Solution providers have a massive opportunity for migrating Windows Server and SQL Server instances to the Azure cloud, helping to make Azure a smarter bet for partners than Amazon Web Services, Microsoft Channel Chief Gavriella Schuster told CRN in an interview.
Said Schiller, who is corporate vice president for Microsoft's One Commercial Partner, said: "Support for SQL Server 2008 in July – followed by Windows Server 2008 in January 2020 – there are tens of millions of SQL and Windows Server instances available to be migrated to Azure," said Schuster organization.
"That is, bar none I think, the biggest opportunity for our partners," Schuster said. "We talk to [partners] to that, and we talk to them about how it is five times more expensive for customers to choose to migrate those servers to AWS versus Azure. And how to make the cloud move to the cloud. "
[Related: Microsoft Azure: 5 Key Takeaways On The Partner Opportunity]
What is an edited portion of the conversation with Schuster? What incentives do you know about AWS incentives for partners, what partners should know about the new Microsoft Customer Agreement and how the Redmond, Wash.-based company is expanding its sell with "initiative with partners.
What's your pitch to partners for why should they focus on Azure over AWS?
There are a couple of different things that we talk about with our partners about where they should make their investments. One of them is the biggest opportunity in the market? The biggest opportunity in the market right now is Windows Server and SQL Server migrations. We have more than 53 million instances on-premise of the servers. That is, bar none I think, the biggest opportunity for our partners. We talk about them, and we talk to them about how to pay for these servers to AWS versus Azure. And how to make the cloud. Not only does it help the customer with the short-term move and support those servers and workloads on those servers, but it gives the partner upside to actually the full platform modernization. Which, for partners is really where the money is. Because it's about helping them think about their whole application portfolio.
How do Microsoft's incentives for Azure appear to AWS incentives?
We have a great incentive and margin program around Azure from a numbers standpoint. One is that if the customer is on an EA [Enterprise Agreement] we have something called the administration [incentive]. When a partner administers a customer's Azure subscription on their behalf, we pay a pre-sales fee as well as an ongoing managed service fee and an Azure consumption growth fee. We pay them incentives along the way. If the customer chooses the partner solution entirely through CSP, they get a margin for that service and the sale, plus the opportunity to embed their own services in it. And that margin is generally higher than resale margin. Then they also managed services on the backend. They get ongoing incentives on the consumption of that consumption. I think we are between 50 and 80 percent higher [than AWS] in terms of the actual incentive opportunity that a partner can have.
How does Microsoft's "sell with" initiative differ from co-selling?
They are slightly different. Co-selling is the way we refer to when to partners and to Microsoft sellers actively are engaging to customer together. And we are rewarding our sellers for that active engagement. Whereas "sell with" takes many forms with us and our partner ecosystem – many of the customer opportunities are partner-led. While various other people in the organization and the partner are involved with the partner and the customer, but not necessarily our sellers. Or where we're engaging other partners to sell together, and complement each other, or sell through the marketplace. Or we're doing go-to-market activities. All of which is part of "selling with" to partners, but not necessarily co-selling.
What can you say about progress in your "sell with" efforts so far?
We have made additional investments in our go-to-market activities with our partners. We have been pouring literally millions of dollars into our [Azure/AppSource] marketplace to deliver much more robust marketplace experience. We are driving the marketplace, it is a very big number. That's driving business to our partners. We have our investment in what we call our Global Demand Center. Our Global Demand Center is a marketing automation function that really capitalizes on organic traffic – customers who like to Microsoft.com, and how we funnel them back through opportunities to our partners. We turn them into sales leads, then we send them back out to our partners. The number of referrals has reached over 100,000 a month now, in terms of those leads that we have backed out to our partners that were nurtured through our marketing engines. The combination of those is generating quite a bit of business for our partners. What we look at is how to get back to us, and send us an inbound lead if they need our support in closing a deal with a customer. And then at that point that would trigger a co-sell motion.
And then our sellers, when they are talking with customers, they can send outbound leads to a partner who can just be an outbound lead – to sales-qualified outbound lead–[and say], "Hey, this is something you want to talk to you." Or they could send it as a co-sell – "Here's a meeting, and I'd like to get together with you and the customer and talk about this." [Those are] to number of investments we've done to drive "sell with" with our partners. At this point, our partners are leading about 35 percent of our opportunities – they are partner-led, they are just partners from them doing them on their own. It was much lower than that [prior to the recent investments].
We've got the same instrumentation we've put in place now that we're paying our sellers differently. It was more in the 20-percent range. But it was hard to judge. Because what we've done now – and we're going to get some mechanism through an ID that we've tagged out to them on what's closed. I know the business that's closed. And then we check our own CRM system to see if a seller was ever engaged. And so it gives us a better view of what is a co-sell versus what is partner-led.
What does the future look like for "sell with"?
It's an area that we're going to continue to invest in. We've learned a lot about what the go-to-market activities are that we provide that help our partners. We've seen many of our partners still don't have great marketing automation themselves. So we're going to offer our marketing partners and help them with their own marketing automation, so they can do better search engine optimization, so they can take advantage the leads we might send them. Because it may be that, even though we say it's a sales-qualified lead, it's really ready for one of their sellers to pick up the phone and call yet. And what they need to do is maybe a little bit more with their own solution. And so we're just investing in vendor services that we [could] proxies for them, to give them a leg-up.
What progress have you seen in the last few quarters in re-orienting partners and Microsoft salespeople toward consumption?
I think we have seen a lot more momentum around that fiscal year [which began last July]. Last year's financial year, where they were like, "What does this really mean?" They re-oriented to their own Excel spreadsheets and brains around, "How to calculate what consumption means – because it builds revenue is so much easier to understand." We will help you understand when you start small with a customer. their first Azure workload. On average, we want to see customer satisfaction with 10 different projects going at the same time, and that's when you see the highest value delivered to your customer.
What services you can deliver to, and what are some of the longer term [services]. You want to have a good portfolio mix with your customer of the short term and the long term. A short-term example might be, it's really great to work with a partner like Rubrik or Cloudera, or someone who can do a migration assessment and backup and recovery solution. I know that they can get a test environment right into Azure, they can do some backup and recovery right into Azure. For a customer. They're going to see the potential. Then you need to move to some higher-value workloads.
Some of the longer-term things, [which are] really valuable to a customer, is more like an SAP migration, or an application platform modernization plan. We've got a clearer picture of how to start our dialogues with your customer. That has enabled them to start to be more predictive about the customer's consumption. Because you know, sellers – whether they are sellers or our own sellers – they like to know where the revenue is going to come from.
What partners should you know about the Microsoft Customer Agreement?
We've been talking about this move for our modern business platform. Reserved Instances on Azure was the first thing that hit our modern commerce platform. The marketplace is now on the modern commerce platform, and CSP will move to the modern commerce platform in the summer / fall time frame. But the [Microsoft Customer Agreement] is the first foray of moving the EA construction on the modern commerce platform. We will not be able to do anything in the EA construct.
If I take a step back just to give you a bigger picture of what the landscape looked like before, Microsoft built was kind of built independently. Every single one of them has this user interface that's something different. What our engineers did — like our Azure engineers — was when they released a new feature, they had to go into every licensing platform, and that feature in the console that a customer or partner used to manage their subscription. A lot of over-the-top engineering is [to] multiple ways of buying. Because they have to know where it is in every single one of those consoles. The modern commerce [platform] is that our engineering team only does it once, and anybody looking at it or managing it — whether it's customer or partner — can see and manage one [way], regardless of the multiple ways they might buy. Our customers have always bought multiple ways, they have spanned all five ways. Our goal is simplifying the process of making and choosing where to make a choice. what does it mean to your own internal procurement and the relationship that you might be having with other suppliers, ie our partners, in delivering that service.
Today, our EA in most countries is called a direct-bill EA, which means that Microsoft managed the invoicing and contracting directly to the customer. And then we have a service agreement with a partner who services that EA. In a modern commerce [framework], we do not need that service agreement, because what we have done with modern commerce is taken by the contracting stuff that was done very manually out of the process. We've entered the new automation was with modern commerce. I know how to continue to do direct debit, like we did on the EA, but we also have to support the pre-sales support that help us sell and post-sales managed services just like we did in the EA. From a standpoint payment and engagement, very little changes for the partner. But from administration standpoint, a lot changes, because the administration just goes away.
Does Microsoft have anything to do with it? It's not competing with partners in any way?
No. What it does is actually eliminate the stuff that nobody wanted to do. All of the paperwork, the signature signing — it actually moves us to electronic signatures. It just takes a lot of that other stuff.
Are you expecting many EAs will convert to CSP because of the Microsoft Customer Agreement?
It may have that result. Here's what I can tell you. Because it will all be on the same platform — as soon as CSP actually moves to the modern platform in the summer / fall — it's all the same console. If a customer signed up originally on a modern commerce agreement, and then they learn that there's a partner that's actually delivering a whole bunch of services they would rather have this contract into their CSP. But today, because those are completely different platforms, that was a very difficult thing to do. And likewise, a lot of customers, in the very beginning when they start with [small] purchases, will go to web direct. [For example], one person at a shop might sign up to get an Azure subscription and put in on a corporate credit card. "I want to now make this the standard for our whole developer team, and I want to start doing invoicing" —they actually had to open a new thing. Because that was a different platform. On modern commerce, they all have to say, "Now I want to grow into a CSP agreement or an EA or an MCA," and it's a simple flip of a switch from credit card to invoice. This makes it much easier for customers to make their decisions to make those transitions without over-complexity. Whereas before, it was hard.
We are hoping to make our business easier with Microsoft, both for our partners and our customers. And we may find that because of those partners' services are so compelling, that more customers just choose the whole subscription. And so we may find more going to CSP.