Microsoft, its partners, and the ‘last-mile problem’

Microsoft has always had an interesting relationship with its channel partners. For many years, there has been a bit of a demilitarized relationship between it and the software providers and the consultants that sell and implement software for Microsoft. Like many industries, Microsoft has a “last-mile problem.”

The company can develop the product, but it’s that last delivery mile that can be hard to manage. Early on, Microsoft had a tiered program where better partners were called gold partners, and the lesser partners were called silver and bronze. Then, around 2003, Microsoft developed a product that bundled many of the items a small business might need. Combining a Windows server and an email server (along with a copy of Outlook for each licensed user), the company dangled its newfangled small business suite with a deep discount — if you migrated from any other server-like platform. You could sign up as a Microsoft partner, and by purchasing a copy of cheap, modem-sharing software, you could get your foot into nearly any small business by providing it with a cheap software suite. (Granted, the software would put shivers into any Active Directory Security guru, but it not only catapulted small business networking, it also grew the Microsoft partner platform nearly overnight.)

Fast forward a few years, and it became clear that success came with a price: Not every consultant that signed up for the partner program was one Microsoft wanted to keep. Over time, it tweaked partner requirements to weed out those that were not performing, or worse yet, not doing great implementations for small and midsized businesses (SMBs). Reminder: smaller firms now are more like larger enterprises — some move fully into the cloud, others take a more measured approach with some computing still done in a local data center or on premises.

And now Microsoft has announced more changes to the partner program, showing it really wants  to emphasize sales — specifically cloud sales — with less focus on consulting.

Rodney Clark, corporate vice president of channel sales and channel chief, recently blogged about a name change for the partner program. But as a Change.org petition points out, it’s more than just a name change: it’s a change in focus from supporting the customer to selling to the customer. It’s similar to when you get your monthly cable bill — there’s little incentive for loyalty, and discounts are mainly used for new sign-ups. Microsoft Partners will have to earn a “partner capability score” of 70 out of 100 points across four measurement areas. Highest points are for “net customer adds,” along with “usage growth” or “deployments.” So, if the consultant you use for your small business deployment doesn’t add new customers or you don’t add employees, and thus add licenses, that’s deemed to be a negative — even if the consultant is doing a wonderful job meeting your business needs.

The next big change causing concern involves how subscriptions are sold to businesses, the “New Commerce Experience,” which was announced in January. If you want to continue to purchase Microsoft 365 subscriptions on a monthly basis, the price increases — and several changes to the annual program — are worrying consultants and Managed Service Providers who provide services to SMBs and sell licenses to their customers. If a customer opts for the annual subscription to lock in lower pricing, it also locks in the consultant to paying the bill. If the customer goes bankrupt or stops paying what they owe, the consultant is still on the hook to Microsoft. Furthermore, they can’t move the unused licenses to another customer. Needless to say,  a lot of consultants are not happy.

As a small business decision-maker myself, my firm is still fully entrenched in a combination of cloud services and on-premises technology. In addition, we aren’t adding licenses or seats; we’re actually shrinking as people make life choices and, in some cases, retire. Thus, for Microsoft to focus so much on growth, when we are all doing more with fewer people, is a bit optimistic. Or it’s a way to go more directly to customers and break the connection with consultants.

Don’t get me wrong. I’ve experienced good partners and bad partners. Some consultants want no part of cloud computing, and it’s this type of customer Microsoft wants out of its partner program. But too many of the good consultants can’t meet Microsoft’s extremely high standards; they focus on good services, not sales, on continuing education and services such as security training rather than selling the next new thing. It’s these consultants who fear they will be dropped from any resources and support from Microsoft.

The partner program has always had a bit of a coexistence problem. But for many years, the relationship has thrived, although the last-mile problem remains an issue. Cloud authentication takes implementation savvy. Single-sign-on doesn’t just magically occur. Even with Microsoft 365, you can’t simply buy it and walk away. There are adjustments and tweaks to get it to work more efficiently. And finally, there are all the other technology pieces, such as applications, printers, and networking, that Microsoft can’t oversee for all of its customers. The partners I’ve talked with hope that Microsoft pulls back from these measures, before the elephant (Microsoft) steps on the mouse (important partners) and damages the relationship for good.

That, ultimately, will hurt Microsoft’s customers.