Sum up what Microsoft is all about?
The partner is the heart of everything we do. It sounds clichéd, but the fact is our partner communities generate approximately 96 per cent of our revenue, so it isn't an understatement to say we are absolutely committed to the partner channel.
We're committed to constantly reviewing the way that we deal with our partner community. We need to keep a continuous eye on how the market is changing and consequently, how we need to adapt ourselves to help drive forward the success that we're looking to achieve. However, we must also be very mindful of the fact that our partners' business models are changing as well and have continued to change over the past 25 years.
How much has Microsoft changed since it arrived in the UK?
I don't think you can compare the Microsoft of 1983 to the version that operates today. It, along with the channel, has changed significantly. I think the biggest thing for me is that the channel had always been a buy-sell model, due in part because of how the distributors operated.
It was all about, could a distributor offer credit? Could a distributor effectively communicate to the resellers that are out there? If you look at what distributors are now doing, they're really redefining our business and becoming much more of a service orientated operation.
We've also seen a massive change in terms of what resellers are doing. Can you actually define what a typical reseller is? I don't think you can at all. Yes, you can gather them up under some generic heading, but realistically what we're finding is that there is no such thing as two resellers with exactly the same business model.
The reality is that many, many reseller organisations are constantly evolving, and are continually looking at what is happening from a technology perspective, from an economic perspective – especially at this time – and what they can do to add value to their end users' packages.
How has that change impacted the way you work with the channel?
If I look at SMBs from a Microsoft perspective, they are all the end customers that have 750 seats and below, which is about 4.4 million businesses. We reach them through the channel – so that's distribution, resellers and those retailers that service the marketplace. There are simply thousands upon thousands of resellers that fit in that pool.
One of the challenges that Microsoft has, and one of the things that we are currently addressing, is that we were very clear about how we would segment and compartmentalise various resellers, based on what we, as vendors, perceived that they do. Now that became a real challenge for us, because the world is a rapidly changing place.
We had to recognise that and tailor our engagement strategy based on those partners, to acknowledge that they are all different. It is very difficult to say, 'now hang on, as far as I am concerned, you're an ISV, or you're an IS, you're a VAR and I'm going to engage with you in this specific way.' That's quite an arrogant approach, and to be frank, it's also not a very effective approach either.
We began our current approach in the SMB space at the beginning of this calendar year. It is to really engage with the resellers that sell a lot of Microsoft products, go out, talk to them and profile them more effectively to form an understanding of how much of their business is pure hardware; how much is software; do they do any software development work; how much of what they do is integration and how much of what they do is connectivity.
But it's not just understanding that sort of thing, it's also understanding what sort of other vendor accreditation that they have. That is to say, look and consider the technologies that they are focused on and pushing, and really try to build an engagement strategy around them, based on those facts.
What has come out of that change in strategy?
What've we've done is look at what we would consider SMB VARs, which from my viewpoint are the top 500 partners that sell Microsoft volume licensing solutions and go to them and work with them proactively, and split them up on a geographic basis.
We've split them into five regions – Scotland and North East, North West, Central, Southern and London. We've gone out to them, we've spoken to them, we've got a handle on their business and how we can work with them, and we're tailoring our engagement accordingly.
They're all part of the Microsoft partner programme, they get all the benefits of the partner programme, they can all sign up to Microsoft Club – which is the marketing rebate programme we have for our resellers. We've made sure they are enrolled in those programmes, that those programmes are appropriate to them. I feel that as a company we've gained a better understanding of what it is they require from us because of these actions that we've taken.
Microsoft, from an SMB perspective, has got a far better handle on what is going on in the reseller communities than it has for maybe ten to fifteen years. It's because we've taken the decision to redeploy resources from other roles internally to become partner-facing, reseller-facing resources. That means going out into the regions to see these guys, understanding the challenges, evaluating them and pointing them towards the resources that we have internally.
The point of all this is to help them to better understand our products, our technologies, our solutions. It is to help them better overcome objection handling against competitive scenarios, or even just help teach them some more effective ways to open up sales conversations.
What sort of response have you had from the resellers you've visited so far?
We're seeing a fantastic response from our resellers. We're hearing that they think it is great. Many of the responses have been along the lines of 'Microsoft has never really been interested in us for ten years, so why are you coming to us now?' When we start to have those conversations, initially you get some suspicion about Microsoft's motivations. But we tell them, we can only be successful if you're successful and we can only see success if we understand the challenges that you face and the help you require from us.
Since we started to engage them, we've had some really fantastic conversations and it really is helping us to better align our own thinking and therefore, our own investments and directions moving forward. That's why our success is so underpinned by the channel community.