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New Business Models Raise Questions for Microsoft Partners

Based on its talking points at WPC, Microsoft considers these four business models as critical for moving its partners into the future.

The messages behind the messages at the Microsoft Worldwide Partner Conference (WPC) provide clues to where the focus areas really are.

I am frequently impressed by the way Microsoft will train its main message on what is next. It knows that it has a big ship and it takes a lot to turn it. So, the company has to make bold statements that are frequently ahead of where it actually is in the market and almost always ahead of where the revenue is actually coming from at that time. Steve Ballmer's cloud speech in 2010 is a perfect example.

The recently concluded WPC was red-hot on digital transformation, which is about helping customers build and execute on their own digital strategy and helping them make sense of the mounds of data that their systems have collected. The conference was littered with examples from GE on down of how companies used technology. In these examples, the Microsoft product names were frequently only noted in passing. This is a major shift for many infrastructure-focused consulting businesses and each of us will need to decide how we will change our business in order to survive or thrive.

Microsoft essentially promoted several business models for the future of its partner community. This list isn't exhaustive and I've combined several of them into my own categories, which won't match Microsoft's. My major categories come down to application development (including mobile and ISVs), Big Data (business intelligence), managed services and security services. You could also argue for another category of integrating new technologies, which could cover things like cognitive systems, virtual reality, augmented reality and so on.

Managed Services
This is typically the easiest place for an infrastructure partner to play in the future. Most of us are already doing this work. Microsoft argues that the Cloud Solution Provider program, by adding the ability to resell licensing, will allow partners to have a closer relationship with their clients. The challenge with managed services is that it, too, is headed for commoditization. Help desk is help desk for the most part. Microsoft is encouraging partners to focus their offerings around specific industry verticals and build the other solution categories that are discussed next. All of them pose difficult questions for infrastructure partners.

Security Services
This is most likely the next major area for a legacy infrastructure partner. We have to do identity work today as part of deploying Office 365. We all have installed the basic firewall/anti-virus for years. Is your business ready to get serious about security? Even if the answer is yes, will the smaller clients in our portfolio spend the dollars needed to actually do the work? Or will security project quotes collect dust until the customer actually has a security incident? Can we hire the right folks to be able to really coach and get our customers to adopt better security practices throughout their business?

Application Development
These partners have been around for a long time and many have thrived. I think there's tremendous revenue potential in app development. However, I wonder if I have the skill set today to recruit and manage a team of developers. Would we be able to build a competitive differentiation to actually win enough business to thrive? Is there a niche that can be exploited?

Big Data
Business intelligence, or BI, is such a sexy area of the market. I'm always impressed by the demos I see of these tools. The challenge, in the real world, is that there is a lot of data cleanup necessary before any BI tool can really do its job. Even things as simple as the ERP system listing the customer as ABC Corp. and the CRM system as ABC Corporation can cause massive headaches. Are we ready to invest in both the business analyst role needed for this and the data architect who can pull together the data sources successfully? How about the role of the person to actually go in and clean up the data? Once we have made the investment, can we keep the resource on staff?

I think the market need here is extensive. However, investing in this as a new area is scary. Can Power BI really compete against the more established big boys? How about the smaller niche players who plug right into an accounting platform of choice out of the box? Can we build expertise fast enough to do a great job for our clients?

Integrator partners have many things to think about right now in their business model. The possibilities are endless, but none are simple or easy.

Where are you thinking of taking your business model? Did I miss an option that you're passionate about?

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About the Author

M.S. Partner is a pseudonym for a former Microsoft U.S. field rep who returned to the channel and writes this column to help other partners succeed with Microsoft. Let M.S. Partner know your thoughts and questions about how Microsoft works at [email protected].