Don't get stuck in a fog, get ahead of the cloud
Microsoft Worldwide Partner Conference 2010
July 11-16, 2010
Microsoft Worldwide Partner Conference was a somewhat scary conference for Microsoft-managed and non-managed partners. Steve Ballmer and Kevin Turner declared Microsoft a leader in the Cloud, but changes to the business model for partners were not yet clarified. More than 9,500 partners (13,000 attendees overall), the largest attendance in the history of Microsoft partner gatherings, traversed the Washington Conference Center and the Verizon Center in Washington, DC, July 11-16.
Kicking off with the song, "Let's do it", courtesy of Seattle DJ Darek Mazzone, Microsoft's messages to their channel indicated a cornerstone watershed in direction both for Microsoft and its partners.
The partners' attention was piqued with announcements of the changes to the partner program leadership and partner program terms, as well as strategic keynotes by Allison Watson,
Steve Ballmer, Bob Muglia, Tami Reller, Stephen Elop, Brad Brooks, Andy Lees and Kevin Turner and former US President Bill Clinton's appeal to the partner audience. Following are key highlights...
July 12 - Allison Watson announced her swap with Jon Roskill. Steve Ballmer outlined how cloud computing is transforming IT. Bob Muglia announced the Windows Azure Appliance. Tami Reller detailed the partner opportunity with Windows 7, and Stephen Elop announced Dynamics CRM 2011 beta availability in September.
July 13 - Allison Watson and Jon Roskill congratulated WPC 2010 Microsoft Partner Award Winners. Andy Lees previewed highlights of Windows Phone 7. Jon Roskill outlined partner strategies for moving to the cloud, announcing Cloud Essentials Pack and Cloud Accelerate for Partners.
July 14 - Jon Roskill presented the A-list, a showcase of the latest advances in technical innovation. Kevin Turner outlined key business opportunities for partners, and ways to leverage
Microsoft investments in the cloud. Bill Clinton appealed to Microsoft and partners to think about they can support small and medium-sized businesses, especially in developing countries, or countries that need to be built anew, like Haiti.
Allison Watson and Jon Roskill swap chairs
Wearing a humble "I-am-just-like-you" striped T-shirt (not your typical outfit for formal keynote speaker attire) Steve Ballmer delivered a speech full of positioning and directional news for the channel that would be in play for decades to come, and that Microsoft partners have no choice but to accept them.
Ballmer acknowledged the challenges for the channel ecosystem in transitioning to a new business model for IT delivery, but left no doubt that Microsoft is prepared to drop partners who will fail to adapt. "I'll have a number of breakout sessions with partners,' he said, "where I'm sure I'll hear various things about how we are competing with you when you don't want us to, and how we can improve channel conflicts. I'm sure I'll hear about margins and blah, blah, blah, but, we will factor in those inputs. We will continue to tweak and tune. We will continue to support you and drive this move to the cloud together. If you don't want to move to the cloud, we're not your folks. But, if you want to move to the cloud and take advantage of one of the most fantastic and interesting investments that corporate IT has ever made, there's nobody better to bet on than Microsoft."
Let us consider now the three key points that Ballmer made in his keynote speech, below. We'll then compare them to the strategic directions that follow.
For Information Workers - On-Premise
Ballmer thanked partners for their work on Windows 7 and what that has done for PC sales and unit volumes. He thanked them also for their work on Microsoft Office, and acknowledged the incredible reception to the new versions of Office 2010, SharePoint, and Exchange.
For Information Workers - Off-Premise, in the Cloud
Ballmer mentioned that literally thousands of new enterprise customers signed up for the Microsoft Online Services in the last several months, and are migrating to Exchange Online and SharePoint Online. A year ago Microsoft had nobody using Windows Azure. Today, there are over 10,000 paying customers, partners and end customers, who are building applications and moving forward with Azure. Ballmer claims Microsoft and channel haveeclipsed 30% of the virtualization market.
Ballmer commented on partners' good work with the new releases of Windows Server and SQL Server. They've had over 670,000 trial downloads of the new release, SQL Server 2008 R2, in just the last two months as many of their partners and the customers they serve look to build new solutions based around SQL Server.
Along with the "Oh, Cloud" message in the very beginning of his keynote, Ballmer pointed to four other strategic directions for partners.
#1 - Opportunity and Responsibility
Ballmer shared a list of some of the customers who've already chosen to move with Microsoft and with its partners, one way or another, into the cloud: Starbucks, McDonald's, Quark, 3M, Nokia, GlaxoSmithKline, Aon, the list goes on and on. Ballmer highlighted that Microsoft and its partners are not at a phase where they're just seeing small companies take experimental steps into the cloud; he reinforced that this opportunity is real and concrete and available to all of us today.
"Because of what cloud technologies like Azure and Microsoft Online Services can mean for the customer," he explained, "we can remove many of these costs and much of that complexity, and enable more of the value-add that all of you bring to our customers to focus in on the new applications and new scenarios that our customers want to embrace, that business value that all IT directors and managers talk about".
Clearly, the cloud brings a set of new responsibilities. When Microsoft customers start putting their data in Microsoft systems, and as customers entrust more and more of their data and operations to third-parties, the bar is raised for improved reliability, security, privacy, and operational excellence.
#2 - Cloud Business Intelligence
Microsoft has not only picked up about three share points in the last year as the Bing technologies continue to get better and better (they've gone from about 8.5 to 11.5 percent market share), but they have learned a lot of from working on Bing.
"When I type 'show me the sales data--show me industry-wide sales of personal computers by country', that is a BI question that I just happen to pose to the search engine. So, how do we take those technologies, how do we take what we're learning about natural language and statistical reasoning, how do we apply that to enterprise technologies like SharePoint search, like SQL BI? How do we apply those technologies as we move them through Microsoft Online Services into the cloud?" appealed Ballmer.
Microsoft is tasked to find out how do they do better at bringing together enterprise data with industry data. Microsoft has a whole program that they refer to as Dallas around our SQL Azure service to help people publish business data streams that can be used for business intelligence.
"So, the opportunities for all of us in the cloud to do a better job helping our customers pull together, find, pull together enterprise and cloud data, and then let them make decisions, I think are phenomenal, and we're pursuing that in Bing, we're pursuing it in SharePoint, in SQL, in Excel, and the rest of Microsoft Office."
#3 - Business Productivity
With new scenarios for business enabled by the cloud, the cloud enhances social and professional interaction. Everybody is the member of a social network; we're all a member of at least one, maybe more. There's a convenience, there's something about that method of interaction, whether it's Facebook-like or Twitter-like, that is appealing to users. So, what can we all expect from Microsoft in this space? Ballmer opened the curtain a little bit: "We're trying to improve through the cloud people's ability to collaborate outside their organization. Today, if one of our partner account managers wants to quickly whip up a secure website in which a Microsoft employee participates, a partner participates, maybe two partners who are collaborating on a deal, a customer collaborates, that is not an easy process to set that up simply and securely. We need to keep pushing those technologies, and you'll see us pursue that with Office Online and SharePoint Online as we move forward."
"Frankly today, if you want to help a business help its users be more productive, with Office 2010, and everything that comes around it, we just flat out have by far the best solution in the marketplace bar none. Not Cisco, not IBM, not blah, blah, blah. Nobody else. If you want to help people be productive with Microsoft, let's sit down on that together, because I'll tell you that together we're way ahead, and we can win."
#4 - Enterprise IT and management
"This is an area that's been a huge focus for us now for years," explained Ballmer. "Ten years ago when I took over as CEO of Microsoft, most people would have said Microsoft is not ready for the enterprise. Nobody says that today. We can be better. You remind us and our customers remind us every day that we can be better. But, if you look at the percentages of the world's desktops and servers that you are managing, and that our customers are managing because of your support, under the direction of our System Center product line it is phenomenal. If you look at the explosion in market share for Hyper-V, and the management tools that we've given you to go manage servers in a virtualized environment, it's amazing."
Ballmer tip-toed around cloud product/service cannibalization by highlighting a competition/survival/customer retention aspect of the cloud trend: "And yet there is still a lot of opportunity, we think, for you and us together. This is an area where, again, I think our product lineup is good, but it's a highly competitive world. And you should understand that we are determined to lead with cloud infrastructure. When somebody who we most support, when one of our mutual customers wants to build a modern cloud-oriented data center infrastructure, it should be you, it should be us, and we should go solve those people's problems and we're absolutely determined to do that."
"This is my last time to welcome you and host you at the Worldwide Partner Conference. Today, I'm turning over responsibilities for partnering at Microsoft. And I've had many reflections as I've been with you. This is my ninth Partner Conference, my eighth year in the role, and it's been an amazing journey," Watson said.
Where Allison moves now
"I've been asked over the years, 'Hey, Allison, when are you going to leave, what are you going to do, what's your next thing at Microsoft?' Well, I have an incredible opportunity ahead of me working inside the U.S. subsidiary getting to help lead our marketing efforts and working with partners to really accelerate velocity with our customers and our consumers. But I'm pleased and wouldn't leave and take that new opportunity if there wasn't, in fact, an entirely capable and exciting person who could take over the reins of this really most important job at Microsoft".
Why Jon Roskill?
A new corporate vice-president of the Worldwide Partner Group, Jon Roskill is a very different character than Allison, his rapid ramping up in the new job we are here to see. Roskill introduced himself: "I've been working with partners for 18 years. They've always been a big part of my job here at Microsoft. Over my Microsoft career, I've worked on a number of products. I started working on the Visual Studio family of products, and those products succeeded because of partners. From there I worked on the Internet servers. We worked side by side with partners such as yourselves in the battle with Sun. And then for the last six years I've been working in the U.S. subsidiary as the BMO, taking marketing campaigns and delivering them with and through partners, in partnership with you."
Roskill started off with bringing up the three overarching themes that partners were going to hear over the next few days of this conference. "I'm very excited to be here as partners are Microsoft's most important asset. Each and every one of you is out in the marketplace every day making a difference with our new innovation and our transformational business models."
First, the incredible wave of Microsoft's innovation that we're in the middle of right now. We've got Windows 7, Windows Server 2008 R2, Office 2010, and all the server products that are going on around them, as well as Dynamics.
Second theme was about the cloud. Microsoft is spending the billions of dollars on R&D coming to fruition in platforms, products and programs that are based on partner's feedback. Microsoft partners begin using cloud services to beat the competition today.
The third theme that Roskill announced was about business transformation, showing partners the cloud business opportunity, and the path to transformation to take advantage of that opportunity. "We have the tools, we have the programs to help you transition your businesses to the cloud along with us," preached Roskill.
What does it mean for Microsoft Partners?
First, Certification and Partner Levels Transition
Roskill inherited Watson's almost 9 years of dedicated and passionate work with Microsoft's worldwide Partner Group. The last 2 years were focused on designing and implementing the new structure for Microsoft Partner Program (previously known as MSPP) and now called Microsoft Partner Network (MPN). The idea was that based on partner and customer feedback, the new Microsoft Partner Network is evolving to market any given Microsoft partner’s specialized skill set. What’s changed? Registered Member, Certified Partner and Gold Certified Partner levels will be retired. They’ll be replaced by new membership opportunities. Partner Points will also be retired. What partnership opportunities will MPN offer going forward?
Communities, almost a given
Well, this is not a Competency or a Level, really. Everyone who enrolls in the Microsoft Partner Network is a valued member of a vibrant community.
Subscriptions, a nice refresh
It is simple – well-known and liked by many MSDN subscriptions are repackaged and enhanced as cost-effective Microsoft Partner Network subscriptions, where partners receive savings on software licenses and development tools, get access to training, and some support. It is not a Competency or Level either.
Earning Silver and Gold Competencies
Yes, it is getting real. Earning a Microsoft competency is getting more difficult. Is it a part of the Microsoft brand development policy? Competencies structures changed, and there is no more double-dipping, i.e., each certification should be owned by a unique individual, and one certified individual cannot support more than one competency for a partner any longer. Partners have to accelerate on training and certifying their staff or associate consultants to secure their titles in Silver and Gold Competencies. Competition for a Gold title (now applicable only for a solution area, and not for an organization as a whole as it was before) is getting tougher. Partners with Gold competencies will represent organizations (and associated individuals) who have demonstrated the highest, most consistent capability and commitment within a specific business solution area. Gold competencies will make it possible for partners with deep levels of expertise to leverage the Microsoft brand to differentiate themselves in the marketplace.
Evolution of Microsoft’s Channel
In the short-term strong partners will become even stronger and the middle tier will likely drop. The bottom level will likely grow substantially because some of the middle tier would return to the bottom, and the bottom will recruit new entrants. Already Microsoft-managed partners are increasing their consulting time with their assigned partner account managers. Non-managed partners might find themselves in a hurry to study the new MPN terms and engage business consultants to help them realign quickly. Despite the fact that there is still enough money outside of the Cloud for everyone, the world is changing fast and will never be the same. Just watch the next 18 months.
How Will the Could Affect Partner' Business Strategic and Marketing Planning?
It can be all about SMBs
New opportunities with SMBs can outweigh the loss of traditional IT business for distributors, resellers, and system integrators. Given the roughly 14 million small and medium businesses in the US alone that may not have purchased any business software because of their size, SaaS will provide the technology for them and thousands of potential implementers may provide the consultancy.
Train implementers, train sales force
A wise IT consulting firm’s business decision-maker will likely set aside some training money for technical staff to update their technical skills following requirements of MPN (above) and proactively adding some cloud-related technical training, as well as some sales training for their business development folks and sales force in 2011, if not already now, to support re-enrollment into MPN this winter.
New role of resellers and why SIs should care
The giant army of software licensing advisors will become even more powerful. Why? Because now we will have a customer who is to make a choice of not only a purchasing model, but likely a technology choice along with it. It is already becoming a trend that VARs are trying to learn how to become SIs, i.e., ‘trusted advisors’ to end customers. That could be a challenging task, because of the current economic crisis, which is placing greater financial constraints on many on-demand vendors’ margins, forcing customers to consolidate vendors or to reduce number of vendors they are working with, and perhaps even more hesitant to do business with new suppliers. Consequently, trust and relationships with customers will increasingly become a crucial survival and success factor.
Full attention to portfolio, business model
Steve Ballmer was direct in his keynote: “Prepare for a long and unpredictable economic depression". It’s been two years, it is a summer of 2010 now, and there are still plenty of reports that corporate executives are downsizing their organizations, planning budget cutbacks. However, successful businesses and IT organizations will be the ones who find new ways to perform their day-to-day duties and achieve their strategic objectives. As Ballmer said, "Microsoft is moving to the cloud. If you are not, then we are not your folks…”
What ISVs are brainstorming about
First, how to position or re-align their software roadmaps. Second, how to bet on winning channel partners and then recruit them into their "inner" circle, i.e., review a channel roadmap. Third, how to build an effective to-partner, through-partner go-to-market strategy to win breadth or niche in the evolving market.
So, if you are a channel partner, it is pretty much clear what you'll need to do in the next 6 months.