Microsoft is looking to accelerate the move to "repeatable" solutions and services among top partners in 2020 while making major investments to help solution providers expand their work in the cloud, Microsoft channel chief Gavriella Schuster said in an interview with CRN USA.
The moves come as Microsoft has reported a re-acceleration in growth for its Azure cloud platform, suggesting to some that the company is gaining ground on chief rival AWS.
Schuster told CRN USA that solution providers are gravitating to do more with Azure than with competing cloud platforms because "partners really follow customers."
"We've actually seen a wave of customers shift to have a preference for Azure, for a number of reasons," said Schuster, who is corporate vice president for Microsoft's One Commercial Partner organisation.
For one thing, Azure is now reaching beyond early adopter customers, who are "more conservative," she said. "All of their estate is running Windows and SQL. Their preference is to stay with the provider that gives them that same experience. And so we're seeing the preference for Azure change pretty dramatically for our customers."
Schuster also spoke about her goals for working with Cloud Solution Provider (CSP) partners this year and about big opportunities such as Windows Virtual Desktop—which debuted last fall as a way to simplify deployment of virtual desktops while also reducing the cost.
What follows is an edited portion of the interview with Schuster.
Microsoft just reported a strong quarter of growth. What are some wins you've been seeing in the channel?
One thing is that we've made quite a bit of traction with our global SI community in terms of the movement towards dedicated Microsoft business units. That enables us to co-sell in the enterprise better if they have this group that oversees all of the Microsoft business across all the rest of their practices. We already had announcements from Accenture and TCS and Infosys.
And it was exciting to have TCS announce this, especially with the way they're going to leverage the power of AI, automation and cloud. And then, just last month, HCL also launched their Microsoft business unit. And they actually traverse all the offerings in business apps, Dynamics, Azure, IoT, AI/ML. Then we're also working with them on Microsoft 365 and Windows 10 practices. We're very excited about our continued momentum with them. We're working very closely with them around our SAP Business—our joint SAP business as well. So it's nice to get closer to those partners.
That leads me into our continued partnership momentum with SAP. Satya highlighted that in our earnings. In October, when SAP selected Microsoft Azure as its preferred cloud, we really have gone very deep with them on embedding their business into our business. We're working through a joint ecosystem plan. We're creating some great joint customer offerings, particularly starting off in the high end of the enterprise. But we're actually planning to scale that all the way through their corporate accounts business, which is quite large. And we've already helped customers like Coca-Cola and Walgreens Boots Alliance with their transformation initiatives on SAP. So we're very excited about that partnership, as well.
Are there opportunities for some of the smaller partners with SAP and Microsoft?
Absolutely. So, we have quite a few wins at the lower end of the market in our corporate accounts with some of our more niche partners, particularly around data center migration. We've had a lot of success with data center migrations with a lot of our previous hosters, as they make a move to managed services. And one of the key workloads that they first move is SAP. We're working with SAP to make sure that we move that with all of the tooling that they're recommending. Part of our agreement with them is that there's a set of cloud tooling that they built that they want to make sure partners are using and customers are using.
What have been some recent moves in your partner program that you'd want to highlight?
We've been continuing to try and simplify the experience for all partners in doing business with Microsoft. We have successfully migrated all of our partners--I think we're like 99.8 percent of our partners--into the new Partner Center experience. That enables us to retire the 12 antiquated systems they were using before to interface. So they have this single place to engage and interact with Microsoft, which should make that process a lot simpler.
We're now working on all of the process and governance behind that across the company, so that everything flows through there. And we're working on the investment strategy behind that, so that all the various investment and incentive programs also flow through that single portal. That should make it a lot easier for our partners to find what they want to participate in and see the results of the work that they've done. We can showcase back to them the customers they're engaged with and the actions that those customers have taken through the telemetry of the product, which should help them grow their business quite a bit.
In Partner Center, we also put out a set of APIs that lets them do pipeline sharing right from their CRM systems, so they don't have to use our tools to share their pipeline or share leads. We've seen that adopted by all of our top ISVs at this point. We've also seen continued momentum with the new ISV Connect program. So I feel like we're on the right path. This has been a very difficult year because most of our partners were using dual systems, as we helped them migrate. By the end of this year, all of those processes and governance will have moved. So they should find, starting in our new fiscal year, that all the programs are in one place and things are a lot simpler.
Then coming up in March, we have our Partner Advisory Councils. We have a few hundred partners that we bring in, and we segment them by the different solution areas and then by things like partner experience and ISV experience, to make sure that we met with them on all of our new fiscal year planning. They give us feedback, they guide us--and they help us understand what will work, what won't work and what other kind of product innovations they're looking for.
I just spoke to a Microsoft gold partner that is selling in AppSource but also still doing traditional consulting—do you see that as a good model for what you're looking for from partners? Having that kind of mix?
Yes. For partners, when they have their own IP, their own applications or their own repeatable solutions, that's their most profitable business model. We want as many partners to find their path to that as possible. And that is why we created CSP. CSP isn't just a resale model, as a matter of fact we don't want it to be a resale model. We want it to be a place where they can bring together their IP, other partners' IP and ours, and actually create these fully repeatable solutions that they can sell as transactional offers in the marketplace. So it is the ultimate direction of where we're trying to go with all of our partners.
How much progress do you hope to make this year in helping traditional partners to expand into these kinds of offerings?
I think that percentage-wise, it'd be great for us to get to the place where all of our gold partners have some level of repeatable solution or repeatable offering. So, it would take us into the double-digit percentages. And then hopefully over time that would just continue to rise. I would say we're probably at around 30 percent [of gold partners]. But like I said, my objective would be that through this fiscal year, we get all of them to have something [repeatable] that they can do. Even with some of our data partners, we've been doing "data in a day"--like data warehousing in a day, data analytics in a day. With that kind of offer, they can put that workshop out onto AppSource and bring a customer in essentially doing a [proof of concept] in a highly repeatable, factory kind of way with a customer. That is even oftentimes enough for them to cut that customer acquisition cost down.
Is there anything new that you're doing this year to help partners move into these types of offerings?
I think a lot of the product offerings that we're coming out with will enable them to do that more. You look at Windows Virtual Desktop, where the partners can engage with hardware partners and they can be the turnkey, one-stop solution aggregator for a customer on their on their managed desktop. That's a huge repeatable offering that they can create. Especially when you think about those small business or medium-sized business customers, who never liked managing their desktops—being able to do it virtually, being able to do it through the cloud, is an incredible upside opportunity.
Then when you look at what we're doing with Azure Arc—which unlocks the on-premise, edge and multi-cloud scenarios for all the customers, delivering the Azure services, the management and the security. A number of things in there, coupled with Azure Lighthouse, enable those partners to then create those managed services. It enables them to automate a lot of that, which makes it a repeatable service offering where they can put a fixed price on it for a customer. And then Azure Synapse Analytics helps them to streamline their data analytics across the warehouse and the systems, and reduce the development time for that BI.
This is where we've seen a lot of those "workshops in a day," that they can help a customer bring together a whole lot of their data, layer over that analytics and walk out of that workshop in just the course of one day saying, "Oh, now I have a whole new dashboard." Probably 90 percent of the time, I think that leads to a whole lot more business for the partner, which becomes an ongoing managed service as well.
What are your takeaways on Windows Virtual Desktop so far, in terms of how partners are responding to it?
We have hardly scratched the surface, because we haven't really deep-dived in terms of an investment into this. But at the same time, the pipeline is the biggest pipeline I've ever seen in the first release of a product. There's a huge pent-up customer demand, and our partners right now are scrambling to actually fulfill that demand. It's a lot of the partners who were in traditional desktop outsourcing, and partners who had been doing VDI on behalf of their customers--where now they have to scale up very quickly. So we're working with a number of those partners to help them figure out how they scale up.
Is the ultimate opportunity for Windows Virtual Desktop to reach customers that have never considered desktop virtualisation before?
Yes—so VDI was super expensive. [Customers] thought it would be great, and then they realised how expensive the infrastructure was and the management overhead was, and they stopped. And so now they have an alternative that actually runs on multiple types of environments seamlessly and gives you that full, real Windows client experience versus this virtualised terminal services type of experience. I think almost every customer on the planet wants to get away from managing the desktops, and so it's happening a lot faster than we anticipated.
What are the biggest ways you are looking to get partners to gravitate toward doing more with Azure than with AWS?
Partners really follow customers. And we've actually seen a wave of customers shift to have a preference for Azure, for a number of reasons. One is that we're now getting to those customers who aren't your [early adopter] customers—and so, they are more conservative, and all of their estate is running Windows and SQL. Their preference is to stay with the provider that gives them that same experience. And so we're seeing the preference for Azure change pretty dramatically for our customers. And with our investments in security and data privacy, I think a lot of customers are really gravitating towards us as the safe platform. Our partners will just follow customer preference.
What do you think that shift in customer preference means for the growth pace of Azure going forward?
You see the growth trajectory we are on, through our earnings--and the expectation is that we are going to just continue that level of momentum in the market. Especially, like I said, with some of these new innovations coming out with the work on SAP--which is probably the largest workload that any customer runs--along with the virtual desktop, which is the second largest, [since it's] all of their desktops. And then Azure Arc, Azure Synapse, being able to help them with that hybrid environment, in a very real and easy way.
We have a very long tail of hosters, who for a long time have been evaluating when they should make the move out of their co-los or their own infrastructure into Azure. We have some plans for big program investments this coming year to help them make that move. Because a lot of it is, how do they shift their cost structure? We've had enough experience now to kind of build some plays and playbooks around that for them, so that we can help them figure out how to do that.
What are you doing around partner compensation for Azure this year? Are there ways you are looking to make it richer?
I'm actually just doing that investment portfolio review right now. I think one of the biggest things that our partners have asked for is more skilling. For them, probably one of the biggest investments is taking time out for their people. So we've created this virtual instructor-led training lab [VILT] environment, where we take them through a combination of on-their-own and with-instructor VILT, and enabled them to play around. And then we give them certification vouchers.
This year we've made a pretty big investment in that. We've trained over 100,000 people within the channel. But next year, we're committing over $100 million to focus on skilling. I think that's one of those [investments] that just continues to pay off for our partners. They are taking people who are potentially trained or skilled up on a lot of the previous technologies—like SQL or Oracle or other database technologies, other data warehousing, other infrastructure—and help them learn how to work in the cloud ...
We're just in the beginning of shaping our FY21 focus. And we will be doubling down on security with our partners, and really giving them a broader lens on the whole security platform across all of our technology areas. And then enabling them and helping them figure out how they add data and analytics into all of the businesses that they do.
What do you see as the biggest thing that has changed in your direction for partners over the past few years?
I think the biggest thing that's really changed is the level of innovation coming out of Microsoft. You see that in our earnings—that as we've stuck with our core solution areas, and really maintained focus as a company, the level of innovation within each of those solution areas has really expanded. And the level of cross-platform solutions that partners can build—and the ability to utilise the APIs for Teams and Power Apps as well as Azure, all together into single set of solutions—we've had a lot more focus on enabling that.
So our partners, when I meet with them, they're like, "OK, there's so many things that I could be doing right now. You have to help me understand what's right for me." Because it used to be kind of like, "What am I going to do next?" And they just didn't know. Now there's so many options. They're looking for where they can make their niche and really build out their portfolio and invest with us … I do hear that a lot—"you guys are moving so fast and feels like something new is coming up all the time." That is really why we're making this big skilling investment. Because the hardest thing about keeping up is making sure their people keep pace.
Have you seen any change in the typical profile of the partner that is coming and looking to work with you?
I think that there is a whole new wave of digital native-led partners. Some of them are completely new organisations. And with some of them, the traditional leaders have moved on and sold their business to these digital natives, and so these younger CEOs are taking the helm with a whole new set of energy. It's around, "Of course we have to dive deep into the cloud and scalability and the technology." They're not encumbered by past success.
They're looking at the world fresh. We do see organisations that do a lot of advisory for customers—more so than just selling, they just work on advisory kinds of services for their customers. And so we're embracing those kinds of influential partners.That doesn't necessarily mean big—there are a lot of smaller partners who focus on doing advisory services. We find that a lot of these super-agile organisations are much smaller than traditional partner businesses.
What are you most proud of accomplishing since you became channel chief—and if you could have one do-over, what would it be?
I'm most proud of the work that we've done to drive this marketplace, co-sell trajectory with our partners—helping them engage with the field in a much more connected way, working on both the culture and the tooling of driving that co-sell momentum. And then the CSP program and the marketplace, and the way they're working together to enable partners to really transform their business. When I first started in the partner business, we had an almost irrelevant ecosystem. We now have over 80,000 partners doing business in the cloud.
And we have been able to help them transform their business, as we've been talking about, into things like managed services [and] repeatable services that they can actually put up as transactable offers in the marketplace. What touches me the most is when I get into a room with a partner, large or small, and they're like, "I would never have been able to do this without Microsoft and the investments that you've made in our business." That makes me feel great. I think that's probably what I'm most proud of.
One thing, if I could do it over—we've had this very hard year of change, and I knew coming into this year that it was going to be a hard year of change as we transitioned every tool they've ever used. As much as they might not have liked the tools they used, they at least knew them. So I probably would have done a lot more play booking and communication and change management—invested more change management resources into the partners to help them through this year of tools changes, and just got us off to a faster start in doing business. I think the other thing that I'm on a path [with] now, but I wish I had started earlier, is really driving more diversity within the ecosystem. I still walk into so many meetings where I'm the only woman in the room, and I want to see that change. I desperately am working with our programs, with our requirements, creating this guidance around an inclusive economy to really drive change and create a much more diverse ecosystem.