Note: this is part of the series of posts about Microsoft Community Ecosystem. The Introduction can be found here.
One thing to understand is that Microsoft fundamentally wants to be a product company. Their business is to make a product, and sell it millions of times, making a healthy profit. They don’t really focus on industry verticals, and are instead focusing on broad software that can be used by many companies. This leaves two gaps: System Integration and more targeted solutions towards specific use cases or industries. Both are addressed by different aspects of the partnership model. Additionally, Microsoft relies on training partners to do a lot of it product training.
System Integrators
By comparison to products, consulting and services is a low margin business. This means they have a lot of SI partners that do the actual integration work. This is a great relationship – there is very little channel conflict. Microsoft avoids the channel conflict by keeping their consulting force quite small. I am told that their sales people are not really commissioned on services sales.
This means their sales guys care about the job getting done, and have no problem with bringing in a partner to lead. The partners that have a good relationship with Microsoft get to be the lead implementers on the deal. They are brought in while being given Microsoft’s imprimatur, and then they take over the relationship. Often, they also get involved in Microsoft-funded proof of concepts, product launches, white papers, and other efforts. So there is some revenue coming in directly from Microsoft as well.
For small but good consulting shops, Microsoft relationship is a god-send. You get the benefit of having Microsoft’s relationships work for you. That can get you introduced into many big customers. The result is that your sales model becomes MUCH simpler – no longer are you going in trying to convince new customers that you are good. Instead, you are brought in by a Microsoft sales rep that already has a relationship with the customer, saying “these are our go-to guys for this technology”. This can allow you to have higher billable rates than otherwise, when you are competing against other companies.
One bad thing about working for a Microsoft partner, is that there is such a co-dependency, that the companies end up recommending Microsoft solutions more often than they should in order to maintain the relationship. If you are brought in to scope a SharePoint deployment by Microsoft, with licensing revenue on the line, then this is what the customer is likely to get, even if SharePoint is not the best fit for this particular problem. Being a technologist, this becomes frustrating at times, since you don’t feel the problems are being solved in the best way possible. However, this is not inherent in the Microsoft partnership itself, but rather in most companies and partnerships.
There are different competence areas in which you can be a partner. For example, a company can be a Business Intelligence partner, or a BizTalk / distributed technologies partner, etc. Since Microsoft has many product lines, this allows companies to specialize somewhat. Also, Microsoft can bring in different SIs into different deals. Several SIs within the same geographic area can thus have profitable relationships without stepping on each other’s toes too much.
To make sure that partners are good, there are some requirements they need to meet, like having a certain number of certified employees, and some other requirements I am not completely aware off. However, ultimately, it’s about delivering and building up the relationship. If you are known as a company that delivers, you will get more business, since Microsoft salespeople will be more likely to bring you in.
Additionally, there are other partner benefits, such as access to software from Microsoft, MSDN subscriptions, and other benefits. But of course the key benefit to the partnership is the business opportunities.
Training Partners
Training partners work somewhat similarly to SIs. They can also get leads from Microsoft for opportunities and also have different competency area that they can teach. One nice distinction is that Microsoft Training provides the Microsoft Official Curriculum (MOC) – courses that are completely pre-packaged to the point that almost anybody with some basic familiarity with their products can teach them. That’s the biggest value to you – Microsoft generates demand for products, which in turn generates demand for training. That, plus the curriculum that Microsoft puts out enables Training partners to make money and be part of the ecosystem. My old company did both integration work and training as well.
Independent Software Vendors (ISVs)
There are also a lot of ISVs that sell add-ons to Microsoft products. I do not have experience with these, so I won’t talk about this. Suffice to say that it allows Microsoft to fill niches it would not be able to fill otherwise, and also drive sales for its partners.
While partnership has many benefits, if you are a product company, partnering with Microsoft is a bit more dangerous, since you may find a competitor in the next version of their product. So you need to maintain a good relationship with the product teams and understand their product direction and product map.
In the next post in the series, I’ll talk about the Developer and User Community Programs.
