of Microsoft Certified Partners
Director of Sales and Marketing, Insource Technology Corp.

As the New Year begins, we're urging our members to closely watch the following areas:

Software plus Services Microsoft will continue to strongly promote this concept, which may well cause some partners to experience some kind of paradigm shift. Partners may need to become especially agile about realigning their service offerings to maximize profits with Software plus Services. Watch, listen, learn -- and be ready to act.

Unified Communications Don't get left behind as Microsoft leaps into Unified Communications products and integration capabilities. This move offers partners tremendous service opportunities with customers ranging from small business all the way up to enterprises. And don't let the unfamiliar phone/voice aspects of this integration keep you from moving forward. Find and work with partners that can cover your technical gaps. Get into the UC space!

Restrictive legislation: IAMCP remains troubled by efforts promoting laws or regulations limiting the ability of federal, state or local agencies to choose technologies best suited to their business needs. We believe that limiting choice is anti-competitive and detrimental to a free-market economy; in addition, of course, it's potentially harmful to partners' businesses.

For those reasons, we will continue to monitor policy issues that could affect our members and help them evaluate and respond to potential threats. If you're concerned, we encourage you to get involved, too.

Focus on Migration
Mathew Dickson
Vice President/Product Development
Midmarket Storage Unit

CA, Inc.

In 2008, partners will need to focus on leveraging a variety of new Microsoft products, including Windows 2008, SQL Server 2008, Windows Essential Business Server and Hyper-V (Virtual Server). Partners will be able to sell migration services to upgrade or deploy these new Microsoft solutions.

Partners should also take the opportunity to offer complete recovery-management solutions to fully protect application data in these new environments as well as to ensure business continuity, meet aggressive recovery objectives and fulfill compliance requirements. 

Given SharePoint's continued importance to Microsoft users, protecting SharePoint servers and keeping their data highly available should be another partner priority. With the debut of Windows Essential Server, vendors need to provide integration between their products and the administration console so that midmarket IT staffs can more easily manage essential data-protection tasks.

Additionally, partners can focus on using Microsoft's Hyper-V solution as a disaster-recovery target, helping customers to cut costs and simplify management.

Reap the Rewards of Past Investments
Ted Dinsmore
Co-author, Partnering With Microsoft 
Worldwide Partner
, Exertus Partners

The Microsoft stack has been maturing. For instance, SharePoint is in its third release (with a service pack expected to come out at press time in December); this is a product that corporate customers are taking seriously. With a number of other Microsoft products now on the third release -- which, according to some customers' conventional wisdom, is when Microsoft finally "gets it right" -- the stack is now a stable in most IT shops.

So leverage the Microsoft stack in 2008 and build both your businesses and
savings accounts. The partner ecosystem has been building and investing for in Microsoft for a long time, and, in 2007 and 2008, we're seeing some rewards.

Areas to consider leveraging in 2008 include:

PerformancePoint The server seems to hold appeal for many midsize companies and even some larger enterprises.

SharePoint Many customers had SharePoint on their lists of projects for either 2007 or 2008.

Web sites With the coming of Silverlight and SharePoint's usability on Web sites, Microsoft will finally start competing with Flash in this space. It might be early to start thinking about this one -- but it's definitely one to keep on your radar.

Prepare for Grown-Up Managed Services
Charles Weaver
President, MSPAlliance

If you live and work in the information-technology field, especially in the partner channel, then chances are good that you've heard the message about managed services loud and clear.

What you may not have heard is that the customers are already coming -- and they're going to be coming faster and faster during 2008.

So if you've narrowed down your choice of managed service provider platform technologies, that's good—but it's no longer enough. By the end of this year, you should have a well-defined service-delivery process that's capable of scaling quickly while, at the same time, providing the highest possible level of customer satisfaction.

Bottom line: 2008 is the year that managed services come of age. Don't let the growth spurt leave you behind.


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