Microsoft FY18 Partner Strategy
At the Microsoft Inspire partner conference, Microsoft announced major improvements to how they support partners for the year ahead (FY18). This article summarizes their new partner strategy and the opportunity for managed partners to tap into Microsoft co-sell resources.
Microsoft’s One Commercial Partner (OCP) organization is meant to simplify the partner experience with Microsoft and align incentives with Microsoft sales teams. The framework for partner support is “Build-With”, “Go-To-Market”, and “Sell-With”. This framework applies to ISV, Systems Integrator, Managed Service Provider, and Reseller (channels) partner types.
Overarching customer themes remain the same as FY17: Empower Employees, Engage Customers, Optimize Operations, and Transform Products. These are addressed through 4 main Microsoft workloads: Modern Workplace, Business Applications, Applications & Infrastructure, and Data & AI. Microsoft FY18 scorecard items include the following:
Azure Consumed Revenue (ACR)
Azure Customer Adds (ADA)
Dynamics 365 Customer Adds + Revenue
SQL Server + Azure Data Services Revenue
Office 365 Commercial Paid Subscribers
Office 365 Active Commercial Usage
SPE (Microsoft 365) E5 Commercial Subscribers
Windows 10 Enterprise Deployment
Microsoft is implementing a major change in the sales organization structure. The former EPG and SMSP (CAM, CTM, SMB) segmentation no longer applies. Instead there will be Enterprise and Small Medium Corporate (SMC). Historically, the break point for EPG coverage was ~1,000 employees. Employee count will no longer be the criteria for Enterprise account coverage.
The Microsoft Account List will be redefined to incorporate cloud potential: expect this list to be finalized in August. SMC coverage will be provided by tele-coverage teams, shifting field sales resources away from the upper mid-market coverage in favor of more 1:1 management of enterprise accounts.
In the US, there will be East and West regions (vs. East/Central/West in FY17) and 8 districts within those regions (vs. 14 US geographic districts in FY17). This means some territories will merge. While the organizational blueprint has been defined, it will take a few weeks for Microsoft staff to understand their new roles and objectives.
Microsoft is also returning to a strong industry focus (particularly for financial services, manufacturing, retail, education, healthcare, and government). Top partners will be represented in “solution maps” which Microsoft field sellers will use to prioritize which partners to lead with. Note that to qualify for a solution map, partners will need to commit to getting listed in AppSource or the Azure Marketplace.
Enterprise sales teams will continue to have Account Team (ATU) and Specialist Teams (STU), plus a new Customer Success Unit (CSU). Sales teams will not have quota for new Azure contract sales (unlike FY17) and will continue to have quota for Azure Consumed Revenue (ACR). As a rule of thumb, each field seller is expected to drive an incremental $1M in Azure revenue in FY18.
Co-Sell Ready ISV sales will result in ACR quota offset for Microsoft sellers, similar to H2FY17. This ISV incentive resulted in $1B in Microsoft retired quota in H2FY17. New for FY18, partner sales of Office 365 will apply to Microsoft field sales Office 365 quota objectives.
Note: I’ve updated the Microsoft Acronyms for Partners to include the new role and organizational acronyms.
Microsoft is investing in partner co-sell incentives and headcount (including 600 channel managers worldwide). Partner teams are organized around the “Build-With”, “Go-To-Market”, and “Sell-With” framework. Co-Sell partners will have access to a Partner Development Manager (+ supporting Partner Technical Strategists) for Build-With support. Partner Marketing Managers (+ supporting Partner Channel Marketing Manager) in the Go-To-Market team will manage co-marketing resources. Sell-With is supported by Enterprise Channel Managers. The SMC customer segment will be served by Territory Channel Managers. Note that channel managers are assigned to customers, not dedicated to specific partners.
To qualify for co-sell engagement, partners will have to maintain a Gold Microsoft Partner Network Competency and have a Partner Seller (P-Seller) on staff (in addition to exceeding Azure consumption criteria which will be built-in to the Competency requirements). Azure Marketplace or AppSource listing is preferred but not required.
Sellers will be able to rate partner co-sell execution based on sales and implementation performance. This will keep accountability on Microsoft partners to execute well on the Partner Connect/deal registration management as well as solution delivery.
This year’s partner conference was relatively light on product announcements. The key news was Microsoft 365 which merges Office 365, Windows 10, and Enterprise Mobility & Security capabilities into 1 subscription-licensed suite. Available in both Enterprise and Business (SMB) versions, it will generate monthly recurring revenue streams for Microsoft and its partners.
Steps to take in July/August
Microsoft was able to communicate enough of the planned changes for the Microsoft employees to intelligently engage partners at Inspire. Microsoft staff will gain deeper insight into OCP implementation and their specific roles/objectives at Microsoft Ready, Microsoft’s Public Sector kickoff (ISU), and District Kickoffs (in July/August). Managed partners should maximize their alignment and exposure as Microsoft sales teams initiate account planning activities (in August). Actions to take in July/August:
Assert your relevance to Microsoft industry stakeholders to stake your claim on the appropriate industry solution maps
Increase your awareness with regional Microsoft teams
Map your leads/opportunities to strategic accounts in the Enterprise segment
Summarize your Microsoft FY18 scorecard alignment and co-sell capabilities in time for the Microsoft account planning cycle