Ready, Set ... Wait and See

Services Ready is a good idea, but it won't work in the long run unless Microsoft gets over it's paralyzing paranoia.

Of all the things that Microsoft promised to do at the 2009 Worldwide Partner Conference, the most important may have been something it promised not to do.

In formally rolling out its Services Ready program for partners, the company said that once it turns a particular service offering over to partners, it will no longer offer it directly to customers itself.

It's not in Microsoft's DNA to not do something. In fact, its overactivity is one of the company's major weaknesses. Spooked partly by its own miraculous ascent from a tiny group of BASIC experts to the world's largest software company, Microsoft is always wondering who will perform the same miracle and send it toppling.

Combine that innate paranoia with gigantic cash flow, a pliant board and shareholders with endless patience, and you get a company that sinks billions -- compounded, we're probably talking $30 billion by now -- into losers such as online portals, game consoles and Internet search, which have nothing to do with the company's core software business. Redmond believes it can do anything better than anyone else -- and at the same time fears that the previous statement isn't true. Consequently, the company never asks, "Why should we do that?" Even if Microsoft did ask the question, the answer would always be, "Because someone else might."

But when that "someone else" is partners, there's a problem. On one hand are Microsoft's beliefs that it can provide enterprise software services better than anyone and that partners may not be energetically promoting great software, like Windows Vista. On the other hand, when it comes to feet on the ground, Microsoft is seriously outgunned by competitors like IBM and Oracle. Microsoft made the choice a long time ago to leverage a large partner community rather than invest in a direct sales force capable of serving about 40 million business accounts worldwide, many of which generate only a few hundred dollars a year in business.

Now the company can't go back. And it shouldn't waffle. That's been the soap opera for at least the last five years: services executives promising that the company wouldn't compete with partners except in the most extenuating circumstances. This was followed by recognition that Redmond was indeed ramping up services and turning them into a profit center.

Partners who lived by the maxim, "watch what they do, not what they say," saw a fairly consistent pattern: a services group ready to jump in whenever it perceived a gap between what it thought customers should be demanding and what partners should be supplying.

The story this time is as follows: Microsoft will start with bleeding-edge services -- typically the latest, untried and riskiest products or solutions. It will collect the experiences it has gained from the first dozen or so major engagements. Then, the company will "harden" those experiences into templates that partners can use -- after intensive training and some hand-holding from Microsoft -- to deliver the services themselves. Finally, Microsoft will tell customers who ask for services for a similar project to "call a partner."

Services Ready does have one new and potentially problematic element. It includes a lot of marketing and sales material. Microsoft's message to partners is: Responding to requests for proposals isn't enough -- you need to be our sales force as well as our services force.

Overall, Services Ready is a good idea. Every time Microsoft Services takes on an engagement that a partner's capable of doing, it robs a partner not only of revenue, but of experience and confidence. This scenario can be devastating enough to convince some partners to turn to competitive solutions where the risk of competition from the vendor itself may be lower.

But Services Ready won't work in the long run unless Microsoft can convince not only partners, but itself, that partners can perform and Microsoft can design a program the helps them do so. If the program doesn't meet its initial goals, Microsoft will need to commit to fix the program to make it work for customers and partners, rather than hop aboard the pendulum and ride back to its usual starting place.

About the Author

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