The Microsoft Partner Balancing Act: Don't Bite the Hand that Feeds
Anyone who’s spent any time working in the IT industry knows far too well the endless power struggles, networks and dependencies of the companies that populate the sector.
Ecosystem is the perfect word to describe the industry’s partner networks. The biggest creatures dominate the food chain, yet they always face the threat of a changing environment or rivals becoming better hunters. Yet the biggest fish depend on smaller creatures to sustain themselves and sustain the surrounding environment.
If the IT industry is an ecosystem, Microsoft is surely among the largest predators.
However, while Microsoft is fundamentally looking out for number one, it — as with big fish — depends on its symbiotic or “partnership” relationships with countless other small businesses to sustain its success.
Research firm IDC estimates that 92 percent of Microsoft’s revenue comes through its enormous Partner Network. That’s more than twice the 39 percent average the rest of the software industry brings in from partners.
Now this is usually good news for partners. You get a lot of support and guidance from Microsoft. But it can create some, how can I say … awkward scenarios, especially around how you position yourself to your customers.
Having personally managed this curious relationship for a number of years, I wanted to share some insights I’ve picked up along the way.
Microsoft Partner Relationship Issues
Microsoft partners often find themselves in a strange and sometimes insecure position vis a vis Microsoft, which can lead to a degree of ambivalence:
- You become keenly aware that while Microsoft supplies the products you sell, it can arbitrarily stop creating them and destroy your business model overnight
- Unless you’re desperate to be bought out, anyone who’s created some intellectual property (IP) around SharePoint, for instance, faces the constant risk that Microsoft will release its own version of your product
- Major Microsoft initiatives — such as its push towards the cloud — massively undermine the purpose and role of countless consultancies, developers and IT pros
So partners straddle a fine line. They spend their days touting Microsoft and increasing its revenue through product sales, but they’re also constantly watching their backs.
And things have only become more complicated in recent years.
Changing Business Models
Where once partners could make a good living customizing SharePoint, deploying Exchange or adding their own products onto Microsoft’s tools, Azure and Office 365 are quickly changing long established business models.
Microsoft used this year’s WPC in Toronto to emphasize certain key messages to partners:
- You need to become subject matter experts in cloud solutions
- You need to start focusing on building your own intellectual property in Azure — so as to sell more Microsoft licenses
These moves makes sense, but further complicate partner’s relationships with Microsoft.
Playing the Microsoft-Partner Balancing Act
Say you create some fantastic new piece of IP — perhaps a custom application, an intranet or an industry-specific workflow. How do you go about positioning that product or service in relation to Microsoft?
You don’t want to spend your marketing budget saying Microsoft’s own tools are trash, since that not only bites the hand that feeds while also putting customers off. Neither do you want to downplay the value of your own creations. What can you do?
Choose your words carefully
The way you describe your product’s relationship to Microsoft’s tools is essential to success.
If, for example, your tool improves OneDrive for Business, you want to sing and dance about it. But you need to position your tool in a way that doesn’t destroy your relationship with Microsoft.
Choose messages that emphasize how Microsoft’s products are good, but that yours can extend, enhance or complement them for your customer’s specific needs.
Focus on the benefits — no one wants to listen to negativity. Explain the specifics of how your tool will help your customer and their business. If you don’t need to criticize Microsoft, don’t.
Emphasize rather than criticize
If your tool directly competes with Microsoft’s own tools, it might be impossible to differentiate your tool without any criticism. How can you do this well?
Focus on facts. Give people objective metrics and research — does your tool make it 10 times faster to discover emails in Outlook? Say that. Does your interface make it less hassle to store documents in SharePoint? Focus on the amount of time it saves according to your own research.
From general to specific
Position your company by highlighting your uniqueness.
While Microsoft provides a huge product range that practically any industry can use, you can emphasize that fact you know your industry incredibly well, so have built a tool or extension on Microsoft products that perfectly fits your niche area.
Healthy Relationships Depend on Communication
Remember, while Microsoft won’t be overjoyed at you criticizing them, if your tool leads to more active licenses and boosts the number of users, Microsoft will be happy. Whatever your IP does, try to work closely with Microsoft. Help it understand who you are, what you’re about and what value you bring to it — this will bring you value too.
It is a good time to be a Microsoft partner. Its continued growth, renewed cool factor and new products such as Office 365, HoloLens and Cortana herald an exciting era of innovation. This energy will also feed back into what your business does and help you succeed.
So, when working with Microsoft and building your own IP, grab your slice of the pie by positioning your own products in the best possible light.
Title image Alexandre Chambon
Ivor Share is a three time Silicon Valley software CEO, and one of only four people in the world who have been a Windows Source Code Licensee. He has done deals with Bill Gates and worked with Steve at NeXT (though in that time rarely won an argument with him).