Microsoft Winning Partners, Deals With 'Cloud-First' Strategy

As Microsoft takes on a “cloud-first” strategy, research shows the software giant is winning over more partners to its approach and gaining new business.

HOUSTON–Microsoft is taking a “cloud-first” approach to much of what it is doing in the market today and, according to some research, it is clearly paying off.

A recent IDC survey commissioned by Microsoft showed that cloud-oriented partners are faring better than those who are less entrenched in the cloud. However, indications also point to Microsoft being a key vendor for partners of all types looking to connect with a major vendor on cloud services.

Darren Bibby, an IDC analyst who conducted several studies on cloud computing and its impact on partners, said he believes Microsoft is in a good place competitively in the cloud services market–particularly as it relates to partnering. Microsoft announced the findings of Bibby’s research at its Worldwide Partner Conference (WPC) 2013 here.

“I believe Microsoft has done a very good job pushing the cloud,” Bibby told eWEEK. “In the early days with SaaS [software as a service], vendors were very nervous about what SaaS and cloud offerings would mean to their revenue streams and cannibalization. So I think we have to give Microsoft some credit for jumping on this, though it could affect some of their different revenue streams.”

Now, as Steven Martin, Microsoft’s general manager of Windows Azure, said in a blog post, “We are committed to helping our partners and customers embrace cloud computing, using a “cloud-first” approach to all we do, from our partner programs to our engineering principles to our product innovations.”

In terms of partner-facing opportunities, in the early days of cloud Microsoft was only offering fees, Bibby said. “So a partner that was really into resale was pretty impacted, but now if you’re a committed partner you can do the open license resale,” he said. “So they have made strides forward. And if you look back at WPCs all the way back to 2006-2007, I think they were ahead of their time.”

And now if you’re comparing Microsoft to the original cloud startup companies–perhaps like, WebEx, NetSuite and others–“It’s hard to compare a behemoth like Microsoft,” Bibby said. “You can’t expect them to be as agile. When you compare them to other big, comprehensive vendors they’re doing pretty well.”

“I think it's fair to say their product sets are No. 1 in the market for most businesses and as such makes our life easier to sell if leaders want to adopt them over competitive products such as Google Apps,” Chris Dunning, CEO of TechQuarters, a UK-based Microsoft partner, told eWEEK. “Don't get me wrong, we are a Google reseller as well, but the fact is that Microsoft wins the day in so many accounts that we have shifted strategy to almost solely selling Microsoft solutions. Once you get to certain level of sales, you get a dedicated Personal Account Manager, which means we have a quick inroad into new developments, ideas and help. The pricing is also right to enable us to make decent margins on consultancy associated with the implementations. Overall, siding with them has been an excellent move for us as their products, training, marketing all help us to nurture a successful business.”

Meanwhile, up-sell and cross-sell opportunities are huge with cloud, Bibby said. The cloud is opening up the doors to new clients.

Indeed, partners are using the cloud to get sales meetings. Public cloud offerings are typically much more affordable to get into in the short term. It’s a great way to get into clients and partners are using that opportunity to up sell and cross sell. Moreover, they are using that to sell both cloud offerings and on-premise offerings, he said.

“That’s possible because once you are in with some kind of subscription offering, you kind of have a ‘hall pass’ to an extent with that customer to be able to go back and say ‘hey, while I’m here can I help you with anything else?’ That strategy has been repeated many different times by different partners,” Bibby said.

Bibby said the cloud research he conducted involved more than 1,300 partners and was some of the most interesting research he has been a part of at IDC over the last seven year. There were two primary studies–one involving Microsoft partners and another including partners in general, including those of Oracle, IBM and others.

“This is a reality check for a lot of partners to say ‘don’t just wait to be dragged into cloud by your customers,’” Bibby said. “And we know from talking to a lot of companies, they’ve been waiting. Because the old world was actually pretty good. And I think if all the partners could collectively vote cloud off the island they might have done it. Because the whole license plus maintenance, plus big fees, plus big projects was a fairly nice gig. But customers want cloud and partners are going to have to adapt to it.”