Interview: Microsoft's channel head urges IP development

Phil Sorgen, Microsoft's worldwide channel head, is encouraging partners to develop their own IP as they embrace a cloud model

Microsoft has one of the largest global channels and its decision to push the 'cloud first, mobile first' mantra has started to have an impact on large numbers of resellers.

When it ramped up the cloud and mobile message at last year's Worldwide Partner Conference (WPC)  it removed any lingering doubts that some resellers might have had about the future direction of the market.

In the year that has past the focus has still been on business transformation but the vendor has been keen to keep things moving and has also called on its channel to take advantage of its latest mission statements.

Microsoft's CEO Satya Nadella spoke back in March about the approach it was taking to the market based around three main themes: more personal computing, reinventing business processes and finally building an intelligent cloud.

For resellers heading to Orlando next month for WPC there should be a chance to get more details about how those themes can be translated into channel action as well as an ongoing effort by the vendor to encourage greater profitability in its partner base.

Phil Sorgen, corporate vice president, worldwide partner group at Microsoft, will be the man leading the charge at WPC and he is keen to get partners thinking about how they can make their own businesses more profitable.

Starting with trying to get a sense of what progress has been made since the last rallying call to cloud first at last year's WPC Sorgen agreed that it would take time for the channel to change, but argued that great progress had been made.

Transformation

"Transformation is happening in Microsoft and our partner ecosystems but it doesn't happen in just a year's time," he said.

"The number of partners participating in the cloud is tremendous and has continued to grow," but he does express some concerns that there is still a way to go in terms of seeing changes in business models from the traditional approach to revenue based largely on cloud and managed services.

"We have reached the first step...but there is still work to be done on changing business models," he said.

Some vendors have tried to used a stick to encourage partners to make the move towards the cloud but Microsoft is still offering help, although the incentives for selling products in the traditional way are being turned down.

"The channel incentives are around the new business models. We haven't taken the tradition to zero but we have shifted them. More of the dollar investments are going into the future. All the things we are doing are shifting and that is not going to stop," he said.   

The channel incentives are around the new business models. We haven't taken the tradition to zero but we have shifted them.

Phil Sorgen

Profitability

As well as encouraging a cloud approach Sorgen is also urging partners to invest in developing their own intellectual property to drive up the value of their own business and develop higher margin services.

"Companies fall broadly into two buckets: Those that have the capability to build first party IP and integrate it into their business models, the ISVs and MSPs and the traditional partners that don't have any first party IP and differentiation," he said.

The cloud is exacerbating the need for change as it is becoming easier to monetise IP and is also commoditising the things that are not adding any value.

Sorgen stresses that the vendor is doing all it can to help partners make changes and recently cut the ribbon on an ISV hub that has resources designed to help those venturing into IP development for the first time.

"We can help them make the transition but the company has to invest the capability to bring it to fruition," he added that another part of its strategy was to encourage a dialogue between partners that had made changes and those that were yet to take steps to share success stories.

When it comes to success developing IP is one of the critical elements but Sorgen said there were other factors that it was highlighting and promoting to its partner ecosystem (see box).

Ingredients for success

When the head of Microsoft's global channels casts his eye over the most successful partners there are a few common factors that emerge

1.Accelerating development of IP - "Businesses where more than 50% of revenue is coming from the cloud but it is not just selling someone else's cloud," says Sorgen.

2. Doing digital marketing better than others - "Building a clearer profile and reaching a new buyer because the buyer is changing."

3. Learning to sell - "Building on unique differentiation not just one more single product."

4. Taking advantage of the cloud - "Making sure they are taking advantage of the fact the cloud erases geographical barriers".

Even with consolidation and some exits from the channel Microsoft has seen the capacity remain fairly constant as fresh blood comes into the market and different business models are introduced.

A lot of this talk of change is happening against a backdrop of a fairly traditional event, the launch of a fresh version of Windows, and the channel should benefit from the software arriving on 29 July.

Windows 10

One of the key planks of the current strategy from Nadella is around encouraging a new era of personal computing and a big plank of that relies on the success of Windows 10.

The channel will be keen to receive an operating system that is not only liked by users and drives sales but also presents them with opportunities to encourage further IT investments by customers.

Sorgen flags up the advances that the OS makes in terms of usability, data protection and the improvements it has made in providing a quality experience across all devices.

"The announcement around Windows 10 has implications and opportunities for the channel," he added that in particular it hoped that developers would get involved with the platform.

This was last published in June 2015

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