Microsoft aims for 1m partners

(By Philip Carnelley, Tue July 14 2009, 9.05am) Microsoft made a couple of interesting announcements at its Worldwide Partner Conference in New Orleans: Office 2010 – in its standard and ‘cloud’ versions (which we foreshadowed on Sunday, see Google hastens launch of Microsoft 'Office-in-the-Cloud'); and a revamping of its partner programme, now renamed the “Microsoft Partner Network”. Microsoft currently has some 640,000 partners worldwide; the revamp is part of a reported goal to raise this by 50% to over a million, over the next 2 – 3 years. Astonishing numbers.

Microsoft’s partner network is one of its greatest assets. Even mediocre products, once put into the hands of this huge machine, can become best sellers. Also, unlike most software companies, Microsoft can afford to sink considerable sums into just about everything it develops, safe in the knowledge that through its resellers and VARs it will be able to reach out to all parts of the globe and across virtually every industry.

The overhaul of the partner network is massive and therefore potentially disruptive. Over an 18-month period, Microsoft will replace its long-familiar three-tier accreditation (Gold, Certified and ‘General Register’) with a new four-level system based on competencies. This will supposedly better differentiate partners’ capabilities and specialisations (for more details see here). All partners will have to be reaccredited according to the new system, which sounds to us like a huge operation.

When Microsoft moved into the business applications industry five years ago and set up its Dynamics division, it changed the nature of its partner network considerably, bringing in partners where specific industry knowledge was a core competency. We believe this is one of the main drivers for the change – to differentiate based on such knowledge. Further, Dynamics remains a relatively small part of Microsoft’s revenue stream and so ramping up the Dynamics partner network is an important route to increasing Dynamics revenues.

In the new system, Microsoft can put more focus on Dynamics ERP and CRM application resellers with strong vertical market skills. Microsoft will reward partners that generate sales from new customers, and who demonstrate the ability to link Dynamics with other Microsoft strategic products like SharePoint. That said, many, even most, of the new partners will be traditional resellers and integrators with network, system installation and integration skills. As Microsoft’s main business streams are growing at just a few percent per annum, it looks likely that there will be larger numbers of players fighting over a similar-sized pie. Positively Darwinian.

Microsoft’s partners will probably not welcome the additional effort and costs associated with the new certification process. Exactly what it will cost, and how long it will take, remains to be seen. But if it leads to better quality business and happier customers, then it may well be worth the pain. At least, that’s what Microsoft, its partners and customers will be hoping for.