“Our channel is evolving fast,” observes Barrie Sheers, Managing Director, Microsoft New Zealand.
A simple statement perhaps, but in speaking to Reseller News on the ground in Toronto, ahead of the 2016 Microsoft Worldwide Partner Conference, Sheers admits that’s no longer enough.
“We have a responsibility to help our partners change in real-time,” he qualifies. “We have to keep them abreast of what we’re seeing in the industry as customer demands and business models change.”
Surrounded by 16,000 attendees, representing 144 countries, Sheers says the focus for Microsoft in New Zealand is built around the need to facilitate the transformation of the new brand of partner in the industry, as cloud - coupled with new and emerging technologies - drags the channel into a new era.
“There’s natural change in the industry with traditional on-premise licensing models on the decline,” he explains. “The only way to grow is to make sure new revenue streams such as cloud are growing faster than the traditional businesses that are declining.”
In short, cloud has fundamentally changed the landscape in New Zealand, triggered by the country’s “early adopter” tag in terms of businesses moving to the skies.
But beneath the vendor marketing rhetoric and favourable analyst reports, the so-called cloud revolution is impacting the channel in ways that don’t always make the press releases, because becoming a cloud reseller requires many strategic changes for partners new to a services-oriented business model.
“Selling great cloud technology isn’t enough,” admits Sheers.
Since taking charge of the Microsoft hot seat ahead of 2015 Microsoft Worldwide Partner Conference in Orlando, Sheers has witnessed his channel consolidate, with key partner Spark acquiring fellow key partner CCL for $50 million in December 2015.
“Change happens and it happens in every market,” he observes. “But we’re also seeing new startups emerge on a regular basis because through cloud technology, the barrier to entry has become so low.
“While there will always be a percentage of startups that fail, the percentage of those succeeding is growing.”
Since gracing the stage in Orlando twelve months ago, Auckland-based Azure specialist firm VMob is evidence of the rapidly expanding ecosystem, changing its name to Plexure Group to reflect strong market growth in America.
“There’s an opportunity to grow and reach a national level, then multinational and then global,” Sheers adds.
Alluding to the Cloud Solution Provider (CSP) programme, Sheers says that as partners change business models, Microsoft is changing alongside, allowing partners to own the end-to-end customer experience in a cloud context.
Across New Zealand, Microsoft currently has around ten Tier 1 CSPs, which include Atmospheric, Datacom, Dimension Data, Intergen, Snap / 2degrees, SoftSource and Spark.
In addition, Dicker Data, Exeed and Ingram Micro lead the second phase of the CSP programme as the country’s first two-tier Kiwi distributors, opening the way for traditional resellers to bring to clients access to cloud services from Microsoft’s Australian data centres.
“CSP is designed for partners to take advantage of the cloud,” Sheers adds. “It’s based around partner enablement and for a vendor such as Microsoft, it’s about how can we help our partner base help their customer base.”
As the partner ecosystem transforms, Sheers believes it’s imperative that Microsoft operates in a “sharing and transparent” manner with the channel, mindful that a shift in business can prompt far-reaching implications going forward.
“We don’t have all the answers and we don’t always get it right but it’s a work progress,” he acknowledges. “We’re open with our partners transitioning to the cloud and as the only player in the market with a hybrid story, we’re well placed to help them on that journey.”
For Sheers, cloud represents a “technological transformation” for both partners and customers, with Kiwi businesses rarely moving 100 percent to the cloud on day one.
“Instead they are moving certain workloads straight to the public cloud, with some workloads remaining on-premise or moving to the private cloud through one of our partners,” he says.
From a technology perspective, Microsoft is the only vendor offering such flexibility in a hybrid environment, all managed through a single pane of glass.
“That’s all well and good, but how do partners compensate their sales team for this?” adds Sheers, alluding to one of the many issues impacting resellers in New Zealand.
“Traditional infrastructure is paid up front, but cloud is paid through an annuity revenue stream. We’re constantly talking to our partners about changing compensation models to reflect this change, and this is one of the many ways we’re trying to educate our channel during the transition.”
While a seasoned infrastructure rep draws on 20 years of experience, compared to 20 months of cloud knowledge, Microsoft’s approach to partner enablement in New Zealand continues to grow in line with global aspirations, lead by new channel chief Gavriella Schuster.
As reported by Reseller News, Schuster’s mandate is simple - to guide partners towards a cloud-focused business model.
As corporate vice president leading the Worldwide Partner Group, Schuster is tasked with setting the strategy for Microsoft’s partner ecosystem, with a focus on driving digital transformation for partners and customers.