Working with partners, and helping them create profitable cloud practices, is not only a deep passion of mine, it is also my job at Microsoft. Our focus is to help partners make the transition and evolve their business models to where the industry is clearly moving: cloud-enabled Services and Devices.
The types of Partners and the opportunity with Cloud services
From my point of view, I see two kinds of partners: 1) Partners that sell somebody else’s products and/or services and 2) Partners that sell their own products and/or services. For the first kind of partner (pure resell or licensing), we clearly see a shift into more diversified business models (services and IP) as the margins continue to be squeezed and prices continue to lower on the portfolio of vendor products. For the second kind of partners that are shifting toward, or have always been, selling their own products and/or services, we see an expanding opportunity directly correlated to the profitability models of the future.
Project based business models (usually associated to an SI or VAR) are taking on new life through the introduction of cloud-based environments. The hybrid IT requirements of customers creates new complexities and opportunities for our customers and for these partners to solve. Additionally, these partners are expanding new managed services practices to meet their customers’ expectations of continuous engagement that comes with the continuous service of cloud computing.
Rolling out managed services is a very strategic long-term effort that can yield annuity revenue based on billable and packaged services, as well as a high overall gross profit. It also creates opportunity for partners to develop their own IP/Apps on cloud-enabled devices and to sell the value to customers.
All of these opportunities and points of business model evolution shouldn’t be taken lightly. There is no silver bullet to make it all happen. As we have seen from some partners, it takes hard work, smart investments, realistic expectations on breaking even, and turning the model in cloud into a long-term sustainable equation of profitability. But, the opportunity is definitely there, and I am seeing it happen all around me as I meet partners from around the world betting on Microsoft Cloud Services. Partners are taking advantage by being the first-mover, winning new customers and positioning themselves for the future.
Making it easier than ever to harness the power of the Windows Azure to grow your business
Our responsibility is to help partners be successful in this new model. That materializes based on our investments and our business model platform. I’m excited to share with you that Microsoft has recently announced a significant change to the Enterprise Agreement to make it easier than ever for you to take advantage of the power of Windows Azure within the solutions you provide to your end-customers.
The Microsoft Enterprise Agreement (EA) has always been the best way to offer our enterprise customers the most economical means to plan for the future and get the most value using Microsoft technology. We are now extending that benefit to our partners – not just to take advantage of the benefits of the EA for your own use, but also for the use of your customers who are consuming your managed services and IP. Below are five key elements which are enabling these changes:
1.) We are enabling Managed Service Providers, System Integrators and ISVs to host & manage applications that are owned by their end-customers. This is not about resale. There must be a Solution running on top of Windows Azure that you enable and manage for the customer.
2.) We are offering our partners the same best pricing that we provide to our customers. Through the EA commitment to Microsoft, both partners and enterprise customers will get our best Azure prices—regardless of the upfront Windows Azure commitment. More importantly, you have the ability to aggregate all service usage; be it for your own needs or to support your hosting/managed service business against the same EA.
3.) Microsoft has also extended those same great rates to unplanned growth that partners and customers have on Windows Azure, so all Partners and customers are free to grow as they need without the fear of overage penalties.
4.) Partners and Customers can now pay Microsoft at the end of the year for that unplanned growth, as long as that extended use is within certain thresholds
5.) Windows Azure via the EA gives partners and customers access to the Enterprise Portal, a great resource for partners managing multiple accounts or subscriptions
How it Works
Any partner or customer can add Windows Azure to their EA by making an upfront monetary commitment to Windows Azure. That commitment is consumed throughout the year by using any combination of the wide variety of cloud services Windows Azure offers from its global datacenters. If usage exceeds the commitment, the licensee will be billed in arrears for that usage without penalties, either quarterly or annually depending on whether that additional use is more than 50% beyond their original commitment.
We are excited about the new changes and how this enables our services partner community to better deliver world-class solutions based on Azure to your customers.
These changes are just a start in how we are enabling, you, our partners to be the catalyst in driving Cloud Solutions.
We look forward to being a part in your success.
Contact your Microsoft Account Manager or Licensing Partner to get started today. More information on these changes can be found at http://www.windowsazure.com/en-us/pricing/enterprise-agreement/