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Microsoft Slowdown? Partners Investing Despite ‘More Cost-Conscious’ Customers

Wade Tyler Millward

Interlink, Core BTS, LAN Infotech, Guardian Computer and Ensono weigh in on Microsoft’s tough week.

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Partners tell CRN that even if Microsoft growth is decelerating for their businesses, they still see potential for bringing in more revenue from customers by offering more Microsoft products and services in security, data analytics and moving legacy applications to the cloud.

The earliest round of Microsoft’s 10,000 layoffs happened Wednesday, with employees in the areas of marketing, advertising, recruiting, gaming and mixed reality among those to publicly report their leave from the tech giant.

Some investment firms have issued positive reports on Microsoft doing well in the long run even with the United States apparently headed for a recession with rising inflation and interest rates. Other firms have said Microsoft’s growth period has reached a slowdown.

[RELATED: Microsoft Layoffs Ahead Of Q2 Earnings: 5 Things To Know]

Are Microsoft partners seeing a slowdown?

Mike Wilson, chief technology officer at Mason, Ohio-based Microsoft partner Interlink Cloud Advisors, told CRN in an interview that his 52-employee company expects “significant growth” from 2022 to 2023 while declining to give an exact figure.

Security remains a major growth area for Interlink, Wilson said. His company has been working to move customers beyond the tools they get through Microsoft’s Enterprise Mobility + Security platform.

“Customers are coming around to the idea that Microsoft is the top security company in the world,” Wilson said. “We’re seeing people really start to look at how they handle threat protection. And Defender XDR (extended detection and response) is resonating. The message that you have a set of integrated tools that are all pretty good individually, but are better than the sum of their parts when they get put together is really working well.”

Outside of security, Interlink has been investing in its prowess around Microsoft SharePoint to give Teams users more collaboration options and building up its Power Platform business to bring more developers to the low-code tool and achieve more business process automation.

While Wilson said he is sad to hear about Microsoft’s 10,000-person layoffs, his company is ready for the chance to recruit top talent.

“I certainly feel bad for the people that are having a transition and obviously the disruption that goes with that, but I don’t see any impact to our business based on what Microsoft’s doing,” he said.

Michael Goldstein – CEO of Fort Lauderdale, Fla.-based Microsoft partner LAN Infotech – told CRN in an interview that customers are still investing in cloud growth but they are “more cost conscious than before,” maintaining their Azure consumption rate instead of increasing it.

Instead, security is the area of growth he’s investing in, with February and March popular times for attempted breaches, he said. LAN Infotech – a member of CRN’s 2022 Managed Service Provider 500 – even plans to roll out security reviews for customers.

“We see a big growth on the security side of it,” he said. “We’re really excited about the Defender suite and the ratings that it’s gotten. And all those kinds of things. So I see pushing security, Sentinel. There’ll be a lot of big stuff coming in that side of it, and people will look into that consolidation stage. ‘So, Mike, do I need to have four vendors? Or can it all come from Microsoft?’”

Goldstein is also still excited for more Teams features and how Microsoft will promote Mesh as part of its workplace tools.

Jean Prejean – president of Metairie, La.-based Microsoft partner Guardian Computer – told CRN in an interview that her 11-employee business is investing in growing its capabilities around Azure and hybrid cloud environments.

Although Guardian – a member of CRN’s 2022 MSP 500 – is still busy helping clients dig into the Office 365 suite and even upgrading some customers to E3 licenses, she still expects relatively flat growth in 2023 compared to 2022 due to the economy, Prejean said.

“We had great growth from ’21 to ’22,” Prejean said. “But our forecast for ’23 is pretty flat. We hired three people in ’22. If we hire anybody, it’ll be at the end of the year. We just don’t see big growth this year … we’re not predicting a bad year, but it’s going to be a flat year.”

Gordon McKenna, chief technology officer of public cloud for Ensono – a Downers Grove, Ill.-based Microsoft partner with 3,000-plus employees – said that he expects to double the company’s Microsoft business.

Ensono – No. 97 on CRN’s 2022 Solution Provider 500 – is leaning into Microsoft’s mainframe modernization offerings to help customers move workloads to the cloud and modernize legacy applications. He also wants to get more strategic with Microsoft – and fellow hyperscalers Amazon Web Services and Google – and become more than a co-selling partner.

Even for non-technical businesses that try to move to the cloud using in-house employees and resources, they will learn that outsourcing is the best way to handle complex IT projects, he said.

“Where’s all the growth going to come in our business? It’s from cloud,” he said. “I don’t think there are any of our clients who don’t have a cloud strategy now, which was different from a few a few years ago. And I think all of our clients, if I said the No. 1 thing my clients say to me that they want to get – it is more velocity to the cloud.”

McKenna is also looking into how to use the marketplaces of his biggest vendor partners. Microsoft has been signaling to partners that its marketplace might be a way to sell to customers watching out for any new spending – but who already have a large Microsoft Azure Consumption Commitment (MACC) for discounts.

For partners, transacting through the marketplace also cuts down on the procurement process time, he said.

“A lot of customers commit to large amounts,” McKenna said. “I was talking to a very large financial customer the other day, I think they committed to near a ($)2 billion MACC with Microsoft. … The other massive benefit of marketplace is that customers have one bill. So rather than engaging with Microsoft and giving them money for Azure and then engaging with us and giving us money for services, what they get to do is buy a marketplace item through the marketplace and that goes on their Azure … bill.”

Tony Guidi – senior vice president of the Microsoft alliance at 745-employee, Indianapolis-based partner Core BTS – said that Microsoft CEO Satya Nadella’s comments on customers seeking to optimize their spend as opposed to just spending more with the vendor aligns with what he is seeing.

The pandemic boom time has now given way to customers of Core BTS – No. 161 on CRN’s 2022 SP 500 – looking at getting the most out of their spending on subscriptions and consumption, Guidi said.

“Some projects you‘ll see clients who are somewhat stalling, kicking the can a little bit just to see economically where things are headed and shaking out,” he said. “But at the end of the day, business has to be competitive. And they want to grow their business despite economic conditions and be more profitable. Be more efficient.”

Still, he’s not worried about negative growth in Core BTS Microsoft practice. Core BTS has been seeing a lot of demand around application innovation, Azure’s data analytics capabilities and endpoint security.

“We’re seeing growth in our business really on all fronts,” he said. “Is it growing at the levels we wanted it to … no. But there’s still growth there.”

More Microsoft Layoff LinkedIn Posts

Meanwhile, even more of the 10,000 laid off employees have taken to LinkedIn – a social media network owned by Microsoft – to post about getting laid off from the Redmond, Wash.-based tech giant since Wednesday.

The employees come from Mcirosoft’s gaming divisions, mixed reality, customer success, sales and support and Microsoft Advertising.

Some of those employees are:

A business program manager who’s worked at Microsoft for more than 15 years

Two sisters, one a senior program manager for Xbox Game Studios Publishing and the other a Halo franchise producer at Microsoft subsidiary 343 Industries

A 25-year veteran of Microsoft who was most recently a principal program manager for Services Hub, a digital delivery platform for Microsoft’s Enterprise support customers

A director of retail and consumer goods consulting services at Microsoft for less than a year

An employee on Microsoft’s FastTrack team who provided consulting and business value advice related to Teams

A cloud solution architect 

A Microsoft mixed reality product manager and producer who worked on Mesh and Microsoft’s AltspaceVR platform

A senior customer success account manager 

A customer training associate at Microsoft for more than seven years

A direct sales and support manager with Microsoft for about nine years

A senior product manager for Microsoft Start experiences who worked with the company for almost 16 years

A senior service engineering manager for the Microsoft Advertising publisher display and native policy enforcement team (AdsHelp) at the company for about 17 years

Wade Tyler Millward

Wade Tyler Millward is an associate editor covering cloud computing and the channel partner programs of Microsoft, IBM, Red Hat, Oracle, Salesforce, Citrix and other cloud vendors. He can be reached at wmillward@thechannelcompany.com.

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