$32 billion! That was the whopping amount of revenue revealed by CEO Satya Nadella and Amy Hood – Chief Financial Officer at Microsoft, in the Q2 earnings report 2018. There was a 12% increase from the previous year. The commercial cloud revenue also increased to 48% year over year to $9 billion. It is an amazing fact that 95% of Microsoft commercial revenue directly flows from the partner ecosystem. You too can maximize your cloud revenues, read on to know how.
Nearly 7500 partners join the Microsoft partner ecosystem every month and help fuel innovation and cloud growth!
While Microsoft runs a number of partner programs, its Cloud Solution Provider (CSP) program is the fastest growing licensing model. Through it, Microsoft partners integrate Microsoft technologies into their own solutions to deliver differentiated and long-term value to their customers.
The onset of digital transformation has fueled the demand for cloud, or we can say it the other way around – the cloud is the catalyst of digital transformation.
Digital Transformation – not a hype anymore!
Digital Transformation redefines the way modern enterprises work and go to market. They make use of digital technologies to renovate their business model, streamline business operations, improve customer experiences and enhance organizational performance.
Organizations, to be successful today, need to be the early-movers in technologies, to re-create their business operations to scale and transform. This can be achieved with the use of third platform technologies – the Internet of Things (IoT), big data and analytics, cloud computing, social technologies, and mobile computing.
Partners have a very important role to play here. Being the IT players backed by Microsoft, they can drive this change, be the trusted advisors for enterprises seeking digital transformation, while generating revenue for themselves from these highly profitable opportunities.
How big is the market opportunity for Microsoft partners?
Per IDC, partners that transform digitally will capture their share of the $1.7 trillion technology spend in 2019.
IDC predicted that partner opportunity will double to more than USD $2 billion by 2022. This means for every US dollar of Microsoft revenue, partners will generate an additional USD $9.64.
Microsoft partners are able to attract more profits because of the:
- Opportunities to bundle high-value cloud products.
- High demand for Microsoft products due to platform’s familiarity with prevalent legacy on-premise systems.
- Availability of ready-to-use marketing resources, training materials and leads.
- Opportunity to build on top of Azure to extend the stack.
In its first Digital Transformation Series e-books, IDC also predicts digital transformation opportunity to constitute 20% of global GDP. Businesses are looking to invest $1.7 trillion in 2019 across a wide range of IT services (software, services and hardware). The IT spending mix according to IDC will be as follows:
Partners who are focused on digital platforms and cloud services will be able to benefit from the majority of this spend.
Intelligent cloud technologies will be the main drivers of this growth. IDC also said that partners who are able to attach more value to Microsoft cloud solutions will grow twice as fast as less cloud-capable peers.
Thus, cloud has an important role to play. You can sell cloud solutions to maximize your cloud revenues, as cloud partners have the longest digital maturity and highest growth potential.
How can Microsoft partners derive huge revenues?
A modern partner rides on the wave of digital transformation and aims to deliver comprehensive solutions to the end customers. By putting the customer at the center of their business ecosystem, they can tailor their offerings based on his objectives and needs. Successful partners have the following reasons contributing to their success:
1. Microsoft portfolio of solutions: Microsoft partners in the Cloud Solution Provider program (CSP) get an ever-increasing catalog of offers. They can sell the full range of Microsoft cloud services, as well as various additional offers that change frequently.
2. Working with other partners: Microsoft Cloud Solution Provider (CSP) program provides opportunities for partners to work together in a number of ways. This helps increase capabilities and revenue opportunities for partners.
- Two-tier model: In this model, indirect providers and indirect resellers sell Microsoft cloud-based services to organizations in different locales, verticals, and industries by working cohesively.
- Multi-partner support: This partnership feature supports scenarios when a customer needs to work with more than one partner. For example, a customer may want one partner for Office 365 and a different partner with Microsoft Azure specialization.
- Multi-channel support: This partnership feature supports scenarios when a customer wants to hire a Microsoft partner for provisioning and supporting a subscription that they purchased elsewhere.
3. Microsoft Partner Center: Microsoft offers various resources to help partners grow their business. Microsoft Partner Center, a site specially dedicated to the partners, can help them attract new customers and gain more profitability. They can use it to get sales leads, offer trial subscriptions to Microsoft products, offer promotional pricing on Microsoft products and sell in additional markets.
4. Microsoft support to customers: Partners are expected to provide support to their customers, diagnose and resolve issues to the best of their ability. However, if the partner is not able to resolve an issue, they can escalate them to Microsoft via different support vehicles.
5. Focus on cloud services: Per IDC, 70% of the partners surveyed focus on cloud services to generate revenue and provide value. Cloud-oriented partners outperform their peers. Leading solution providers either adopt cloud earlier or faster than their non-cloud counterparts.
6. Building upon modern technologies: Disruptive technologies like AI/cognitive capabilities, IoT, big data, blockchain, etc. play an important role to support the digital initiatives of partners by providing new monetization and operating models. IDC quantifies partner opportunities for different technologies as below:
- Compound annual growth rate for AI spending will near 50 percent in the US.
- Distributed ledger solutions (blockchain) will see a five-year CAGR of 81.2 percent.
- USD 3.5 billion worldwide market opportunity for GDPR by 2019.
7. Learning new skills: Partners well-versed in digital technologies, modern business practices, transformation services are able to lead the digital economy. Organizations look for a Microsoft partner who can understand and help them deal with market challenges and establish them as an industry leader. Partners should inspire change and set new standards for the industry.
8. Developing Intellectual Property (IP): Managed services and IP support attract higher margin opportunities. Partner’s IP and subject matter expertise helps generate long-term value. Hence, modern partners must develop IP that they can directly embed in their solutions.
9. Long-term customer relationships: Partners focused on customer’s business transformation in the long run, gain competitive edge over their peers. Partner-customer relationship must not be limited to selling only, rather the partner should act as the advisor and one-stop destination for the customer.
10. Using automation: A cloud business automation platform like RackNap, can help partners deliver Microsoft services and manage their billing with automation, in a seamless way. The ability to create bundled solutions and cross-sell and up-sell, helps to maximize the revenue opportunities. With RackNap, partners can:
- Manage the recurring billing subscription and licenses. Create plans with multiple billing frequency.
- Completely automate the marketing campaigns and sales management from tracking campaigns to assessing performance and evaluating ROIs.
- Provision and deliver different Microsoft CSP offerings with complete automation.
- Simplify after sales support with automatic ticket creation.
- They get self-service panel for customers to help them check their billing, orders, and invoices.
You can maximize your cloud revenues, by asking yourselves the following questions:
- Whether I am using the latest technology for the next level of efficiency.
- What digital platforms am I using to reduce delivery timeframes?
- How smoothly can I bring new products and services to the market?
- Can I solve customer issues before they become issues?
Contact our experts on firstname.lastname@example.org now to know how RackNap can help you seize digital opportunities, align your business models with Cloud provider like Microsoft and be able to run a profitable cloud business.