Forrester attended Microsoft’s second annual Asia Pacific Analyst Summit in Singapore last week for an update on the company’s progress in transforming into a devices and services company. The event highlighted Microsoft’s strengths and exposed some obvious challenges, which I’ve shared below. Forrester clients can access further event-related analysis and implications here.
Day One: Impressive Capabilities And A Strong Understanding Of Customer Needs
Day one was well designed and delivered, with a clear focus on customer and partner case studies and go-to-market strategies based on three core imperatives:
Transforming IT. Focusing primarily on Cloud OS, Windows Azure, and Office 365, this imperative highlights Microsoft-enabled capabilities and resources to help IT organizations transform both internal data centers and IT delivery.
Engaging customers and employees. This imperative essentially combines mobility and social to help organizations thrive in the age of the customer by delivering improved customer service and customer and user experiences.
Accelerating customer insight and business process improvement. This imperative targets the changing needs and expectations for data and information access and real-time decision making via a combination of traditional analytics and big data.
Microsoft (MSFT) recently announced plans to sell Surface tablets to enterprise customers, including educational institutions, through a two-tier partner program called Microsoft Devices Program (MDP). The program authorizes distributors to sell Surface to a newly designated group of device-authorized large account resellers (LARs). Per the announcement, in the US, Surface will be resold through three authorized distributors (Ingram Micro Inc., SYNNEX Corporation, and Tech Data Corporation) and 10 high volume LARs. MDP is likely to be expanded to select partners in 28 other countries by the end of September 2013. As part of the initial go-to-market model, Microsoft is not including its solution providers in the program.
Based on recent media reports, Microsoft’s US partners -- solution providers in particular -- have expressed dissatisfaction with Microsoft’s selective approach towards partnering for Surface. Solution providers feel Microsoft is ignoring the opportunity to deliver “wrap-around services” around Surface, which they could have delivered.
I believe that in the near term, Microsoft is correct in limiting access; but, in the longer term, it will need to open up to other partners, including solution providers that can help Microsoft deliver Surface-based solutions as a means to ensure differentiation in the tablet market and drive margins. Microsoft needs to follow some key guidelines as part of Surface’s go-to-market strategy if it wants to stand above the crowd:
A lot of tech vendors – and channel partners – are struggling over what channel partners’ play in the cloud services demand chain is going to be. Technology is decreasingly delivered/consumed in the form of on-premise installation (a function performed by and the original raison d’être of channel partners), and increasingly delivered as-a-service by a service provider. In the software sector, that service provider is typically (but not always) the software vendor (think: salesforce.com).
And, in most cases, for good reason. Software has bugs. Early versions of software can be unstable and unpredictable. In the classic channel-partner-sells-and-installs-software model, the product (the software) remains in the control of the software vendor, i.e., the vendor assumes the risk of customers’ unmet expectations. The license is between the vendor and the customer, and the vendor is on the hook for providing bug fixes and tier-2 and -3 support.
As much as many channel partners would like to act as application hosters (and many of them do – approximately 15% of software is delivered via a hosting model today, and 20% of channel partners today have a hosting business [see “Channel Models In The Era Of Cloud”]), when it comes to early-version or mission-critical software, vendors simply can’t risk putting the as-a-service service level/performance responsibility in the hands of channel partners. Service failures, over which the vendor would have no control, would result in egg (or worse!) on the vendor’s brand, not the channel partner’s. Until tech vendors’ partner programs mature to the point where they can certify partners’ data centers, those vendors are going to be reticent to hand over the data center reins to partners.
What is the opportunity for Microsoft partners (or other VARs, SIs, ISVs and technologists) in the emerging cloud computing space? Don't think of cloud as a threat but as an opportunity to ratchet up your value to the business my evangelizing and encouraging their transition to the cloud. How? At the recent Microsoft Worldwide Partner Conference I addressed this issue in an Expo Theater presentation. Missed it? Now you haven't: