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Half of Microsoft Partner Incentives in 2016 Will Be Cloud

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Microsoft will accelerate the ongoing shift of its partner incentives to increase the focus on cloud-related business activity in fiscal year 2016, which started at the beginning of this month.

Partner incentives are one of Microsoft's biggest levers for aligning partner behavior with company goals. One of the company's biggest stated goals this year is getting more partners to do more business in the cloud.

Microsoft COO Kevin Turner told partners in his Microsoft Worldwide Partner Conference (WPC) keynote on Wednesday that Microsoft wants to "own" the cloud, given the company's unique positioning in both consumer and business service offerings that span IaaS, PaaS, SaaS and hybrid cloud.

Despite a count of 75,000 partners transacting cloud business with Microsoft in FY15, Turner said, "We don't have enough cloud partners at scale in the company today."

Turner said nearly half of Microsoft's total partner incentives for fiscal year 2016 will go for cloud-related work. In a slide (see below), Turner showed the steady upward march of that percentage starting with 2013.

[Click on image for larger view.]

As a percentage of total partner incentives, cloud incentives accounted for 10 percent in 2013, 19 percent in 2014 and 32 percent in 2015. For fiscal year 2016, that figure jumps to 49 percent, which is the biggest percentage-point increase over the entire period. The overall size of the partner incentive pool was not shared in the keynote.

The focus on cloud incentives accompanies another major change Microsoft is making to encourage partner participation in cloud this year. The other is the broad market rollout of the Cloud Solution Provider (CSP) program (see RCP's July cover story for details.) That program allows partners to both bill their own customers directly and to bill them on a monthly, rather than annual, basis.

In an interview, John Case, corporate vice president for Office marketing, said Microsoft expects the broad rollout of the CSP program to radically expand the number of partners transacting cloud business with Microsoft this year.

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Posted by Scott Bekker on July 15, 2015 at 12:45 PM