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Microsoft Standardizing Partner Incentives, Paying Points for Gold

Earlier this month, we covered a Microsoft partner subsidy that effectively returns 68 percent of first-year BPOS revenues to partners. It's an eye-popping figure, but the rub is that by the time most partners figure out how the incentive works, it will have expired.

A California-based partner raised the issue with Microsoft channel executives during the Microsoft Partner Network Interactive Leadership Forum on Thursday.

"I have been sort of frustrated at some of these incentives that it takes a full-time person to just keep track of. I'm wondering why can't it be simpler. I feel like we are coupon clipping every Sunday, trying to figure these things out. It just needs to be one number for the entire year. I mean, can we do that?" the partner asked during a call-in portion of the webinar.

"I have to figure out if we mix a SQL Server with a Windows Server and do it between July and August, we get a certain amount off if you include another one of this or another one of that. It's really confusing," the partner said.

While the Business Productivity Online Services subsidy is a recent example of a fast-expiring promotion, the caller's complaint applied more to server-based programs like the U.S. Big Easy incentive, which relies on partners selling complicated combinations of server products.

Ross Brown, vice president of Microsoft Worldwide Partner Sales, acknowledged the issue during the forum.

"One of the things that you're rightly identifying is that on server-based products, short-term promotions aren't really effective," Brown said.

"We've been trying to...create a more standard framework around our channel incentives, and really try to limit the amount of short-term promotional activity that's going on in lieu of more structured, stable programs that [are] consistent both in terms of how you claim and the qualification process as well as consistent in the economic benefits," Brown said. "It's taking us some time to get our arms around all of these local activities that occur that are more promotional in nature."

Brown said a member of his team, Allen Boone, has created a Channel Incentives Governance Council inside Microsoft to get a handle on the rate of change and the types of programs that subsidiaries are creating. The goal, Brown said, is "to help limit...unproductive churn."

Another mention of incentives in the online forum covered efforts to drive solution incentives to gold competency partners who are not necessarily doing the licensing transactions.

"The solution incentive program...puts real meat behind the gold competency. It starts to provide additional revenue opportunities for partners that are able to go off and achieve that gold competency," said Jon Roskill, corporate vice president of the Microsoft Worldwide Partner Group.

Brown said pilot versions of the solution incentive program have been running in the United States and other Microsoft subsidiaries.

"The transaction may occur through a LAR or another partner. You can earn up to 20 points on the license value for being that solutions partner that drives it. We've rolled this out on our management and virtualization stack, and in some subsidiaries we've rolled it around some other areas, such as SQL BI and [we're] looking at Windows 7 deployments," Brown said. "We intend to go broader with these as we evolve our incentives program, and being at the gold competency allows you to participate in those incentives."

Also on Thursday, Roskill may have cleared up something that's had me scratching my head for years. Almost every year at the Microsoft Worldwide Partner Conference, Chief Operating Officer Kevin Turner talks about Microsoft's investment in the channel. It's gone steadily upward to $3.3 billion at WPC 2009 and Microsoft used a $4 billion figure this year. It was mysterious to me because one Gold Certified Partner after another had told me how drastically their market development funds have dropped in recent years. I've asked Microsoft spokespeople repeatedly what the amount referred to and no one could tell me or find out.

During the webinar, Roskill said, "Over $4 billion worth of channel incentives is shaped around the programs that we put into market." Ah. Maybe the figure refers to incentives.

(Ed's Note: For more news from the Microsoft Partner Network Interactive Leadership Forum, click here.)

Posted by Scott Bekker on March 15, 2011