Underneath the product announcements and licensing changes that are common themes at any vendor conference, this year's Microsoft partner-fest in Toronto revealed a deeper transition occuring in the vendor's ecosystem. The cloud and software giant wants its hundreds of thousands of partners to work together to drive third-party apps into the hands of customers.
It's a new world order, one in which Microsoft is not necessarily the central hub, and where partners can piggyback on its reach.
At WPC, it's been mentioned as "channel-as-a-service" – a way to use that giant network of partners as a weapon against Microsoft's cloud competitors. According to the vendor, "Microsoft has the largest channel network in the industry. Larger than AWS, Google and Salesforce combined."
The linear channel model worked in the good old days of boxed software, when success was based on the number of units shipped. In the cloud world, where customers can turn software on and off with the click of a mouse, consumption is the metric. Enter the independent software vendors (ISVs), the companies who build new applications on top of platforms such as Office 365, Sharepoint and Dynamics.
All of the big cloud vendors – such as Amazon Web Services, Google and Salesforce –have ISVs developing software add-ons around their platforms. Where Microsoft hopes to stand apart is by offering ISVs the power of its supply chain.
Part of this is Microsoft's new AppSource marketplace, which is already stocked with 200 software and services developed by the ISV community. Another route-to-market is through reseller and integrator partners.
This channel has always been the predominant route to market for Microsoft's own products; at this year's Worldwide Partner Conference, the vendor revealed how it would drive more third-party applications via partners.
Again and again at WPC, Microsoft channel executives talked about fostering more partner-to-partner (P2P) business.
What is P2P business? In the classic reseller-integrator segment, it could be, say, a Sharepoint specialist working with a Skype for Business expert to build a unique productivity solution for a customer.
This strategy brings risks and challenges. Sure, two partners might collaborate on a project where one provides Skype skills while the other does Sharepoint, but both probably sell other Microsoft products – what happens when that customer has an RFI for an Office 365 rollout?
It is too easy to envisage two collaborators suddenly going head to head in a competitive pitch for a piece of work. Does one partner step aside? Or does the marriage break down?
For Microsoft Australia director of partner business Phil Goldie, avoiding potential competition is not that complicated: "Specialisation is the way to stop that."
And if partners do enter into conflict in a customer pitch, Goldie said "we would do what we have always done – competency is a good way for the customer to look at which partner to work with. We don't favour one partner over another other than through that competency lens."
Among Australian IT providers, acquisition has been the more popular way to expand the skillset: look at how award-winning partners such as Readify, Kloud and Ensyst have been acquired by the carriers, or how Empired snapped OBS, eSavvy and Intergen.
Another type of P2P networking – the one predominantly highlighted this year in Toronto – is around ISVs building tools on top of the Microsoft stack, then engaging resellers to get their product out to more customers.
"The best path to get there is through partners – like we do," said Goldie. "Think about how we sell. We sell through partners, and the ISV needs to do that as well."
ISVs have been heaped with attention in Toronto. While IT service providers comprise the bulk of the Microsoft ecosystem, independent software vendors are the golden children. Goldie said he met with around 40 ISVs in the past year alone, to explain how they can leverage Microsoft's expertise, sales force and, crucially, its channel to grow.
"The interactions I have with those 40 is – you must start with the basics, which is a really deep conversation with that ISV about their go-to-market strategy. What is their target customer segment? What does their technology do? What other technologies does it need?"
Microsoft can play matchmaker, linking an ISV with a reseller. One example is Portland, Oregon-based public safety app developer Swan Island Networks, "which had no scale in Australia". Microsoft Australia paired the company up with ASX-listed integrator SMS Management & Technology. "SMS effectively becomes their go-to-market play in Australia – they are selling to the police forces, the state governments and the fire services and so on," said Goldie.
Microsoft is also encouraging its traditional system integrator partners to become ISVs. In fact, some of the best examples of IT channel companies that have successfully done this came out of Australia: Nintex, which has more than 1,000 partners around the world; and LiveTiles, which is listed on the Australian Securities Exchange.
Both Nintex and LiveTiles were born out of Sharepoint integrators: Melbourne-based partners OBS and nSynergy, respectively.
"What is interesting is that more traditional SIs, as they become more like an ISV, they go on that journey of building a channel," said Goldie.
This support is not charity, of course – the more popular and useful the application, the greater consumption of Microsoft platforms and the higher the licensing revenue for the Redmond-based vendor.
Next: changing partner philosophy
Steven Kiernan was a guest of Microsoft at Worldwide Partner Conference
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