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Channeling the Cloud

Microsoft CSPs Expecting Less Conflict, More Azure Consumption

A newly refocused Cloud Solution Provider program is giving partners hope for better relationships with Microsoft field reps.

Microsoft wants to drive more Azure consumption.

Considering revenue growth has practically doubled every quarter for some time, the Azure business might not seem like a huge problem. It's not about trying to pull ahead of Amazon Web Services (AWS), which by far is the largest cloud provider. Despite the growth of Azure, clearly the No. 2 global public cloud, Microsoft needs to ensure that Google, Salesforce.com, IBM and others keep their distance.

For Microsoft, what's perhaps even more important is that the dominance of AWS doesn't become insurmountable.

The critical strategy for Microsoft is bringing its existing on-premises customer base to Azure, ensuring they don't move to AWS or another cloud. Microsoft's path to bringing more customers to use Azure infrastructure and platform services is by having its partners help drive consumption, which is part of the reason the company launched its Cloud Solution Provider (CSP) program a few years ago. Designed to bring partners and field service reps together to jointly offer cloud solutions to large enterprise customers, the CSP execution was flawed. When jointly meeting with enterprise customers, partners and Microsoft field reps had conflicting agendas.

"When we started offering Azure support and resell on the CSP program about two years ago, we quickly learned that going out and talking to the Microsoft field about working together simply wasn't going to work all that well just because they were incented to sell Enterprise Agreements and measured on build revenue from those Enterprise Agreements," says Jeff DeVerter, CTO of the Rackspace Microsoft cloud business. "Even when we would go in with a support-only message, there was concern about us co-opting their licensing sale."

Wendy McQuiston, director of Microsoft professional services at Logicalis U.S., agrees. "They weren't highly motivated to cooperate and participate with the partner community," McQuiston says. One outgrowth of Microsoft's major partner organization reorg back in July was a refocused CSP. Logicalis and Rackspace agreed to give it another shot, announcing re-upped participation in a revamped CSP.

"I really believe that Microsoft is embracing the partner channel and Microsoft also wants to make sure because the partner channel has the greatest visibility into what the customers are doing," McQuiston says. "If we're truly working with our customers and acting as a trusted adviser, then we should understand their environment, probably better than the [Microsoft] account manager who shows up once every three years to do a renewal on a large agreement. They're embracing that."

Both say it's too early to declare victory, but left Microsoft's Inspire partner conference back in July feeling much more optimistic. "Now that the field will be measured on consume revenue, I think we are well-poised to have a very fruitful relationship and really help drive some consumption," says DeVerter.

There's more at stake for Microsoft and its CSPs with the release of Azure Stack, the new hyper-converged infrastructure appliance that lets partners and customers stand up native Azure instances. Azure Stack will play a key role in the next wave of consumption.

More Columns by Jeffrey Schwartz:

About the Author

Jeffrey Schwartz is editor of Redmond magazine and also covers cloud computing for Virtualization Review's Cloud Report. In addition, he writes the Channeling the Cloud column for Redmond Channel Partner. Follow him on Twitter @JeffreySchwartz.