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July 12, 2017 |

Microsoft Admits Past Mistakes as a Partner and Describes Future Corrections

Speaking this morning at Microsoft’s annual partner conference, channel program leader Gavriella Schuster (pictured) offered further details on the dramatic steps Microsoft is taking to become an easier company to build, market, and sell solutions with.

In a remarkable display of humility by one of the largest technology companies in the world, Microsoft confessed to a host of past flaws in its approach to sales and partnering, and provided further details on the far-reaching steps it will take in coming months to correct them.

“This is the biggest change that we have made in over a decade,” said Gavriella Schuster, corporate vice president for worldwide channels and programs at Microsoft, who spoke this morning on day three of the company’s 2017 Inspire partner conference in Washington D.C.

In her keynote, Schuster sought to give her audience the back story behind the organizational restructuring Microsoft has been outlining for Inspire attendees all week. Those changes include the creation of a consolidated, company-wide partner group called One Commercial Partner; the expansion of a co-sales program piloted in Microsoft’s previous fiscal year that pays internal account managers commissions for helping makers of Azure-based solutions close deals; and the re-alignment of Microsoft’s salesforce and partner organization to drive sales of complete, industry-specific solutions in four core solution areas.

All of those measures, Schuster said this morning, were informed by feedback from partners frustrated by the difficulties of engaging with Microsoft’s field sales organization, the complexity of Microsoft’s many programs and go-to-market campaigns, and the friction between their sales priorities and Microsoft’s. According to Schuster, Microsoft has been addressing such complaints on a piecemeal basis at best for years.

“We weren’t getting to the root cause,” she said.

To address partner complaints more directly and fundamentally, Schuster continued, Microsoft is overhauling its sales model and partner organization in three profound ways.

First, to establish clearer, more effective connections between partners and Microsoft’s field sales team, the company has split one role into two. Previously, Schuster noted, partner account managers were responsible for everything from helping partners create solutions and train their technicians to pursuing join business opportunities.

“It’s really way too much for one person, even the best of them, to do,” Schuster said.

Consequently, Microsoft has replaced its partner account managers with new squads of partner development managers and channel managers. The former group is responsible for helping specific partners build solutions and bring them to market.

Channel managers, on the other hand, connect customers that need solutions with partners that have them.†Unlike partner development managers, moreover, channel managers work with any partner anywhere that has an appropriate product for a given customer’s needs, rather than a particular set of named accounts.

“The role of this individual is to know all of the solutions that you offer and all of the sellers so they can get connected to the customers who need them,” Schuster said. “This is a role that we have never had in my 22 years at Microsoft.”

To make partnering with Microsoft less complicated, Schuster continued, Microsoft is simplifying its licensing and eliminating extraneous programs and offers. Going forward, everything Microsoft does in the field will be organized around the four core solutions and six vertical industries that Justin Althoff, the executive vice president in charge of Microsoft’s worldwide commercial business, discussed at Inspire on Tuesday.

“We are going to build everything about our go-to-markets around these four core solutions,” Schuster said.

Finally, to drive closer sales alignment between Microsoft and its channel, the company has completely revamped its commissions to ensure that sales reps are financially motivated to drive the same results in the same way as partners. For example, Microsoft’s salesforce will now receive compensation for driving partner sales of Office 365 licenses through the Cloud Solution Provider program.

“Our sellers will get an incentive, an accelerator, to give them the total contract value of every Office 365 [seat] that you sell through CSP,” Schuster said to the partners in her audience.

Similarly, instead of basing the commissions it pays salespeople on how much Azure revenue they produce, Microsoft will now focus on actual usage of Azure resources instead.

“We’ll only be paying on Azure consumed revenue,” Schuster said, a policy that will inevitably cause sales reps to work more closely and often with partners.

“When you sell an Azure solution, an Azure service, consumption is four times higher,” she noted, “so they will want you in every single deal they close.”

Though this morning’s general session was the last for Inspire 2017, the conference officially rolls on through Thursday.

Microsoft’s other big announcement at this week’s show, beyond its internal makeover, was the introduction of a new bundled software-as-a-service solution combining Office 365 with management and security components form the company’s Enterprise Mobility + Security suite and Windows 10 operating system.


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