Channel Taking Wait-And-See Attitude About Microsoft's Rules Of Engagement


Upbeat reaction, but partners want to see results


Initial channel reaction to Microsoft's new rules of engagement formally unveiled on Monday is positive, but many are taking a wait-and-see attitude as they await briefings later this week.

On the whole, most partners said they have heard about the model informally over the past few months, but nevertheless feel reassured about MCS putting a line in the sand by naming its top 1,000 accounts, as former services chief Robert McDowell promised last year.

They are also pleased that channel executives publicly acknowledged that conflicts in the field must be addressed by establishing a new escalation process and an increasing number of subcontracting jobs from MCS in the past few months.

Even so, they worry about the constantly evolving channel organization and the long-term direction of MCS, which is technically under the umbrella of newly appointed Worldwide Services Chief Mike Sinneck but whose sales force also continues to report to Microsoft's senior vice president of U.S. sales, marketing and services, Microsoft insiders said.

Partners are also concerned about what they said is a potential loophole in the rules of engagement: Microsoft's admission on Monday that there will be exceptions to the named-accounts rule when the company deems a customer is an early .Net adopter.

"What I feel is an extremely positive step, however, is the escalation process that they have laid out with a path all the way up to the VP level for issue escalation," said Michael Cocanower, president of ITSynergy, a solution provider in Phoenix, Ariz., which does not do any business in Microsoft's Top 1,000 named accounts. "Although I have never worked with him directly, I am told that the MCS Practice Manager in our district is very aggressive, and this escalation process gives us the ability to have our side heard by people other than the PM. I am also very encouraged that MCS will be redefining their targets/goals, as I feel this will help the situation as well."

Randy Schilling, president of Quilogy, a St. Charles, Mo., Microsoft partner, said there was not much new in the call and that he had heard McDowell talk about named accounts before. But he said he has seen an increase in subcontracting opportunities from MCS in the past six months and "it's encouraging to hear them say there will be rules and they won't compete with partners in medium-sized accounts."

One solution provider who declined to be identified, said he is also pleased about the named-accounts model, but that he didn't hear anything new from the Microsoft officials on Monday.

"I am glad they are publishing the list and have made the first effort to communicate to the partners about the engagements," said the solution provider. "However, a lot of partners will wait and see how this translates back down to the local districts . . . and a lot of us have heard the basics of this before."

Observers and channel partners remain concerned about one facet of the announcement made by Microsoft during the company's Services Partner Framework briefing. While each Microsoft district is slated to review the list of its named accounts with partners every six months, for example, there will be exceptions, noted Paul Bazley, vice president of U.S. enterprise and partner sales at Microsoft. "In select, high-impact early adoptions of .Net where it makes sense for MCS to participate aggressively, that still may happen, and we will review that as an exception," he said.

While Bazley said later during a conference call that these instances will likely be isolated and limited to a handful of companies with more than 4,000 PCs, one analyst said the exception amendment nullifies the named-accounts provision.

"What's important to recognize here is that Microsoft's named-accounts model addresses a specific element of the company's overall go-to-market picture, which leaves partners to draw their own conclusions regarding the role they play in the broader Microsoft model. We believe this uncertainty is driving a great deal of angst among the partner community," said Steve Graham, an analyst at IDC. "While Microsoft is clear and unequivocal in naming specific customers that MCS will actively target, it leaves the door open to exceptions in the mid-market and doesn't clearly outline how the company is going to behave when it encounters partners competing for services business in either type of accounts."

One analyst said the announcement clarifies MCS' focus on the enterprise and its interest in having partners sell solutions in the mid-market, but he's not clear that the rules are a win-win for either party. He cited Microsoft's statement that it will stay away from partners who sell .Net servers and middleware with the operating system, but will compete with partners who sell non-Microsoft application servers and middleware.

"Having named accounts traditionally is a very strong signal to partners to leave a particular arena alone, or even that crucial services [e.g., product support will only be delivered to those named accounts directly from the vendors. I don't see the upside for Microsoft partners here, except that they know now where not to waste their time," said Paul DeGroot, lead analyst, sales and support strategies at Directions on Microsoft, an industry newsletter in Kirkland, Wash. "Finally, Microsoft's general direction seems to be pushing partners into the role of a sell-through sales channel, rather than as sell-to customers who, in the course of doing their work, used a lot of Microsoft product. As Microsoft provides more integrated solutions, the value added by consulting partners and integrators goes down. And Microsoft's bias toward solutions that sell lots of Windows servers may not be seen by large customers as having their best interests at heart, and the policy could encourage Microsoft partners to look very hard at non-Microsoft alternatives that they can beat Microsoft with in large accounts."

One solution provider noted he doesn't even view the Services Partner Framework as a clear line in the sand between MCS and the channel, but merely general guidelines for selling .Net solutions.

"I really don't consider [the Services Partner Framework as rules of engagement," said Greg Sullivan, G. A. Sullivan, a St. Louis-based solution provider. "These are really about selling strategies and tactics. This is all good and will help us both win in the marketplace."