Microsoft To Hone Partner Strategy At Annual Conference

For all the deserved and undeserved criticisms hurled at Microsoft during the past couple of years, one thing the company can't be accused of these days is skimping on its partner-based resources.

Think about it: A cool $1.5 billion spent in fiscal year '04? Another $1.7 billion committed in fiscal year '05? That's more than the annual total sales for most independent software companies. And it buys a lot. So much, in fact, that more than a few partners lament being overwhelmed by an unrelenting number of new programs, online tools, marketing materials, training events and other initiatives pouring out of the vast campus in Redmond, Wash. Last fiscal year, 35 percent of Microsoft's spend went to partner initiatives; the same amount is earmarked for fiscal year '06, plus another 15 percent on top of that to fund partner outreach and recruitment. Last, nearly half of the company's overall marketing budget is spent in conjunction with partners, according to Microsoft officials.

Now, at its annual Microsoft Worldwide Partner Conference, which began this morning in Minneapolis, Microsoft's programmatic goody bag is expected to brim once again. New programs, new marketing dollars, an expanded emphasis on vertical specialization and rewarding partner account managers are all in the offing, according to Allison Watson, vice president of worldwide partner sales and marketing for Microsoft. Another key focus area, Watson says, is fostering an environment where partners team with other partners to co-sell, conduct joint projects and the like.

"That's a breakthrough area for this year," she says. "We want to get the partner-to-partner thing right."

It has been one year since the official rollout of Microsoft's new partner program. The program has gotten a fair amount of thumbs-up, but early on was mired with a problematic IT infrastructure--mainly Web-site glitches that frustrated partners trying to sign up for the program and research its requirements.

The program has also seriously upped the commitment ante for partners, who are now segmented in the program by solution skillset and expected to specialize in a particular Microsoft technology area (in Redmond parlance, a "competency"). Meeting the competency litmus test can be rigorous, however. You can't test your way in; if you want to specialize in advanced infrastructure, for example, Microsoft expects you to deliver three real-world customer references in that project area. You'll need to come up with at least three new customers 12 to 18 months thereafter to requalify for your competency. Repeat business doesn't count.

Bart Hammond, president of Interlink, an Englewood, Colo.-based regional solution provider, recently acknowledged to VARBusiness the rigor and time commitment needed to meet Microsoft's partner-program requirements, but for a VAR who has bet his entire business on Microsoft, he summed up the work this way: "I want to grow my business."

For FY '06, Microsoft is looking for better ways for partners to do just that. Those efforts will include assessing partners' current level of Microsoft technology skills, the theory being that the deeper the skillset, the more apt a partner is to drive more deals at larger sizes. Microsoft is also looking to infuse the channel with more financial and staffing resources. Internally, the company plans to iron out the kinks in its existing programs, unify its internal IT infrastructure, beef up marketing dollars to partners, and help them to grow revenue through vertical specialization, according to Watson.

In addition, the company is adding new competency areas--one focused on mobility, and another on solution providers who specialize in project-based, custom-application development (as opposed to ISVs). Meanwhile, a few existing competency areas have been renamed to better reflect the partners' technology specializations. For example, the business-intelligence competency is now called data-management solutions, and the e-business-solutions competency is now dubbed business process and integration.

Microsoft also seeks to engage small-business partners more directly. Certain partners will be designated as small-business specialists and, as such, get access to postsales support and to use marketing collateral sporting a "Designed for Small Business" tag, according to Steve Guggenheimer, vice president of small business, SMB solutions and partner operations at Microsoft.

But whether it's in SMB or further up the food chain, partners are taking steps to move up the program-level ladder. Watson says the total number of Gold Certified Partners (the highest level) is at 35,000 worldwide currently, which is up 10 percent year-on-year.

Watson and other Microsoft channel team officials recently outlined some of the specific new elements to the overall partner program strategy. Among them, the company emphasized its ongoing efforts to streamline access to its resources and make it easier to do business with the software giant. To that end, Microsoft is investing internally in an IT project called Partner Velocity Engine that better aligns the partner-based online tools and systems so there is one point of access for all business partners. The company also is working on a portal/content-management system that will provide different veneers to the user. Another result of the integrated IT will be the online Partner Learning Center.

A major initiative for '06 involves linking partners to one another through online directory tools called Solution Profiler and Solution Finder that let partners find solution providers with like skillsets.

The challenge going forward is to avoid having partners step on one another's toes. The partner collaboration strategy is one way Microsoft aims to deal with that problem, according to officials. *