The cloud - should you be 'all in'?

The cloud - should you be 'all in'?

Microsoft’s Worldwide Partner Conference is generally an accurate gauge of the issues that are top of mind for the channel. After all, there aren’t many parts of the technology sector the software giant doesn’t influence

Because the shift to cloud computing is currently the game-changing force in the software world, it was no surprise that the subject would dominate the partner conference this year.

The largest-ever Kiwi contingent (about 50-strong) headed up to Washington DC this month to hear how Microsoft sees their place in this shifting landscape, and how the delivery model could make a difference to their bottom line.

In the earlier stages of its software as a service push, Microsoft’s catchcry was Software Plus Services, but this has been replaced with a new tagline - “All in”.

Reflecting this slogan, the vendor is building cloud opportunities into its technology stack at several points – into the operating system with Windows Azure (its platform for the creation of cloud-based applications and services), into databases with SQL server’s SQL Azure, into collaboration and communication with Exchange Online and Sharepoint Online, into productivity applications with Office WebApps (the free, online versions of its on-premise suite) and Live Meeting, and customer relationship management with Dynamics CRM Online.

Microsoft used this year’s conference to unveil new tools and resources designed to propel more partners toward cloud adoption. Those who invest most heavily in online services sales and Azure-based applications, with proof via customer references, will become Cloud Accelerators, with benefits attached.

Later this year, partners can access the Cloud Essentials Pack, which gives internal use rights to the Business Productivity Online Suite (BPOS) and CRM Online, marketing and sales tools, and training.

As you’ll have read in Divina Paredes’ article earlier in this issue, Microsoft and some partners are positive about the opportunities outlined. But there should be a word or two of caution.

BPOS, which comprises the company’s hosted communications and collaboration programs, has been contentious among partners. On the face of it BPOS seems to offer a simple way to make money from managed services, with Microsoft providing hosting and management, but it has also been the most evident example of potential disintermediation.

The vendor offers an “influencer” fee for partners who refer BPOS to customers, but prices, and therefore margins, have been reduced amid hot competition between Microsoft and Google, with the latter’s Apps offering. Small margins, at least in the early stages of cloud adoption, aren’t going to encourage partners to get involved in cloud-based services in the short term. In fact, smaller reseller companies can’t sustain small revenue amounts for long before they require growth and a more significant return.

Another key element of the debate is the support services partners might offer to make further revenue – some managed services providers prefer to manage billing for customers for just this purpose. And if partners aren’t controlling billing, then rebadging a managed service, customising it or offering technical support are the only other options.

Because of Microsoft’s size, and its history in the software game through the traditional on-premise era, it has a larger partner base than its competition. It therefore has more to lose if partners don’t get onboard with its cloud story, and that’s why the cloud message was so important at this year’s global conference.

Azure and BPOS will be important spaces for the local channel to watch in coming months.

Harking back to Microsoft’s new cloud tagline, “All in”, the shift to the online delivery model is underway in earnest and analyst firms predict the “as a service” market will continue to grow at a rapid rate.

So partners have no choice but to be “in”, in some regard at least. This may only be investigating the options that are available from different vendors. But in the search for profit and new markets, they shouldn’t leap before they look.

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