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In-Depth

Marching Orders 2017: What Microsoft Partners Must Do in the New Year

Big ideas from channel experts to help Microsoft partners succeed in 2017.

What should you do to make the most of technology business opportunities in 2017? We put that question to a number of channel luminaries, including top Microsoft channel executives, consultants, Microsoft partners and other regular Redmond Channel Partner magazine contributors. They provided a lot of ideas from digital transformation to focusing on managed services to improving sales processes. Hopefully you'll find something here that sparks a new and profitable direction for your company in the year ahead.

Lead the Digital Transformation
By Gavriella Schuster
Corporate Vice President, Worldwide Partner Group, Microsoft

Cloud technology is no longer a nascent trend -- it's the new normal. Last spring, IDC research found that 80 percent of businesses are deploying or fully embracing the cloud, and that number will only continue to grow.

The opportunity in 2017 and beyond for partners is huge. In fact, IDC also found that public cloud services spending is forecast to hit $195 billion by 2020, with greater cloud spending hitting $500 billion in that same timeframe.

The numbers are exciting to see, but here's the amazing thing: Even that is just a start.

Customers are fundamentally changing how they use technology to drive their business forward, bringing technology out of the back office and embedding it in every aspect of their business, moving IT spend from OpEx to COGS. Every business will become a digital business, and that's digital transformation.

Customers are building their own visions of what technology can do for them, and they're looking for partners who can bring that vision to life. They're looking for partners who can deliver a full-service solution, not an individual product or project.

For partners, the opportunity lies in leading, not following, that digital transformation. I see three areas where every partner can focus in 2017 to put themselves firmly in the driver's seat.

Specialize
When technology is everywhere, the possibilities for specialization are virtually endless and can be overwhelming. That's why it's so important to define the unique core of your business -- what you alone can offer to customers that no one else can.

Maybe your unique core is a specialized app solving a specific business need. Maybe it is unique IP that enables multiple applications to work together. Maybe it's a connected solution that pulls from multiple online services. Maybe it's the managed service that you've tailored to a certain industry. Specializing isn't just about writing unique code.

If you're not sure where to start, look at the industries you've worked in, the types of solutions you've perfected, or the business model you've built. There are opportunities in the work you're already doing to tease out your unique differentiators that build on the business you have without starting from square one.

Partner Up
One great way you can build a unique offer is by partnering with your peers. As you look to modernize sales and marketing and evolve your modern partner capabilities, consider partnering to specialize, verticalize, for IP opportunities and for building out your managed services. The first step is to just start having the conversations.

If you're an ISV or app builder, consider all the ways you can go to market without necessarily having a direct conversation with a potential customer. We're here to support you in thinking through your value prop, building your brand and creating a digital marketing strategy, all of which make you an attractive business partner for a solution aggregator, especially if you're plugged in to our Cloud Solution Provider (CSP) model. Moving existing on-premises apps to cloud or hybrid and working toward certification on our marketplaces are also great ways to get in front of customers and potential business partners.

Get Digital
Leading digital transformation will be difficult if you're still operating in the past. Your own business may be ready for a shakeup to meet the demands of customers of the future. Are you and your employees ready to help customers capitalize on the next generation of business?

Make a plan to keep your team's skills current. The pace of change is so fast, and skills that were core to the job even a few years ago just aren't relevant anymore. We're releasing new courses on our learning platforms, including Partner University and Microsoft Virtual Academy, all the time. Make sure you're equipped to handle any scenario a customer can imagine.

Earlier this year, we sponsored a series with IDC all about the four pillars of modern, profitable partners. If you haven't already reviewed those e-books for ways you can start your own digital transformation, I encourage you to visit aka.ms/modernpartner to check them out.

Invest in Employees
By Eduardo Kassner
Chief Technology Officer, Worldwide Partner Group, Microsoft

Organizations across all industries are recognizing the value digital transformation can have in propelling future growth and it's driving the explosive demand for cloud-enabled solutions. With Microsoft Azure premium services revenue, we have seen triple-digit growth for the last eight consecutive quarters. In 2017, it will be more important than ever to make investments in cloud training for your most valuable resource, your employees.

We want to make it as easy as possible for every partner to get the skills they need to address the growing market opportunity. To help close the skills gap in the high-tech industry, at our Worldwide Partner Conference this past July, we announced the Microsoft Professional Program (MPP), the first of its kind to offer employer-endorsed, university-caliber curriculum for professionals at any stage of their career.

MPP is a Microsoft-led initiative that provides professionals with real-world knowledge and hands-on experience to grow their skills in critical fields. All courseware is available on the edX platform. The initial curriculum, designed with input and participation from industry leaders, universities and our learning partners, is focused on data science to provide critical skills and experiences in this rapidly evolving industry.

In September, we built on the program by announcing open registration for the data science track of the MPP. Whether employees are just starting their career or are looking to diversify their skill set, these courses teach the skills and provide the practical experience needed to be successful.

To help drive awareness of training achievements, in October, we announced that we have partnered with Pearson VUE to make digital badges broadly available for Microsoft Certified Professionals (MCPs). Any person who has passed a selection of exams or earned designated certifications will now have the tools needed to share achievements more broadly and attract new business.

Whether you are just getting started in your own business transformation, are looking to differentiate yourself as an expert, or are proficient in another cloud solution and are looking to explore ways to become a multi-cloud expert to address any customer need, this training will help you become more profitable with the cloud.

In the coming months, we will share new investments we're making, such as Big Data engineering and front-end Web development, to help you address the growing market opportunity and capitalize on the explosive cloud demand in 2017.

Reconsider Cloud Managed Services
By Aziz Benmalek
Vice President, Worldwide Hosting & Cloud Services, Microsoft

We truly have "crossed the chasm" and are in the "early majority" stage of the cloud-adoption curve. Cloud is disrupting traditional IT faster than we think, which means increased opportunity for cloud service providers.

One of the biggest opportunities for partners moving into 2017 is helping customers navigate the superior functionality of cloud offerings, and managing their production workloads running in the public cloud. In fact, 451 Research indicates that cloud managed services are projected to be a $43 billion market by calendar year 2018, growing 60 percent faster than infrastructure-only services.

Whether your primary business model is IT consulting, systems integration, managed IT services, datacenter hosting, outsourcing or value-added resale, cloud managed services give you an opportunity to add a new, higher-margin business line that can provide a more stable, steady stream of recurring revenue.

Managed services are not a new business model. For more than 20 years, large enterprises have relied on service providers to manage their IT assets. Whether they're an outsourcer, a remote monitoring and management (RMM) provider or a managed IT provider, service providers have been managing their customers' workloads -- either in their own datacenters or those operated by their customers. Cloud, however, requires a new method of management because of its focus on scale, elasticity and automation. For CIOs, cloud represents a paradigm shift in the way they think about embracing IT, and they are demanding a new way to think about data governance and security.

The hyperscale nature of cloud provides a completely new meaning to scalability, elasticity and resiliency, and has redefined how applications are architected and delivered. Device and data proliferation means customers can do so much more with their IT assets, with cloud providing the computing resources to do so. The pay-as-you-go model provides a fail fast, agile method of app development. In fact, DevOps has completely changed the way applications are developed and maintained.

In addition to the benefits provided to customers, managed services ensure you have a constant revenue stream as opposed to a project-based method. With the consumption-based model, service providers are providing monthly billing to customers for managed services packages and adding to the packages over time as the customers' cloud needs grow. Margins are typically higher, too, compared with professional services and just reselling services. Managed services also provide the opportunity to diversify a service provider's portfolio and add new offerings like cloud dev/test, cloud backup and data recovery, cloud-native app design, et cetera.

Amidst the sea change the cloud has enabled, MSPs have a huge opportunity to help customers transition to (and embrace) this paradigm shift in technology by guiding customers in all aspects of their cloud journey. From consulting to migrations to operations management, customers rely on cloud MSPs to show them all the benefits that come with cloud adoption. As a cloud MSP, you have the opportunity to truly engage with customers to meet their needs end to end. Whether around cloud migrations or net-new app development in the cloud, you have the opportunity to truly become a trusted adviser.

Last year, Microsoft launched the Cloud Solution Provider (CSP) program specifically for partners looking to tap into this booming opportunity. This year, we hope you'll join the more than 500 partners providing managed services on Azure via the CSP program.

Prepare for a Correction
By Reed Warren
Vice President, Revenue Rocket Consulting Group

Harry Truman was fond of saying how much he yearned for a one-handed economist. He grew weary of economists offering one prognostication, then a minute later saying, "On the other hand," and proffering yet a completely different scenario.

We're going to offer a one-handed prognostication for 2017/2018 -- the market could very well see a pullback in demand, thereby setting off a technology correction.

It seems the timing is about right. We are not looking at a correction the likes of 2000/2001, or of 2007/2008. It appears to us that the market going forward will be characterized more by a sustained period of incrementalism, rather than some new significant, unforeseen innovation that reshapes the market.

The IT services firms that will prevail over the next 12 to 24 months will be the top-quartile performers possessed of an arsenal of cash, low debt and a fortified balance sheet.

In addition to a healthy balance sheet, these top-performing companies will be those that have successfully transitioned to a process orientation, and with significant IP initiatives. They have focused their business on the intersection of a technology and an industry. Having such will put the company in a better position to win over new customers relative to those less endowed, and to also be in a more advantageous position to make attractive acquisitions.

History has proven time and time again that successful companies look at recessions or pullbacks as the best time to invest in their business, such that they come out the back end in a better position than they were at the outset.

For 2017, think profit.

P2P as a Practice Is the new Black
By Per Werngren
Chairman, International Association of Microsoft Channel Partners

Remember a few years ago when Microsoft partner account managers or PAMs (now called partner sales executives or PSEs) asked partners to sign up for new competencies? If you tried to resist, you often had a problem convincing your PAM to agree.

But times have changed. We see that the most successful partners are the ones that specialize in doing only a few things -- and doing them well. Less is more!

The "jack of all trades" era is over, and by specializing and being great at something -- rather than mediocre in everything -- you will see your margin go up and your market share increase. It will also make it easier to recruit because if you're running the best team in your area, you can be pretty sure that the best people will want to play for you.

We see a wave of consolidation in our industry and I foresee that this will continue. Buyers are eager to pay top dollar for great companies that are successful and well-known for their specialization. Generalists are not what they are looking for unless you have massive scale, but that's an exception reserved for only a very few.

This is clearly reflected in valuations. Having sold my specialized cloud hosting company this year, and having seen several of my good friends doing the same, I speak from experience.

Here's where "Partner-to-Partner (P2P) as a Practice" is needed. If you want to serve your customers well but still be specialized, then you will see that by working with trusted partners you will be able to increase your profits and keep your customers even happier. You will be part of a team of specialized companies catering to your customers' needs and that will ensure that you can keep your narrow specialization but also be part of delivering projects with a much wider scope.

P2P as a Practice is clearly in fashion as more and more partners realize that it makes great business sense for many reasons. Microsoft is embracing P2P as Practice, PSEs are helping partners specialize, and the IAMCP is educating and connecting partners.

A few years ago I worked with IDC to create the "P2P Maturity Model" (PDF here) as a framework for structuring P2P activities. Stay tuned to RCP in 2017 as I share insights about that framework and other tips for driving success in your P2P activities.

Sell Outside of IT
By Keith Lubner
Managing Partner, Channel Consulting Corp., and Co-Founder, Channel EQ

Our company develops ridiculously good training content and programs for the channel. One of our most popular programs is called Business Guidance Selling. The essence of this course is transforming salespeople to sell outside of their comfort zones and into other areas beyond the IT department.

In 2017, your ability to excel will be determined by your ability to sell to all the other stakeholders within an organization that now have budgets to spend on your products and services.

You can thank the cloud for this shift in the market. More applications and services now exist for more people within an organization. Couple this with the cloud allowing companies to shift spending buckets from CapEx to OpEx and you create more buyers in more departments within more companies. The problem is, for the most part, partner sales teams have been focused on selling to the IT department.

To jump start your transformation and your capabilities, focus on the following in 2017:

  • Turn your salespeople into consultants. We mean this figuratively, not literally. Selling to other areas within a business is different. Therefore, your people need to think and act differently. They need to do better pre-call planning. They need to ask better discovery questions. They need to start making recommendations to the prospect on areas for improvements or cost reductions.

  • Because this transformation is not easy (but required in order to make the leap into those other areas), you need to arm your salespeople appropriately. This means training the salespeople on market "pains" and "requirements." This means educating your technical staff to ask more questions about other areas within the business. This means learning more techniques to prospect into the layers of an account.

  • The seller/buyer relationship has changed dramatically, and in order to prosper, you must come to terms with this reality. Buyers know more about your products and services before you ever pick up the phone or walk in the door. You need to differentiate and the only way to do that is to shift your mental approach to the account. Instead of pitching a product, start thinking of presenting a solution. Instead of being reactive to a prospect, become proactive in giving advice. Elevating your abilities will help you rise above the competition and keep you from falling into the control of the buyer.

Think and act differently in 2017, and you will develop more robust pipelines by selling to more people outside of the traditional IT.

Execute Brilliantly
By Ken Thoreson
President, Acumen Management Group

Thinking about 2017 versus the past two years, I envision that most Microsoft partners will begin propelling their organizations to new levels of success.

In most cases, the business models have already been worked on during the past two years, and if those partners have focused on the right actions, 2017 should be highly profitable.

During the past two years, we have worked with many organizations on their partner cloud acceleration strategies and business-velocity tactics. In the new year, the words I would use to describe partner marching orders would be: "Brilliant Execution: Finding Leverage, Fine-Tuning Business Models and Enhancing Management/Sales Training."

Brilliant execution means a careful and consistent focus by management on every aspect of your business. Ask the following questions: Is it working? If not? Why not? And what will you do to fix it?

Fine-tune your business models; building KPIs is essential for tight management systems that will work well in the new environment. Margins have changed, so costs and productivity must be managed more carefully. You must know what levers you can pull to alter your profits.

Finding leverage means knowing the ways to extend your sales team, your marketing programs and your business resources without simply adding more staff. Check out the Microsoft Community Connections program, for example.

Enhanced training means raising the bar on management/leadership and sales. After 19 years of consulting with Microsoft partners, I know that those partners that focus on excellence from their teams exceed their goals and win market share. Check out ChannelEQ.co as an example of how to improve performance.

Differentiate To Survive
By Matt Scherocman
President, Interlink Cloud Advisors

Cloud gives partners the ability to sell anywhere in the world. With that, some of our key differentiators as partners are changing in the eyes of the customer.

My recommendation for 2017 is to focus on how your business is going to set itself apart from everyone else.

Here are the simple steps:

  1. Identify why customers purchase from you already. Have you actually asked them? I can tell you that I am asking frequently and continue to be surprised by some of the answers.

  2. Identify what makes you different. Where do your approaches or methodologies stand out? Can you make your "Big Mac" the same every time from every location or consultant?

  3. Where are you going to invest? Is it in building out a SharePoint solution that targets a vertical, or an offering that has an easy-to-understand pricing model, or software you have written?

  4. How will you market your differentiator? Fundamentally, a differentiator is only important if the prospect or client knows about the differentiator and considers it valuable to their business. So, our marketing has to be in their language and has to talk about how our solutions solve their business challenges.

It used to be about having expertise available. With the Internet, however, knowledge is available at the click of a button. So, in 2017 what client business challenges will your business solve better than anyone else?  

Digital Maturity Isn't Generational
By Jeff Hilton
Founder, Alliance for Channel Success

There is a big drive for organizations to achieve greater digital maturity.

When organizations use technology-led initiatives and digitally managed processes to drive performance, they gain strategic assets and distinct competitive and effectiveness advantages. They gain new ways of finding, engaging and working with clients and co-workers.

Forward-looking business leaders are aware that at some point, digital immaturity becomes a distinct disadvantage.

This is a perfect practice area for partners. Partners can leverage their technical expertise to help organizations find new ways of working with the technology in place and guiding them with implementing new technologies.

Partners can develop this practice by learning from their own internal use of technology. How do you use the technologies you sell? How do you make your organization effective and efficient? How can you take these insights out to your clients?

Don't make the mistake of thinking an organization's ability to achieve this kind of change may vary with the age of their workforce.

There are about six generations living in the United States today with baby boomers, Generation Xers and millennials making up the majority of the population and the workforce. All three of these generations are very familiar with the current stew of technologies. We're already experiencing a digital transformation, along the way to digital maturity.

Being born into a digital world or being a high-volume user of digital technologies doesn't confer technical expertise or digital maturity. It's much more than using technology; it's the ability to innovate with it. And this ability is readily found among all the generations in the workforce.

Your role as a partner is to integrate new technologies and processes that enhance your clients' ways of working across all generations. Get this right and you have a killer practice in the making.

Sharpen that Post-Infrastructure Strategy
By Howard M. Cohen
Columnist, Redmond Channel Partner magazine

My "marching order" for all Microsoft partners is stop and ask yourselves the hard questions. Realize that the relationship between you and Microsoft is changing rapidly, and you need to face the brutal truth of those changes and adapt.

Where will you and your company go?

At its Worldwide Partner Conference this past July, Microsoft introduced the Microsoft Professional Degree (MPD) program. After it was pointed out to Microsoft that this training did not lead to a legitimate "degree," that was changed to the Microsoft Professional Program (MPP). The first course offering is in Data Science and, indeed, this is an exciting, lucrative and high-demand direction that partners may choose as they abandon their infrastructure businesses. More courses are yet to come.

Fewer and fewer customers will be standing up servers and storage on their own premises as they migrate to the cloud. What will replace those sales in your business? Customers still seek experts who can help them:

  • Manage their IT environments for greater efficiency and lower cost.

  • Manage their user experience for greater consistency and robustness.

  • Manage their security and regulatory compliance.

  • Manage their data and related analytics.

In RCP next year, I'll be focusing on viable alternatives for transitioning partners.

  • Microsoft has finally embraced open source. We'll be exploring why and what incredible opportunities are available to partners who manage open environments for their customers.

  • We'll explore other major platform partner programs. Even those of you who are enjoying success in Microsoft's Cloud Solution Provider (CSP) program will need a much bigger toolkit for satisfying your customers.

  • We'll explore how you can go that alone, or what partners you can engage to accelerate your process.

It's time for a business-model transformation. Now that we know why, let's figure out how!