Microsoft cuts fees and restructures partner programs

Microsoft has revealed new cloud competencies and cut program fees at World Partner Conference (WPC) – and the updates could be just the tip of the iceberg for larger changes across its partner programs.

In her keynote on the opening day of WPC in Washington DC, Gavriella Schuster, general manager of worldwide partner programs, outlined a raft of changes to the Microsoft Partner Network (MPN), including waiving fees for its three new cloud badges, and a wholesale fee cut of up to 10 percent across all its on-premise competencies.

The new competencies are "Small and Midmarket Cloud Solutions" for selling Office 365 to small and medium customers; "Cloud Productivity" for selling Office 365 to enterprise users; and "Cloud Platform" for delivering infrastructure-,  platform- and software-as-a-service on Azure. They will launch on 29 September.

These Cloud Performance Path Competencies will progressively replace the existing Cloud Accelerate Cloud Deployment and Azure Circle programs.

A near-20-year Microsoft veteran, Schuster took the new role in May. She is ultimately responsibility for MPN, which oversees marketing funds, training and certification for hundreds of thousands of partners.

Speaking to CRN, Schuster said she has a mandate to rationalise the wide-reaching Microsoft partner program.

"We have gotten to a point where every product has some set of requirements and benefits that are slightly different to other products. What I plan to do long term is to start to bridge that and rationalise that and really try to drive some level of consistency, because I think that's enough to drive a partner crazy."

Microsoft announced several major changes to partner programs on the opening day of WPC, with the news that it will waive the first year's fee for silver cloud competencies, along with some other benefits aiming to hasten partners' move to the cloud.

The vendor is enhancing partners' internal use rights for Office 365 and Azure from between 25 percent and 200 percent, and is also offering unlimited support.

Lastly, Microsoft is reducing the fees for all on-premise competencies by 10 percent. While Schuster hoped partners would use the savings to re-invest in the cloud, there are "no string attached".

It is understood that the fee waiver and price cut represent a significant sum of money, but Schuster said: "There is obviously a cost to Microsoft to do that but we are not out to make money out of our partners. The partner program doesn't exist to make money for Microsoft."

Consumption economics

In future, competencies will be increasingly graded on customer consumption, something easier than ever before because cloud technology allows for real-time customer feedback. This could open up more "sophisticated" ways to measure and monitor client usage and to structure partner programs in the future, said Schuster.

"The cloud affords us an opportunity to  do that because we have that direct insight from their [customers'] usage and their consumption."

Measuring on consumption is essentially measuring the value the customer is getting out of their investment.

For example, it is understood that partners will be more highly recognised if their customers tap into the full suite of Office 365 tools, rather than just mainstays like email, Word and Excel.

Microsoft Australia's new director of partner, Phil Goldie, said: "Typically, competency attainment has been based on revenue performance, customer deployments and case studies, and training. One of the major changes has been thinking less about pure revenue and more about consumption.

"The competencies will focus more on how effective partners have been in getting customers to use the services they have paid for: not just selling the service but making sure customers are getting maximum value."

This should help Microsoft in its battle for customer stickiness amid the SaaS war with Google – a battle Microsoft wants to win on features and functionalities, not price.

"At a broad level, one of the benefits for customers in the cloud is you can move," said Goldie. "The barriers are more straightforward. Happy customers that are getting value don’t move. We know that happier customers are those that have deployed and used more technology."

Steven Kiernan is a guest of Microsoft at WPC.