Microsoft Tunes Up and Evolves its Partner Programs

    February must be Partner Program update month because most major vendors provide updates on their partner programs. These programs are very different from company to company and, with Microsoft, their partner program has evolved significantly over the decades. Often, as companies grow, they often see partners a necessary evil. The relationships end up unbalanced, with the partner carrying the vast majority of the load and feeling abused. Complaints from partners generally revolve around conflicts with direct sales, compensation disputes, lack of support, inability to get help, and a lack of interest by the larger company.

    However, every company I follow addresses these complaints with a fervor, and partner programs across the board seem to be improving. However, in Microsoft’s recent update, I saw two things that are still relatively unique in partner programs: a focus on partner revenue and broad recognition for partners that excel using the program. Both are important.

    Also read: Open Source Platforms Vie with IT Vendors for Management of MLOps

    Revenue: Why Partners Partner

    This conclusion should seem obvious, but small firms partner with larger firms to grow revenue. They don’t partner because they have a deep desire to jump through vendor hoops, love the drama of changing product lines and strategy surprises, nor are they fans of being abused. These firms partner to make money, yet most often, at these partner updates, the only thing that isn’t discussed is how lucrative the related partner programs are.

    Microsoft has been guilty of abusing partners in the past, particularly during the ‘90s and early 2000s. Since then, the firm has pivoted to taking partners very seriously. This focus was showcased this week with Microsoft’s unusual focus on partner revenue, not like some vendors (Apple, I’m talking about you) who look at partner revenue like it was theft, but in recognition that revenue is why partners partner.

    Microsoft admitted that partners influence 95% of Microsoft’s revenue and is thus one of the company’s most potent revenue growth drivers. Much of what Microsoft presented had to do with programs designed to increase demand overall and increase partner revenue in particular.

    Microsoft openly admitted that partners are looking to them to help generate revenue. This revenue position helped Microsoft frame their services in terms of increasing that revenue. Programs that train partners how to sell better, positive responses and actions to partner’s requests include:

    • Better pricing support
    • New opportunities to add partner services like managed support
    • Efforts to assure customers view partners as their place to go for operations support and services.

    These efforts extended across independent software vendors, hardware partners, and services providers, particularly those that were leveraging Azure to create those services.

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    Partner Appreciation

    The other thing that partners appreciate is recognition.These partners put in a lot of work, and they often feel like they aren’t receiving commensurate respect. Microsoft spent much of the call praising partners that went above and beyond what the partnership agreement specifically outlined. This sharing of credit for what was a very profitable year for Microsoft was likely very well received. Partners, and people in general, like and appreciate receiving credit for their hard work, and Microsoft made sure to praise their most powerful partners publically. They even called out other top partner programs that they participate in, like HP Amplify, also well known for treating partners particularly well, at their event.

    Giving credit like this tends to increase partner loyalty and focus because that credit addresses a need for recognition that surrounds most employees due to status.

    Building Team Spirit

    At Microsoft’s Partner event this week, the company followed general best practices by talking about making it far more profitable and efficient for partners to work with them. They spoke of simplifying and improving the contracting process, how they would continue to improve and simplify the systems that the partners used to interface with Microsoft, and work to increase demand for Microsoft’s offerings sold by partners. But it was Microsoft’s focus on building demand, not only for Microsoft’s products, but also their partners’ unique offerings that sit alongside these products.

    Microsoft also alluded to the fact that they were going to turn Microsoft Teams into a platform that supports partner hardware and eventually support partner apps and customizations. With the likelihood that Teams will remain one of the most potent tools for company collaboration post-pandemic, Microsoft and its partners stand to open more new revenue sources for the duration of this work-from-home event that currently defines our lives.

    Also read: Savvy IT Leaders Navigate Digital Business Transformation During COVID-19

    Rob Enderle
    Rob Enderle
    As President and Principal Analyst of the Enderle Group, Rob provides regional and global companies with guidance in how to create credible dialogue with the market, target customer needs, create new business opportunities, anticipate technology changes, select vendors and products, and practice zero dollar marketing. For over 20 years Rob has worked for and with companies like Microsoft, HP, IBM, Dell, Toshiba, Gateway, Sony, USAA, Texas Instruments, AMD, Intel, Credit Suisse First Boston, ROLM, and Siemens.

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