Microsoft Testing Waters On Deal Registration

Microsoft says it's currently running a deal registration program pilot program in the U.S. as part of its ongoing efforts to increase partner profitability.

The "very limited pilot program," which began in January, is focused on virtualization and currently involves about 50 Microsoft channel partners, Eric Martorano, director of U.S. partner strategy and marketing, told in a Wednesday interview.

"There's a tremendous amount of interest in the partner community around virtualization solutions," Martorano said. "We felt that due to strategic nature of virtualization solutions, this would be a perfect opportunity."

Martorano declined to get more specific about the program's mechanics, explaining that the details are still being hammered out. But he did say the pilot represents Microsoft's desire to provide incentives not just on the transaction, but across the sales cycle. This includes incentives on lead generation, he said.

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This was also the impetus for Microsoft's launch of its first influencer program in March 2007, when the software giant started tracking partner ID numbers to keep track of those responsible for making software sales through the LARs and distributors.

VARs have complained for years about Microsoft giving unfair financial advantages to LARs in the lucrative realm of software licensing revenue. Last February, however, Microsoft shocked the channel by dramatically reducing funding to DMRs and giving VARs more equal footing with those larger partners on opportunities of more than 250 seats.

The current pilot program looks like another step Microsoft is taking to address the problem, said one Microsoft solution provider. "In general, Microsoft understands that they are somewhat behind the curve in addressing the LAR vs. systems integrator conflict," said the source, who requested anonymity.

However, Martorano says that's not what's driving Microsoft's decision to test the deal registration waters. "This is about taking a look at our overall partner ecosystem and incenting the entire partner sales cycle, from pre-sales, transaction, and post sales," he said. " The guiding principle of the pilot is to enable us to learn."

Next: Microsoft May Expand Pilot Program

To ensure that it gets a representative pool of feedback, Microsoft has included channel partners of all sizes in the pilot. Feedback has been positive thus far, and Microsoft may potentially expand the pilot to other technology solutions and a broader base of partners, according to Martorano.

"The good news is that we're absolutely going to continue to expand the pilot in FY11," Martorano said.

Microsoft isn't committing to the pilot beyond that time frame, and Martorano says the idea is to proceed slowly, gather feedback, and ensure that any eventual program stemming from the pilot is exactly what partners are looking for.

"We're trying to be very careful that we provide partners with something they want. Influence for us is extremely important and we want to incent that behavior," Martorano said.

One Microsoft solution provider sees the pilot as a potentially positive step. "Deal Registration would be a nice tool to add to our arsenal, if it's done right," said Daniel Duffy, CEO of Valley Network Solutions, a solution provider in Fresno, Calif.