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Microsoft's Schuster Touts Azure Growth, AI Opps in 'State of the Channel'

Microsoft is adding a whopping 7,500 new partners per month.

Lynn Haber

February 5, 2019

5 Min Read

Whether you’re a traditional Microsoft partner, new or existing ISV, or new customer partner type, a modern partnership with the software giant includes cloud, IP, AI, and co-sell. That’s the message that rose to the top in Tuesday’s Microsoft State of the Channel Modern Partnership briefing. 

Gavriella Schuster, corporate vice president, One Commercial Partner (OCP) at Microsoft, focused on three things: what partnership means to Microsoft today; how the hundreds of thousands of Microsoft partners connect with customers through the company’s marketplaces — both Azure and AppSource; and how partners are embracing artificial intelligence (AI) through Microsoft technologies to change the world. 


Microsoft’s Gavriella Schuster

“What this is about is driving success for everyone through partnership,” she said, pointing out that the OCP was built to create pathways for success through partnership. Microsoft’s channel chief also said that more than 7,500 partners are joining Microsoft’s partner ecosystem each month. 

She noted how Microsoft modernized its approach to partnering, transforming from a transactional model to a partnership model, where partners add value, or build on top of Microsoft products. If traditional Microsoft partners haven’t been paying attention, the vendor’s pool of partners is changing and includes, in addition to traditional partners, startups, ISVs, MSPs, SIs and customers. 

Customers are a growing partner type in the industry, and also an evolving piece of Microsoft’s partnerships.

“It’s something we didn’t expect ,but what we’re seeing more and more is our customers becoming partners — and they’re understanding the benefits of building solutions together with us and co-selling with Microsoft,” said Schuster.

Take Kroger, for example, which is reimaging how customers buy groceries and how it manages its facilities. 

Kroger has a retail-as-a-service product — cloud enabled shelves with Bluetooth that interacts with a shopping list on a customer’s smartphone to help find items in the store. The solution includes connected sensors beaming real-time shopper and inventory data to the cloud. IoT sensors also track the temperature of refrigerators and freezers and send alerts when problems arise. 

Schuster confirmed that 95 percent of the company’s commercial revenue is driven by partners. Citing second-quarter commercial cloud revenue of $32 billion, which represents a 48 percent year-over-year jump, 95 percent is generated through Microsoft partners.

She also noted that partner growth is happening in a big way via the Microsoft co-sell program, launched a year-and-a-half ago. Recent figures show that the program generated more than $8 billion in partner sales revenue since inception. The co-sell approach includes one partner, one field seller and one customer at a time. 

For partners, IP co-sell deals close three times faster, projects are six times larger, and Azure consumption is six times higher.  

“This year [so far] we’ve seen almost 9,000 wins and 78,000 joint deals in our pipeline,” said Schuster, who contrasted that to one year ago — 11,000 wins and 100,000 deals for the entire 12 months. 

Partners transacting through the Cloud Provider Solution (CPS) program grew 31 percent in the last year, serving more than …

… 2 million customers, representing a 52 percent increase over the past 12 months.  

The Azure Expert MSP program, introduced in July 2018, with 32 top Azure partners – now up to 43 – is driving more than $100,000 per month in consumption revenue – some $2 million per month overall – through the global delivery of Azure managed services. Contrast that to Microsoft gold partners who are required to drive $100,000 annually in Azure consumption. 

What’s driving the big bucks for Azure Expert MSPs is migration services. 

“SQL Server 2008 is approaching end of support this July; the same for Windows Server 2008 one year from now. It’s a great opportunity for our services and IP partners to help customers move their existing on-premises workloads to Azure and take advantage of all of the benefits that Azure has to offer,” said Schuster. “There are tens of millions of SQL Windows instances waiting to be migrated to Azure — an estimated $50 billion opportunity for partners.” 

Noting the growth of Microsoft’s modern partnerships, the vendor is making investments. 

For ISV partners, Microsoft has a road map for its marketplaces – Azure Marketplace and AppSource – with the goal of making it the largest commercial marketplace in the industry. Expect to see new capabilities in both marketplaces coming soon. For example, through a single click, ISV partners will be able to offer broader partner ecosystem partners their solutions through the CSP program. Additional improvements are being made to the user experience and interface, with natural-language capabilities and recommendation features. 

Partners also will be able to set up private marketplaces to the specific terms of any customer — billing or metering services per user, per app, per month or per-day basis. Also coming is a curated portfolio of IP and services solutions that leverage Azure, Dynamics, Power BI, Power Apps and Office. 

Growing both Microsoft’s and partners’ cloud businesses involves an ongoing commitment to helping partners find training, the latest documentation and transparency on the product road map, technical support programs and community forums. There’s also a cloud migration and modernization partner playbook and the Azure FastTrack program. And Microsoft is making new migration content available this week — it will be launched on Digital Marketing Content OnDemand, a free benefit in MPN Go-to-Market Services.

AI also is getting some love. Partners in the AI Inner Circle Partner Program, have seen more than 200 percent growth in their AI practices year over year. Microsoft wants more partners delivering AI and encourages them to attend AI practice-development workshops, get advanced education and trainings. Microsoft’s AI Playbook and its library of online resources also are great places to go.

Microsoft also on Tuesday rolled out a new HR skills playbook and tools, in a series of Cloud Practice Development Playbooks, including “Recruit, Hire, Onboard & Retain Talent.”

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About the Author(s)

Lynn Haber

Content Director Lynn Haber follows channel news from partners, vendors, distributors and industry watchers. If I miss some coverage, don’t hesitate to email me and pass it along. Always up for chatting with partners. Say hi if you see me at a conference!

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