Microsoft outlines plans at Worldwide Partner Conference
Despite being one of the largest and most successful companies in the world, Microsoft is refusing to rest on its laurels. At the Microsoft Worldwide Partner Conference, the vendor outlined its plans for the future. James Sherwood reports from Boston
Being a big fish in a big pond is a position many businesses would aspire to. In the IT industry, Microsoft is undoubtedly the largest software vendor in that market and has reached the top of the food chain.
Such a position can present a number of benefits for the vendor, including the ability to negotiate the cheapest sale terms possible from suppliers and the ability to offer competitive margin rates to its regions of partners.
However, when compared with smaller and more agile rivals, larger businesses have been known to move at a more sluggish pace and with a reduced ability to adapt to market changes because they are weighed down by their size.
One large vendor working hard to adapt to changes in the IT industry is Microsoft. At this year’s Worldwide Partner Conference (WPC) held in Boston, the vendor presented a string of new ideas to its 7,000 channel delegates. The initial impression it presented was that its sails were swelled with a strong wind, it was picking up speed and heading toward a range of new and exciting continents.
The first exciting development that the vendor spoke of was the notion of People-Ready Software (PRS). Microsoft aligned the term to many of its latest software announcements during the three-day conference, such as Office 2007 and Windows Vista.
During his keynote speech, Steve Ballmer, chief executive of Microsoft, told attendees that PRS was a notion its channel partners could gain direct benefit from.
“People-Ready Software is the overall message to empower people and businesses,” he said. “We have many partners ready to help customers become people-ready businesses.
“Our industry is full of change. Microsoft and our partners have to embrace it and work together to find these new opportunities.”
To illustrate its adoption of change, Ballmer proceeded to announce several additional technology verticals that it plans to take its operations and partners into. For example, business intelligence, voice over IP, unified communications and security.
“Each initiative we introduce to enter a new market is very important for our partners to understand,” he said. “We have to continue to work through our amazing group of partners to bring these new end-to-end products to market.”
To help it sail into these new waters, the vendor announced a number of new software products that have been designed to allow its channel partners to bring together specific Microsoft technologies to form a personalised platform specific to end-user requirements.
For example, Paul Duff, senior product manager at Microsoft, said that active speaker detection technology – which falls under Microsoft’s unified communications umbrella – has been developed to allow the image of multiple participants in a videoconference to switch when a different person begins speaking.
However, one expansion area that caused the largest amount of interest among channel partners was its move further into the security market.
Although Ballmer spent relatively little time on the subject, Dave Simpson, commercial director at VAR Softcat, told CRN that the expansion was likely to be a follow-on from Microsoft’s previous acquisitions in the space, namely anti-spam vendors Giant Company Software and Sybari, as well as anti-virus vendor GeCad.
“Microsoft is planning to make security software available,” Simpson said. “This will give channel partners a large opportunity in both services and licence revenue.”
Allison Watson, vice-president for worldwide partner and small business groups at Microsoft, told WPC attendees that its expansion into new technology areas, such as security, would ultimately be of great benefit to its channel partners.
“We are working hard to make sure that our partners have better opportunities than those working with competitors,” she said. “We are committed to driving partners’ success.”
Andy Dow, marketing director at Microsoft distributor Westcoast, echoed Watson’s comments. He told CRN that he was excited by both the breadth and the reach of the Microsoft expansion.
“I came away from the conference very buoyant, secure and with a feeling that Microsoft is beginning to strengthen its foundations,” he said. “Microsoft is really opening the gates for partners. It has presented a period of change to partners and its actions here could be a real boost to the channel.”
However, not every VAR appeared convinced that the Microsoft ship was heading in the right direction.
“I’d prefer it if Microsoft stuck to what it’s good at, because as soon as it goes into new areas there is the potential for new problems,” said Iain McGlade, new business generator of Microsoft Gold partner European Electronique. “Selling Microsoft has always been difficult from a margin perspective; the real margin tends to be in the implementation.”
However, as with all new announcements in the channel, questions are raised as the news is digested and considered. Questions such as how Microsoft is planning to take all of its new ideas to market.
As revealed by CRN last week (CRN, 17 July), the vendor has begun rolling out a series of direct and indirect forms of UK distributor re-evaluation, such as 25-page questionnaire-style documents and interviews.
Microsoft told CRN that this process, which it claimed will be completed next month, could see new UK distributors brought on board, existing distributors stripped of certain elements of their contracts (such as licensing), or simply see some distributors thrown overboard completely.
While some could argue that Microsoft’s re-evaluation is simply a move to pave the way for its expansion into a broader range of software verticals, Simpson argued that Microsoft was moving in response to changing tides.
“Microsoft should always be evaluating its partnerships because the landscape is always changing,” Simpson said. “So it needs the right people matched up to the products it is selling.
“There’s definitely an opportunity for the channel in these new areas. If Microsoft didn’t constantly expand into new markets then the market would become saturated and it would become more difficult for partners to make any new sales.”
The second new development that Microsoft announced it was confidently sailing towards was software entitled Demo Showcase. This is generic business software that hopes to satisfy end-user demand in the medium-sized business sector, defined as between 50 and 1,000 employees by Microsoft. This also falls under the vendor’s PRS banner.
The vendor claimed that Demo Showcase is able to recognise up to 120 business genres and processes and then link them to the vast selection of software available from Microsoft.
However, the vendor admitted that before it can confidently allow its channel partners the ability to simplify their sales processes through Demo Showcase, it must first redress its current global partner skills shortage.
Don Nelson, general manager for worldwide partner sales and readiness at Microsoft, told CRN that it would need to train about 47,000 partners, but he claimed that a new programme – Partner Skills Plus – would help it to address the problem.
“This [Partner Skills Plus] will help partners to close the gap and invest in time, sales and skills,” Nelson claimed. “A leap of faith does have to be taken by partners though to realise the rewards of the training.”
The programme consists of several different elements, such as subsidised training courses, sales, technical and marketing support, a series of informal evening courses and downloadable training videos.
It was almost inevitable that while Microsoft happily presented its latest software and services developments across a plethora of slideshows to thousands of intrigued resellers in a dimly lit convention centre, it would also confront them with a new route to market and another acronym: Software as a Service (SaaS).
According to a recent IDC study, demand for SaaS delivery methods, such as software on demand and hosted application management, continued to increase in both momentum and end-user mindshare last year. It currently show no signs of retreat for 2006.
“It’s inevitable that things will be done better as a service in the future,” Nelson added.
However, Paul Russell, head of consulting at VAR Servo, told CRN that SaaS will never be truly accepted by all end-users.
“Many end-users want software this way because it takes the hassle out of software purchase and management,” he said. “But there will always be end-users that see SaaS as an unnecessary cost and will consequently opt out.”
Microsoft also used the event as an opportunity to talk about its intention to grow its foothold in the CRM market, and to bring partners up to speed on the technology and its benefits to end-users.
Jason Nash, UK product solutions marketing manager for Microsoft CRM, told CRN that to benefit from what will be an increasingly heavy period of investment in the technology from Microsoft moving forward, its partners would have to begin thinking holistically about CRM and stop seeing it as a silver bullet.
“Our partners might not have thought about bringing services together before and this represents a big opportunity for them,” he said. “The challenge [in the CRM market] this year is to get our partners to think about CRM from a business-process point of view, rather than as a straight sale.”
Boston’s weather during the three days of Microsoft’s WPC changed intermittently from hot and sunny to hot and raining, but overall the message from the WPC was one of clement weather ahead for the channel.
Richard Best, business manager for software asset management services at VAR Teksys, summed up the event’s partner announcements.
“This event has been mostly an ideas factory,” he said. “However, the potential returns on the cost of this trip are a great chance for us to advance.”
Microsoft ready to shake up distribution strategy
Contacts:
European Electronique (0845) 345 8340
Microsoft (0870) 6020 100
Servo (01629) 832 111
Softcat (0870) 800 1000
Tecksys (01256) 827 555
Westcoast (0118) 912 6000