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Does the Microsoft partner ecosystem follow the 80/20 rule?

Partner Elevate director Desmond Russell believes Microsoft's channel strategy underserves the bulk of its partners. Here's how Microsoft could better support its channel ecosystem.

The beginning of a new fiscal year means the Microsoft partner ecosystem has a new set of channel priorities and initiatives to navigate.

Desmond Russell, director at Partner Elevate, a business that coaches and mentors Microsoft partners, believes Microsoft's ecosystem efforts will fail to effectively support the long tail of partners. He estimated 80% of partners can't fully take advantage of the software company's array of go-to-market benefits and various technical enablement programs. Microsoft's distribution partners face a similar challenge in backing channel companies, he added.

"The bulk of the channel is underserved by Microsoft and its distributors," Russell, a former Microsoft channel manager, said. "A focus on technical skills and enablement has left a gaping hole in what these businesses really need, and that is help to translate their technical capability into profitable business capability."

In Russell's view, the founders of channel companies are typically tech-minded entrepreneurs, who will build their partner firms around a technical skill or capability. That technology focus, however, bumps into limitations.

The rise of cloud and SaaS offerings, for example, has eroded the value of some of those technical skills, Russell said. Microsoft and other vendors, however, continue to emphasize technology skills enablement.

"No one has helped [partners] understand what it is to run a profitable business," Russell said. "No one has showed them how to run a business that needs to grow and scale."

While vendors could do a better job of gauging partner needs, partners bear responsibility as well, Russell contended. Channel companies need to own their transformation, he said. In the Microsoft context, this means making the move from single-product reseller to trusted advisor with multiple services, skills and products to sell and implement.

Partner Elevate's goal is to help partners become "investable" from the Microsoft perspective, Russell noted. That is, gain Microsoft's attention -- and sales and marketing dollars -- as a co-selling partner.

The bulk of the channel is underserved by Microsoft and its distributors.
Desmond RussellDirector, Partner Elevate

A matter of focus

Without internal transformation, Microsoft partners struggle to sort through the vendor's programs and grasp the key business opportunities, Russell said. He pointed to the example of Microsoft's advanced specialization initiative, a priority for Microsoft in fiscal year 2022. A partner with a Microsoft Gold competency can seek advanced specializations in areas such as Azure, business applications and security.

"This will appeal to many yet only be attainable by a select few," Russell said. "From a partner perspective, they look at where Microsoft is focusing and almost relentlessly pursue this objective, mostly without a coordinated plan."

Complicating this is the fact that Microsoft's priorities change regularly. "This will mean programs, investments and opportunity will change for resellers [and] partners as well," Russell explained. Partners must understand these priorities and then identify the opportunities they provide, he noted. From there, partners can decide where to concentrate their efforts and execute a plan.

Transformation benefits partners, Microsoft

Partners must have a decisive, focused strategy with Microsoft, Russell said. Partners tend to pursue whatever program Microsoft points them toward. But partners should learn to say "no" for the sake of focus, he added.

Partner transformation would benefit Microsoft as well. Microsoft and its distributors rely on the same set of partners -- the top 20% -- year after year rather than on building channel capacity, Russell said.

"The recycling is done by both vendors and distributors, and this is why capacity planning continues to be their Achilles' heel," he said. "The 80/20 rule is true. But what would be possible for both vendors and distributors if they helped the 80%?"

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