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Schuster spoke at an IAMCP event about her future and opportunities for partner growth.
May 20, 2021
Departing Microsoft channel chief Gavriella Schuster told partners where they can expect to find growth in the coming year. During a live webinar on Thursday, Schuster also indicated that she has lined up a new job.
Schuster didn’t elaborate, nor did she say whether it’s a role within Microsoft. In a vague hint, she shared that she’ll remain “heavily engaged” with the Microsoft partner ecosystem. For now, Schuster said she is focused on handing off her responsibilities to Rodney Clark, Microsoft’s new channel chief. Microsoft announced the channel chief transition in late March.
Microsoft’s Gavriella Schuster
“Until I am done with that transition, I really prefer not to share the next path forward,” Schuster said. “But what I will share is that I do plan to be very heavily engaged with this ecosystem. I love this ecosystem.”
Schuster spoke for 45 minutes during the two-day quarterly International Association of Microsoft Channel Partners (IAMCP) online briefing event.
“I will continue to be engaged with the IAMCP, with the Women in Cloud and with the Women in Technology Network. That’s the best part of the job that I have today, and it will be the best part of the job that I will have in the future.”
“The Prometheus award is typically awarded by partners to recognize Microsoft staff that have really gone out of the way to help them and support them in their journey,” Malhotra told Schuster. “Partners in different regions vote for the Microsoft person who supported them most.”
Malhotra also told Schuster that the IAMCP plans to honor her legacy in two ways. First, the IAMCP has created the Gavriella Schuster Parity & Equity seat on its IAMCP D&I Advisory Board. The board member it selects to take that seat will be someone “who has the same level of commitment and works with the community the way you have to promote equity and diversity and inclusion,” Malhortra said.
Second, the IAMCP has created the Gavriella Schuster D&I Partner of the Year award, an addition to the collection of awards IAMCP gives at each year’s Microsoft Inspire partner conference. Malhotra said the recipient of this award will be a partner that “has displayed exceptional exemplary commitment to D&I.”
As Microsoft’s next fiscal year approaches on July 1, Schuster told partners where the company is prioritizing its partner investments. While she didn’t provide details, saying that will come later, she outlined four key areas of focus:
Skills: Programs will emphasize helping partners gain skills in new technologies in Microsoft’s advanced specializations. It will include enabling CTOs to come to embrace new ways of packaging solutions.
Customer acquisition: A focus on securing new customers with digital transformation requirements and workload migration opportunities.
Accelerating cloud adoption and consumption: Emphasizing the delivery of managed services.
Co-sell: The program in which Microsoft’s sales reps bring partners into opportunities.
The most profitable services partners can offer are those that focus on digital transformation, Schuster said.
“Customers are willing to pay the most for digital transformation services,” she said. “These also tend to be strategic and long-term for a customer. What you’re delivering is very unique and tailored, although from your perspective, hopefully very repeatable in the way that you deliver that service.”
Packaged or custom solutions built on the Microsoft platform are high-value and highly profitable, Schuster said.
“It can be one-and-done unless [you pair it] with managed services,” she noted. “We recommend that you spend time to build your business model to deliver digital transformation services with package services.”
Managed services are profitable, though not as much as …
… digital transformation or packaged solutions, Schuster said. But it depends on what type of managed services a partner offers. Ongoing IT management, monitoring and maintenance of customer infrastructure are good ways to move into offering managed services. But Schuster said many customers require more than that, including managed security services and managed applications.
“You will start to have declining margin profitability on managed infrastructure services,” Schuster warned. “And you’ll want to start moving up the stack to some of those other managed services.”
However, many partners are well-positioned, she noted.
A survey conducted by the Technology & Services Industry Association (TSIA) for Microsoft found that 94% of the partner community now deliver value-added services. But given the declining growth in the profitability of some of those services, partners should look to build on those offerings.
According to the TSIA survey, 73% of partners already deliver managed infrastructure services. Further, 66% provide project-based migration and 64% are delivering technical support.
“This is a good start, and you want to continue to move up the value chain,” Schuster said.
The opportunity to offer services has also risen. Several years ago, Microsoft was saying partners can earn, on average, $8 in service revenues for every $1 of Microsoft revenue by offering value-added services. Now, Schuster said that figure is $9.58. Digital transformation, industry solutions, security and data-oriented applications have the highest potential.
Indeed, COVID-19 has accelerated demand of new technologies that were rolling out when the pandemic began. Schuster said key market opportunities coming out of the pandemic include:
Hybrid work: 5G apps, IoT, mixed reality and enterprise voice.
Advanced specializations: Gaining competency in areas that are trending including security, data and AI.
Managed services: Expanding on infrastructure services, managed security, managed data and managed applications.
On-prem-to-cloud migrations: Helping customers move more on-premises services to Azure and managing third party cloud services. “These are those ISV applications that are native to the cloud, that scale with the cloud,” Schuster said. “You want to bring to your customer and sell them as a service and bring them into your managed services, and even manage devices as a service through the marketplace.”
Schuster also pointed to growth of the Microsoft Cloud Solution Provider (CSP) program. CSPs are partners that offer more value to Microsoft’s cloud services beyond reselling them. The program has grown to 90,000 CSPs, which currently generate 60% of partner transactions, according to Microsoft.
Microsoft projects revenues from the CSP program to reach $10 billion this year. That’s a 48% year-over-year increase.
Jeffrey Schwartz has covered the IT industry for nearly three decades, most recently as editor-in-chief of Redmond magazine and executive editor of Redmond Channel Partner. Prior to that, he held various editing and writing roles at CommunicationsWeek, InternetWeek and VARBusiness (now CRN) magazines, among other publications.
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