Microsoft Remodels Channel Program

July 21, 2009

Microsoft Corp. is retooling its channel program, tossing out the current system of levels and designations and replacing it with rankings meant to more accurately reflect partners’ skills, market focus, performance and success in satisfying customers.

The vendor announced the sweeping changes—including a new name, the Microsoft Partner Network—at its recent Worldwide Partner Conference, detailing its thinking behind the overhaul and introducing new partner categories, competencies and areas it intends to emphasize.

In diagramming the new scheme, Allison Watson, vice president of Microsoft’s worldwide partner group, called it the “next evolution of the Microsoft Partner Program, based on our continued commitment to support customer business success and achieve industry-leading partner and customer satisfaction.”

Microsoft last revamped its partner program in 2003, when it expanded the framework to include a wider range of partners all housed under one umbrella. At that time it established Gold, Certified and Registered tiers, incorporated better success measurements, segmented highly skilled partners and offered additional benefits.

Now, faced with a burgeoning array of new partner types sporting a greater variety of specialties and needs—and suffering a lack of differentiation among its upper tier partners—the vendor plans, over the next year and a half, to phase out its earlier membership levels and install four new categories, namely, Community, Subscriber, Competency and Advanced Competency.

Bigger channel budget

The upgraded naming convention spans a full range of partners, from entry level to top achievers and everything in between—Microsoft estimates that it works with as many as a dozen different partner types—and covers the gamut of the 360,000 program members worldwide.

Under the incoming program, Community partners will be those that are considering selling Microsoft products but have yet to do so; Subscribers will be partners that have committed to building a Microsoft business or skill in a particular area; Competency-level partners will have earned a solution specialization in the Microsoft program; and, Advanced Competency will be reserved for Microsoft’s highest level partners, those most committed to their Microsoft business.

“In the new Microsoft Partner Network, there’s a home for every partner, from traditional value-added resellers, system integrators and independent software vendors to emerging partners like Web platform developers, Web agencies and hosters,” Watson said. “Partners are in our DNA, and we’re evolving our program based on what customers and partner have asked for.”

With upwards of 95 percent of Microsoft’s revenue driven through its partners, the company readily acknowledges that their performance is critical to the vendor’s fortune.

Indeed, Kevin Turner, Microsoft’s chief operating officer, expressed the company’s commitment in dollars and cents when he told the conference’s assembled partners that the vendor will increase its channel budget some $400 million to $3.3 billion.

In the new format, at the Community level partners will not be required to produce much more than a name and an address to participate. However, at the Advanced level the company, among other conditions, will compel members to partake in regular, official customer satisfaction surveys. Results from those surveys will be used to assess partner performance.

Microsoft now counts about 16,700 Gold-certified partners worldwide, approximately 27 percent of which are based in the U.S. Since 2007, the category has grown about 30 percent globally and 50 percent in the U.S., prompting some resellers to complain that the designation has lost is luster and offers little distinction in competitive sales situations.

While it’s too soon to determine if the reformulated ranking criteria will pare the number of partners at the vendor’s highest level, Watson indicated that the more rigorous requirements of Microsoft’s new best-in-class grade should enable partners to better distinguish themselves from one another.

Dave Sobel, chief executive of Evolve Technologies, a Washington, D.C.-based managed services provider with a virtualization practice aimed at small- to medium-sized businesses, said in an online statement that the program changes will help partners to stand out.

“At least in the small- to medium-sized business where my company plays this does allow an engaged partner to really differentiate themselves well and show the value of their educational investment to their customer,” Sobel said. “I like the fact that Microsoft continues to respond to partner and customer demand and to continue to try to improve the program.”

Currently, Gold-certified Microsoft partners must earn at least one competency—an area of proven experience and skill—among 17 different categories comprising some 40 specializations. The company said that by December it will consolidate competencies and specializations into a set of 30 so-called solution competencies to include new technologies and reflect skills that customers are more apt to recognize.

For example, the Advanced Infrastructure Solutions competency, which encompasses Active Directory and Storage Solutions specialties, will be renamed to Server Platform Solutions.

Microsoft officials also said that current Gold program members re-enrolling in the program for 2010 must have participated in its Customer Satisfaction Index within the last year. In addition, the company is urging partners to update their marketing materials to reflect current competencies and designations. New program materials will be available in 2011.

Busy year ahead

Watson conveyed three specific areas—sales and marketing skills, customer satisfaction and social networking—that Microsoft will stress to partners as it phases in the new program, with the former carrying particular significance owing to the company’s rollout of new technology and the latter gaining importance as online communities play a greater role in everyday business activities.

Microsoft said that not only will it unveil an unprecedented volume of new technology this year—chief executive Steve Ballmer called it “absolutely the most phenomenal year we’ve ever had for new technology releases”—but also will unwrap or reconstitute learning resources, tools and models to build practices, drive sales and estimate profits.

Accordingly, the vendor said it will re-launch the Partner Learning Center, placing all training options at one central portal for partners to access. In addition, it is introducing tools for software-plus-services, specifically an enhanced profitability modeler that allows partners to estimate profits from an annuity business model.

Also, the company’s Practice Builder and Services Ready initiative is designed to help partners build a specific practice using proven intellectual property. Green Light provides tools to test applications along with technical suggestions for compatibility.

To help partners corral new customers, Microsoft is offering digital marketing resources such as search engine optimization, business planning services tools, a demo showcase on Windows Azure, tools to assist partners to make the case for IT investment to prospects and collaboration materials.

At the partner conference, Microsoft also announced the winners of its partner-of-the- year awards. From a list of 2,000 entrants, the company named 69 winners in 31 categories, ranging from Advanced Infrastructure Solutions, Active Directory Partner of the Year, won by Quest Software, to Unified Communications Solutions, Voice Partner of the Year, won by Intrinsic Technologies.