Microsoft Cloud Partners Nearly Double Profits, Growth: Study

At its Worldwide Partner Conference, Microsoft released results of a study that shows partners can double their profits and growth by adding cloud services to their mix.

HOUSTON – Microsoft maintains that partners selling hybrid cloud-based solutions benefit from higher gross profit, more new customers, higher revenue per employee and faster overall business growth, according to a new study.

The study commissioned by Microsoft and conducted by research firm IDC featured 1,300 partners and indicates that adding cloud services to their mix of offerings works wonders for partner growth in certain areas. Microsoft released the result of the study at its Worldwide Partner Conference 2013 here on July 8.

The study underscored the transformation taking place in the business world as more and more organizations of all sizes move their technology infrastructures to the cloud. In fact, according to the findings, cloud-oriented partners, defined as those that generate more than 50 percent of their revenue from the cloud, grow at double the rate, accrue new customers two times faster and generate double the revenue per employee compared to non-cloud-oriented partners.

The study also revealed customer buying preferences that highlight the importance of the role of partners in the overall industry cloud transition, including that: 63 percent of customers expect to have a single cloud service provider to meet their needs, 67 percent expect to purchase a wide variety of cloud services from a single vendor, and 74 percent expect their cloud service provider to be able to move a cloud offering back on-premises if needed.

Cloud-oriented partners are seeing faster customer acquisition of 2.4 times higher than the non-cloud-oriented partners. They’re also seeing revenue per employee of almost twice that of non cloud-oriented partners. They have gross profit margins 1.6 times higher than non-cloud. And when you add these data points together, it’s 2.4 times faster growth for the cloud-oriented partners over the non-cloud-oriented partners, the IDC study showed.

What the IDC study proves out is the question that people have been asking since the industry entered the cloud era, and that’s “what is the opportunity for partners,” said Jon Roskill, corporate vice president of the Worldwide Partner Group of Microsoft.

“Microsoft is very divergent from all of the competition out there,” Roskill told eWEEK. “We very clearly, like we always have, have taken a path to pursuing the cloud services business with and through partners as a primary channel. Always, 95 percent of Microsoft’s business has been with and through partners. And as we look at our cloud business, the same is true. That’s very different than anybody else operating in this space.”

“We’re at the point in the industry’s overall cloud transition where partners that don’t move to the cloud won’t survive. However, the most successful partners aren’t just high performing because they’re selling cloud–it’s because they’re putting cloud into the mix to sell hybrid solutions,” said Darren Bibby, program vice president of Channels and Alliances Research at IDC, in a statement. “The cloud transition doesn’t mean partners need to abandon their on-premises expertise; selling them both will provide a competitive advantage. By offering a hybrid approach, partners are able to provide a more customizable suite of solutions for customers in order to meet their needs.”