It has been a bumpy couple of weeks for Microsoft's partner organisation, with the vast majority of its partners furious at the vendor for the changes it announced to its Internal Use Rights (IUR) programme.
The furore culminated in Microsoft reversing the decision last Friday, on the eve of its Inspire event in Las Vegas, which takes place this week.
Microsoft's global partner boss Gavriella Schuster took to the stage on the first day of the conference, and we've rounded up the main takeaways from her keynote.
Microsoft underestimated the importance of IUR
Schuster addressed the IUR debacle head on, revealing that partner response to the changes had been "overwhelmingly negative".
"We clearly underestimated the value of those benefits and the impact that that would have on you and your businesses," she told partners.
"Your partnership means more to us than anything and we value the relationship and the trust that we've built in that partnership because it is based on commitment, integrity, and trust. And it requires us to have ongoing communication, collaboration, and accountability.
"I heard your response and I listened to what you were saying - and I read every single blog and tweet and article. In my mind, there was really no choice but for us to walk back on that change."
Microsoft's relationship with partners is changing
Microsoft has been trying to nudge partners towards new business models for a number of years, and Schuster told the audience that traditional reselling did not stimulate the levels of trust between the vendor and partners that cloud services do.
"Let's face it, our traditional way of partnering was actually built much more around a supply chain," she said.
"Microsoft would build some software. A partner might resell it, a partner might integrate it, manage it, deploy it, support it, and it was a series of hand-offs. There wasn't as much trust inspired in those hand-offs.
"But cloud services fundamentally changes the basis of our relationship. Cloud services collapses that supply chain and requires each of us to provide persistent and always-on services to our customers. It blurs the lines between what we do. We no longer have these unique and distinct roles to play.
"That's why I believe that we have moved from partnering to partnership, because while it may be the technology that brings us together, it is the partnership that keeps us together."
The sinister six
Schuster said there are six key areas that partners should focus on in order to maximise growth in their Microsoft business: Microsoft 365, Teams, PowerApps, Dynamics 365, Azure Migration and AI.
As such, the vendor made a number of announcements around these areas.
Microsoft revealed the Azure Migration Programme, which it said will help customers accelerate their journey to Azure, and offer "proactive advice and tools to help mitigate risks and address common issues associated with moving workloads to the cloud".
Schuster declared 2019 "the year of Azure Cloud migration".
Microsoft also announced Azure Lighthouse, which it says gives partners a "single control plane" to view and manage Azure at scale across all their customers.
"This marks the first time Microsoft has architected a solution at this scale, with partners and for partners," the vendor said in a release.
"Azure Lighthouse builds partners in by design into Azure by enabling multi-customer, multi-tenant management at scale in a secure environment with automation so that Azure becomes your best platform to deliver those managed services to your customers," Schuster added. "We're going to continue to invest in that service for you."
Microsoft also announced a host of updates for Teams and Dynamics 365.
Schuster said that Teams is in a phase of extreme growth.
"How many of you remember the explosive growth of SharePoint about a decade ago?" she asked partners. "Teams is already on a faster trajectory than that."
Schuster also encouraged partners to talk to their customers about server upgrades - claiming that a number of partners are still running two products that are approaching their end of support: Windows Server 2008 and SQL Server 2008.
She said that partners would be letting customers down by allowing them to continue running these products.
"We estimate about 60 per cent of our server install base is still on Windows Server and SQL Server 2008," she said.
"That's 24 million instances. That is a $50bn (£40bn) market opportunity that you should be going after right now, this year, because those customers are vulnerable and exposed.
"Do you remember what was going on in 2008? You run the risk of breaking trust with your customer if you leave them on that server technology, because you leave them unsupported."
Partner investment hits $3bn
Schuster said Microsoft will be investing $3bn in its partner ecosystem this year, highlighting three areas as the most prominent: the Cloud Solution Provider (CSP) programme, marketplace and co-selling.
She said that Microsoft has over 12,000 apps and services available on its marketplace and encouraged partners to list their own offerings.
She added that Microsoft is delivering over 350,000 leads out to partners every month, and transacting around $90m a month.
The second key area for partners, according to Schuster, is CSP. She said that the CSP programme has now hit sales of over $4bn, with over three and a half million customers.
"Those partners transacting CSP are seeing 40 per cent year-over-year growth," she said.
The partner boss also plugged Microsoft's co-sell programme, which launched in 2018.
Schuster said this programme has now facilitated almost $9.5bn in sales of partner products and services.
"I think that we might have discovered the secret sauce, because the secret sauce to co-sell is you," she told partners.
"We're selling your services and your value to our customers together.
"And when we do co-sell, we find that our deals close almost three times faster, the initial project size grows almost six times larger, and the Azure consumption grows almost eight time higher. That's something we want to continue to invest in, and we want to expand it."
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