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Microsoft Worldwide Partner Conference by the Numbers

22 Jul 2015 by Howard M Cohen

Perhaps the most important number announced for service providers at this year’s Microsoft Worldwide Partner Conference (WPC) in Orlando, Florida, was the $45 billion in partner services revenue generated by Microsoft cloud and enterprise projects in fiscal year 2015.

The message: Partner services revenue will be the key to success in the Microsoft Partner Network going forward — more than fees or other incentives earned from the sale of Microsoft’s services. In fact, Microsoft Corporate Vice President of the Worldwide Partner Channel Phil Sorgen only used the word “incentive” once in his keynote presentations.

New channel leaders

Sorgen focused on the two types of Microsoft partners that will dominate the channel going forward: Cloud Solution Providers (CSPs) and Independent Software Vendors (ISVs). This year’s WPC announced the full, formal launch of the CSP program in 131 countries. The new ISV Go-To-Market Team was also introduced during the conference.

“We see today’s successful partners building an annuity business that is based on multi-period or multi-year contracts,” explained Sorgen during his keynote address. “But more importantly, this annuity business is rooted in their first-party IP [Intellectual Property]. Their own capability is a key component of the solution. They’re developing an innovation culture. They know that it sets them apart from their competitors. And it’s a key driver of profitability.”

While Sorgen indicated last year that “Microsoft’s one job is to provide a platform that partners can be successful selling their solutions on,” he said last week at the WPC Conference, “Now the number of partners we see building their own IP is steadily increasing. They’re realizing new revenue streams out of this. Now I want to also be clear that there are multiple ways to monetize your own IP. It could be a Software-as-a-Service (SaaS) extension that you package and sell as a subscription service. It could be your IP integrated into a managed service. It could be developed into repeatable methodologies that extend your project services work.”

Partner IP connected to the public cloud

Sharing the results of an IDC study, Sorgen reported that “those doing more than 50% of their business in the cloud were acquiring new customers at 1.3 times, realizing revenue growth of 1.4 times and profit growth of 1.5 times compared to the rest of the industry. Partners with more than 50% of their business in the cloud were realizing a company valuation of 5 to 14 times EBITDA or earnings before interest, tax, depreciation and amortization, versus the rest of the industry at 2 to 4 times.”

Microsoft partner imperative

The three most-repeated words at WPC were “Increase Azure Consumption.”  Clearly Microsoft has invested heavily to build “more than 100 data centers in 40 countries around the world,” and just as clearly they are not recovering those investments due to lower-than-anticipated consumption of services. As such, Microsoft is opening its arms to any and all solutions that sell more Azure subscriptions and drive more Azure consumption.

Microsoft is even welcoming Open Source solutions with open arms, encouraging developers and others to bring their Open Source databases and applications to Azure. In a private conversation, Sorgen pointed out Open Source developers who are coming to the Azure platform discover Power BI and other Microsoft tools they never would have looked at otherwise, and they’re adopting them.

Service provider opportunity

It’s a new dawn for service providers, and the Microsoft ball is in your court. Talk to your Insight advisors about the new world of Microsoft opportunities. Learn how you can differentiate your business, decrease commoditization of your offerings and leverage the marketing momentum of Microsoft to your own advantage. Find out how to develop offerings based on your own IP, and use Microsoft’s marketplaces and partner ecosystem to create your own sales channels. To see these keynotes for yourself, visit the Microsoft Partner Network WPC videos page.