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Happy New Year! Microsoft Hit Refresh – A Retrospective View of 2017 and Ahead to 2018

by Stephen White  |  January 10, 2018  |  Comments Off on Happy New Year! Microsoft Hit Refresh – A Retrospective View of 2017 and Ahead to 2018

New year. New challenges? New plans? New beginnings? New priorities?

Here is my own simple example of changing priorities. Australia have secured ‘The Ashes’ from England with a 4-0 victory, yet despite having a very Australian love of sport, I didn’t watch a single over of live cricket. That’s a reflection of two intersecting forces. Firstly, ‘cable’ TV rights and negative impacts of the competition between providers would have required me to invest a small but reasonable sum to watch live in the UK. Secondly, I’m now a father of two small children which many of you appreciate has dissolved any ‘free’ time I previously had, but moreover led to a change in priorities. So, I listened to some TMS commentary, caught some online updates, and celebrated Australia’s victories, but that was the limit of my Ashes pleasure.

Microsoft CEO, Satya Nadella, at Lord's, as he reflects on the impact of cricket in “Hit Refresh”

Microsoft CEO, Satya Nadella, at Lord’s, as he reflects on the impact of cricket in “Hit Refresh”

Readers of Hit Refresh will note Satya Nadella’s regular reference to cricket therein, his passion for the game, and its unique characteristic of uniting teams for long periods in pursuit of victory. Published in September of last year, the book speaks at length of attributes the CEO wishes to drive within Microsoft, rediscovering the soul of the corporation, empowering everyone to do more and achieve more, and the need for empathy in order to succeed in such a mission.

One representation was the realignment of Microsoft’s SAM program. But what else has and may continue to change?

Sales Reorginization

Several messages from ‘Hit Refresh’ are common with the sales reorganization which started to take effect mid-year. Creating mechanisms to drive deeper relationships with clients, and grow a solutions outcome mindset has encompassed a redistribution of investment, new roles and changes in primary contact for a number of clients. One of the challenges Microsoft and clients will both face can be maintaining continuity and quality of relationship during the process of change. Many organizations may have encountered impacts of changing resources already, in 2018 clients ought to be vigilant, and seek to understand the impact on their account team, resources and escalation paths.

Prioritizing Consumption

It’s questionable to what degree sales find this behaviour natural. Microsoft’s approach is based on a premise that consumption will underpin value derived, create dependency and strengthen prospects for renewal and upsell. The degree of change associated with driving consumption of what is acquired, as opposed to maximizing the portfolio sold (regardless of whether it sits on the shelf) shouldn’t be underestimated. In reality the behaviour is somewhat in the hands of the partner that implements a service or develops a solution, although mechanisms which enable right sizing and curtail toxic consumption* will in many cases be owned by the client.

Clients may see Microsoft’s announcement in respect to Azure sales objectives to be manifested in commercial structures through 2018. Driving up front commitments to Reserved Instances, however, does appear to conflict with a desire to prioritize consumption, and inherent value unless expected usage is founded on reliable forecasts and minimal wastage.

Role of partners in Digital transformation

Microsoft is a vast organization with extensive internal resource, despite retaining direct selling mechanisms within that resource, partners retain a significant role. That role is less product fulfilment oriented, and increasingly solution outcome aligned, with partners owning the IP that enables digital initiatives on Microsoft platforms, alongside advice and guidance on options, implementation and adoption strategies. Expect in 2018 this trend to continue, whilst impacts of the sales reorganization may also see smaller clients increasingly steered towards a business relationship with partners.

Alignment with Firstline Workers

Microsoft announced multiple changes during 2017 which increased capability aligned to what was previously known as Kiosk offerings. The increased capability aligned to Office 365 was bolstered by inclusion of a Firstline Worker Microsoft 365 edition. In this fashion Microsoft appears to be embracing those workers not classed as Knowledge or Enterprise users.

What stands out as a result, is absence of E1 Microsoft 365 offering, also suited to the Firstline operating from a conventional desktop. Moving forward, Microsoft could go one of three ways;

  1. Drop Office365 E1 and rationalize its offerings – leaving organizations using E1 with a significant gap to address between F1 and E3 offerings, none the least the delta in storage per user (F1 2GB, E1 50GB, E3 100GB)
  2. Retain E1 as an Office 365 option, but without a corresponding Microsoft 365 offering
  3. Add to the Microsoft 365 family with an E1 offering (why not do this initially?).

Option 1 may provide a revenue opportunity to Microsoft, such a step would appear to contrast with Microsoft’s objectives to empower all to do and achieve more.

Unified Support

It’s unclear how Microsoft’s Unified Support offering, and the extent of change from the predecessor Premier Support, dovetails with Microsoft’s messaging. Whilst the approach does include choice across three offers the pricing model may be alarming to clients renewing – see Microsoft’s Unified Support Eliminates Counting Hours, but Some Organizations Will Now Pay for What Had Been Free for a cost assessment. Perhaps the intent is to drive more organizations to utilize partner support offerings?

The Route Forward

What is clear is the degree to which Microsoft is prepared to adapt it’s approaches. During the past 18 months this has been manifested in a number of examples including those I’ve represented here. Microsoft is a particularly large vessel however, and changing both it’s course and velocity takes time – more of a journey than a swift tack. For more analysis of Microsoft’s journey see our recently published Vendor Rating

* Description of Toxic Consumption can be found herein

Note – Fittingly given the message of empathy and life changing birth of son Zain, Satya Nadella committed to donate all his proceeds from sale of Hit Refresh to Microsoft Philanthropies

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Category: asset-management  cloud  licensing  

Tags: cloud  licensing  microsoft  software-asset-management  strategy  

Stephen White
Research Director
4 years at Gartner
16 years IT Industry

Stephen White is a Research Director in Gartner's IT Asset Management, Vendor Management and Procurement team, focusing on strategic licensing and negotiation strategies, asset management, and reseller engagement. Mr. White leverages his experience in software sales and consulting to assist IT leaders through his coverage of best practices in license life cycle strategy and trends, license metric and pricing practices, contract negotiations, optimizing terms and conditions, sourcing, and relationship management. Read Full Bio

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