Only a quarter of Microsoft partners have made the move to the cloud five years after the software giant pledged to revolutionize its business, leaving the potentially lucrative playing field wide open for cloud converts.
Microsoft executives touted that solution providers that have made the leap gain potentially 140 times more profit than those that haven't. But the cloud holdouts clearly disappointed Microsoft COO Kevin Turner, who provided a jolt to the audience, estimated at more than 15,000 attendees, during his Wednesday morning keynote speech at the Worldwide Partners Conference in Houston this week.
"We need you to migrate," he told the crowd. "The reality is this is about accelerating growth together," Turner said. "Use the cloud to sell the cloud."
In particular Microsoft is trying to gain an upper hand over competitors like Amazon Web Services by offering public and private cloud options while still supporting on-premises options.
"Hybrid is the secret sauce," Turner said.
Indeed, the hybrid cloud strategy turned out to be the star of the show, even creating more buzz among partners than the sneak-peak at Windows 8.1.
"8.1 certainly was nice," Jeff Gellman, director at LiquidHub, a Wayne, Pa-based systems integrator and IT strategy firm and Microsoft partner, said Thursday, the last day of WPC. But growth is in the cloud, Gellman said, echoing many of his colleagues in Houston.
Microsoft's mix-and-match strategy pleased Robert Syversen, vice president of NTT Data, an IT consulting firm with headquarters in Boston. Windows 8 is going to be revolutionary, he said. But, it's going to take time for partners to adjust.
In contrast, he called the hybrid cloud a "huge competitive advantage" that puts his company in a position to win customers still in the cloud learning phase.
"It's a big step forward," Syversen said.
But only 25 percent -- or about 150,000 -- of Microsoft's 650,000 partners are in the cloud, Microsoft Corporate Vice President of Worldwide Partner Group Jon Roskill told CRN during an interview at WPC. Roughly three-quarters of the 25 percent of Microsoft partners in the cloud are legacy companies, with the remaining 25 percent cloud natives, he said.
NEXT: Tackling the biggest cloud concernMicrosoft's Roskill said it is realistic to believe that not all partners will cross the chasm. But, those that do can expect explosive growth, he said, citing an IDC study commissioned by Microsoft and released July 8 to coincide with the first full day of WPC.
The three-pronged approach could help soothe partners' fears by allowing them to keep their on-prem role while transitioning their business model and training staff with the skills and processes they will need to adapt.
Partners that have converted expect the private cloud offering to help satisfy customers' concern for security, especially among companies that deal in financial services, healthcare and government contracts.
Security is a worry that predates even Windows, "but the cloud makes it front and center," said Stanley Chan of San Jose, Calif.-based cloud encryption vendor CipherCloud said, in an interview with CRN at WPC. "Microsoft will be a major driver to the cloud through products like Office 365," he said. "The challenge is to take advantage of the Microsoft infrastructure -- the pool of resources."
Beginning Jan. 14, the cloud will be fully integrated into the Microsoft Partner Network, according to Microsoft executives.
Partners are beginning to close more deals and are not as worried about investing in new technology because the economy is improving, said Jimmy Payne, senior director of global channels at DiCentral, a Houston-based provider of supply chain management solutions and business-to-business integration and Microsoft partner. "We're starting to see that fear go away," he said.
Their customers know they need new technology and have the budget to make the investments. And once they dip their toes in the cloud they want to jump all the way in, Payne said. "The mindset is changing."
PUBLISHED JULY 12, 2013