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Doing Business with Microsoft – Inspire Part 4

by Stephen White  |  July 20, 2018  |  1 Comment

The final keynote of Microsoft Inspire (combined with Microsoft sales conference Ready) was relatively short, but commenced with a demonstration of admiration for Satya Nadella from the on site partner and Microsoft sales participants. It’s certainly fair to say that the Microsoft CEO has a strong following among those most dependent on his firm and his leadership.

Whilst greeted with a standing ovation, the session lacked any announcements addressing how Microsoft will work with clients or develop relationships, in Satya’s own words the session was largely a tech speech. Messaging reiterated Microsoft’s priority technologies. On more than one occasion Apple and Google devices were said to be Microsoft 365 endpoints – from an end user experience perspective I’d argue it’s more appropriate to say they are Office 365 end points, given the lack of Windows, and absence of any end user applications in EM&S.

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Considering the business focused content through Inspire, below are my thoughts on some notable themes

Dynamics and Azure Thrust

Whilst Microsoft’s Modern Workplace product set is very much aligned to Microsoft’s legacy products, and represents a vast revenue stream for Microsoft and partners alike,  the greatest degree of noise from Inspire was centered on Azure and Dynamics. Given the desire to drive market share and chase down the leaders in those respective markets that may be of little surprise, with both potentially significant contributors to cloud mix across many Microsoft clients.

Jutson Althoff made a clear appeal to partners to invest in a Dynamics practice, an appeal undoubtedly backed by partner incentives, and a means for Microsoft to create more opportunity. This approach may grow the number of partners supporting Microsoft, but risk adding a ‘me too’ element to partner pitches, unless they invest in the required skills and specialist expertise. Whilst growing breadth of capability was one message, creating a core offering and focus was potentially in conflict but offered as potentially sobering but appropriate advice.

Differentiation

Microsoft clearly relies on partners to extend both it’s salesforce, and technical resources through implementation, and support. The vast partner network and competition among those partners creates a need for differentiation and development of IP for those partners to succeed. Success of partners is key for Microsoft success of course, but also, increasingly relevant as the proportion of Microsoft’s Azure business grows, and sustainability of that growth will be a factor of consumption by each customer, and critically the compelling differentiation of partners applications and services

Customer acquisition

Progressively Microsoft has shifted to a model more oriented to a land and expand approach, rather than a full portfolio across the complete enterprise endeavor. Following this route arguably enables greater growth opportunity once a customer is acquired, dependent on the quality of experience. Microsoft will of course endeavor to make the sale as large as possible, embodied by the Microsoft 365 bundle and Office 365 E5 bundles and motions.

Microsoft are stating investment in Inside Sales to enable the acquisition motion is extensive, expectations being that more than a hundred thousand leads will be produced for partners this year across the SMC segment. Whilst in SMC the generation of interest and hand off to partner motion is expected to prevail, in Enterprise a co-selling motion applies which is expected to see Microsoft sales rewarded for selling not just the Microsoft products and services, but also a degree of partner services.

CSP and EA conflict

This concept came to the surface during last year’s Inspire, whereby partners seeking to grow revenue through CSP felt thwarted by the EA sales motion. Microsoft have generated a vast degree of partner interest in CSP with partners eligible to sell a hundred times greater in number than LSPs responsible for EA.

Potential conflict is comprised by a series of components. Internal contributors are flagged as being managed. My view however is that a critical desire of clients will be to maintain a direct business relationship with Microsoft, including expectation of negotiating pricing and terms with the vendor will sustain demand for the EA. Should CSP and Microsoft’s Modern commerce platform evolve to enable the direct business relationship this point of conflict may be overcome.

Another CSP channel challenge to be addressed is the degree to which those partners can support and navigate licensing complexities for and with clients. Whilst Microsoft appear reticent to speak about licensing during Inspire keynotes, it remains core to every client requirement. Microsoft have established requirements for CSP Direct partners to develop technical capability, to date however that appears unaccompanied by licensing competency.

In closing, whilst last night’s announcement of Q4 figures represented a vast revenue figure, Microsoft leadership will be all too aware of the challenges in maintaining momentum. The past week has been key to those endeavors, and represented an approach of ‘more of the same’, rather than creating new structures or mechanisms.

 

 

Additional Resources

Category: cloud  it-cost-optimization  licensing  reseller  

Tags: azure  cloud-contract  licensing  microsoft  microsoft-inspire  office-365  partner  saas  software  

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


Thoughts on Doing Business with Microsoft – Inspire Part 4


  1. Thanks Stephen great summary from Inspire



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