Redmond Diary

By Andrew J. Brust

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Treating Small Partners Right

For companies that are Microsoft partners, there has been change in the wind for some time. Ever since last year's Microsoft Worldwide Partner Conference (WPC) in New Orleans, Microsoft has made it clear it thinks that it has too many partners and that those partners are too small.

Since WPC '09, the Enterprise and Partner Group (EPG) has focused strongly on Global Systems Integrators (SIs) like HP and CapGemini, and much less on smaller or regional SIs. From WPC '09 onwards, Microsoft said smaller partners would need to be credentialed in specific competencies, with much more stringent requirements than before.

The days of scraping together certifications and customer references, for projects which largely fell under specific technology areas, in order to earn a generic Gold Partner designation, are just about gone.

The New Normal
In theory this will focus Microsoft's Partner Account Managers (PAMs) more efficiently. They'll be spending more time with fewer partners, and Microsoft will get more out of those partners. Global SIs tend to sell software licenses with their deals; and now even smaller partners will need to sell, or influence the sales of, licenses in order to earn or maintain their credentialed competencies.

This will, of course, make it harder for specialist application development consultancies to work closely with Microsoft. Their customers tend to have the licensed products in place already; that's why they call these shops in to develop apps for them. In fact, many smaller shops do dev work for business units within large enterprise customers. These clients tend to buy their Microsoft software through Enterprise Agreements (EAs) and the business unit customers tend to be downstream from the procurement process in any case. And smaller partners who do great things for these customers will fall off Microsoft's radar.

Honestly, dev shops that serve such customers will feel more like lonely fans than well-regarded partners. More of them will have "tele-PAMs" with whom they'll work over the phone and email. Many of them won't even have that. The Microsoft Partner Network (MPN), which replaced the Microsoft Partner Program last year, will change the ecosystem for good.

Understanding the Reasons; Contemplating a Solution
Whether partners like these changes or not, they shouldn't be surprised by them. Microsoft's COO, Kevin Turner, came from Wal-Mart. Given the raw efficiency with which that company is run, changes at Microsoft to improve license sales, and the ROI of working with partners, were bound to come. Turner views it as his job to make such changes, and Microsoft clearly wanted these changes or they would not have hired him.

Microsoft is a big business; no one should be shocked that Turner's trying to run it as other big businesses are run. Protesting these changes as unfair will get partners nowhere, fast. Making a business case for the small partners, and why their inclusion in the MPN is crucial, seems like a better bet. Can such a case be made?

Microsoft is a big business, but it is also a technology business. Leadership in tech is often determined by influencers in the tech community. Influencers tend to be entrepreneurial and run their own small firms. And those firms are just the type to find the MPN changes disadvantageous to them. While managing a herd of these partner companies is understandably difficult, working closely with a group of them, and encouraging others to rise to their level, would be a smart thing for Microsoft to do.

Brass Tacks
Microsoft needs to create a special partner category for influencers' shops. Rather than measuring them by licenses sold or influenced, it should monitor the Microsoft partner satisfaction they engender, and the utilization of EA-licensed products they help drive.

Microsoft should have the principals of these firms demo products and provide thought leadership. They should connect them with customers strategically. They should bring them into early adopter programs. They should treat them well. Doing so doesn't invoke wasteful cost; it provides for cost-effective marketing and customer outreach.

Sure, the Global SIs need to be courted more actively, but the game need not be zero-sum. Smaller shops that love your platform are valuable too. Microsoft historically has understood that. It has understood this better than IBM. Better than Sun. Better than Oracle. And rather than seeking to emulate those companies (imperfectly), Microsoft should use some of those companies' effective ideas combined with those of its own.

Another recent MPN change is in its leader: Jon Roskill, a Microsoft veteran who was once general manager of Developer and .NET Enterprise Server marketing, took over the Worldwide Partner Group from Allison Watson this summer. Given his background, I think Jon Roskill understands the value of smaller partners. I also think he should better explain that value to Kevin Turner and articulate a reminder of that value to Steve Ballmer.

Messing this up is easy, but getting it right isn't that hard. I hope it goes the way it should. Success for Microsoft and its partners hangs in the balance.

Posted by Andrew J. Brust on 10/05/2010

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