While the software giant is actively transforming itself into a cloud giant as well, its channel chief says partners need to take fuller advantage of what Microsoft can offer on this journey, and aggressively benchmark themselves in the transformation.

Microsoft’s increased focus on the cloud is certainly no secret. The company has been rolling out a series of new initiatives around both Azure and hybrid clouds as it transforms itself from a software giant to a massive cloud player as well. Phil Sorgen, the corporate vice president of Microsoft’s Worldwide Partner Group, recently talked with ChannelBuzz about Microsoft’s cloud plans going forward, and how partners can best benefit from them.

“The cloud is front and centre with us,” Sorgen said. “Satya Nadella, our CEO, recently laid out an important vision of what he called three bold ambitions: more personal computing; reinventing productivity and business processes; and building the intelligent cloud. When you look at the momentum we are seeing, in both the public and in hybrid cloud – and we are seeing very strong growth in both – that leads to an interesting opportunity for us. That also means helping our partner ecosystem transform with us.”

Sorgen acknowledged that there are many different conceptions of the hybrid cloud, and said Microsoft’s aim was to work with them all.

“The definition of hybrid cloud can vary wildly, with ten different people having ten different views,” he said. “We have large number of hoster partners who provide managed services, some being more of a dedicated service, some being true multi-tenant. We have tens of thousands of partners selling different kinds of hybrid solutions, and some also selling the public cloud. That’s a market where you have three huge public cloud providers who they don’t want to compete with, so they have joined our Microsoft Cloud Service Provider program. Microsoft wants to provide the best technology to help the customer on the journey regardless of their path to the cloud, and we think that positions us uniquely relative to the other providers.”

Sorgen said that the four pillars of Microsoft’s commitment to partners which he laid out when he took the channels position are more relevant than ever, and that Microsoft has to continue to invest in all four and keep them in balance.

The first is innovating around products and services Microsoft brings to market.

“We invest 10 billion a year in R&D, because if we don’t continue to create products that customers want and partners can build a business around, the rest doesn’t matter,” Sorgen said. That’s reflected in programs as well. “With the Microsoft Cloud Solution provider program, we provide the APIs so partners can write it into their offerings and drive Microsoft public cloud services. That will be a core element at the Worldwide Partner Conference in July.”

The second pillar is helping partners create markets.

“We think of this at both the brand level and the campaigns and resources we provide to add partners’ own capabilities,” Sorgen said. “Creating Microsoft preference and brand awareness drives down the cost of sales. In the last 12 months, our Partner Marketing Center has had 275,000 assets downloaded, a run rate that is growing, and which gives partners the ability to customize their assets and market more effectively.”

Third is partner enablement.

“Our partners tell us that staying up to date on these technologies can be challenging, so we have done a lot on the enablement side for technical, sales and pre-sales training to help support them,” Sorgen said. “We have moved most of it online, even adding online proctoring to make it easier to consume. In September we added three new cloud performance path competencies, and a fourth in February, and these competencies are all about performance. We also launched new Signature Cloud Support, which provides online technical support to partners with Silver or Gold competencies.”

The fourth pillar is engagement in the field.

“We have 3000 employees in our subsidiaries like Microsoft Canada, and they achieve their results through our partner ecosystem,” Sorgen said. “That’s a tremendous asset. That’s how I evaluate this business. Do we have the right services and are they connected? Are we driving down the cost of sales by enhancing how partners market themselves? Are we driving the right engagement strategy?”

Sorgen said engagement can be improved if cloud partners make better use of assets Microsoft provides.

“We offer internal use rights for Office 365 and Azure that need to be used more,” he said. “Partners are always more effective selling things if they use them internally. “There is also an opportunity to get greater use of advisory services. We provide a certain number of hours depending on competency and level to help partners be more effective.”

Sorgen also said that partners need to benchmark themselves effectively as they transition their businesses to embrace cloud opportunities.

“Partners understand where the industry is growing,” he said. “They have seen the data we shared from the IDC White Paper. But they also know they have to perform while they transform and that’s hard. It may change the shape of your P&L, how you compensate, how you market. We aren’t asking partners to do that without having to undergo the same transformation ourselves. But that’s the opportunity we spend the most time on with partners, how to benchmark themselves for that journey.”

Sorgen said the first area he tells partners to benchmark on is the amount of first party IP they are creating to wrap around Microsoft solutions.

“How they differentiate and drive profitability is critical,” he said. “The key to maintaining profitability is having a pipeline of innovation, and they need to build an annuity business with this IP.”

The second thing partners need to consider here is changes to their customer acquisition strategy.

“What’s their customer acquisition strategy in a cloud-first market?” Sorgen said. “The cloud is changing things, and buyers are changing with them. In the past, many customers have been local, but the cloud enables customer acquisition beyond that in ways that weren’t available to partners previously.” The flip side of that, of course, is that the cloud also enables non-local competitors to reach out to customers of solution providers who are not maintaining the pipeline of innovation needed to differentiate themselves.

Third, partners need to benchmark themselves around how well they are able to meet the needs of digital marketing.

With SCM (Search Content Marketing) and SEO (Search Engine Optimization), your digital profile needs to be able to introduce you to new buyers,” Sorgen said. “Are you well positioned for the self-serve buyer today?”

Finally, Sorgen said partners need to assess their KPIs (Key Performance Indicators) and compensation.

“If there’s not a good balance to your monetization models, your own actions could hold you back,” he said.