Online services have long been a point of contention and confusion between Microsoft and its partners, but those bumps in the road may soon smooth over.
Since the launch of the Business Productivity Online Suite (BPOS), partners have protested Microsoft's direct-sales play in the cloud. The concern has only grown since the release of Office 365, resulting in Microsoft's announcement of a new partner program, Office 365 Open, at its Worldwide Partner Conference in Toronto this summer.
For a look into the past, present and future of the Microsoft Office 365 suite in the channel, we talked to Frank Bennett, iCloud LTD principal and author of Thinking of Selling Microsoft Office 365? Ask the Smart Questions, a book available to partners for free via the Microsoft Partner Network.
Can you explain partners' hesitation or lack of enthusiasm for selling Office 365?
F.B.: The two objections I have seen are around Microsoft and their relationship with the customer. Microsoft has now made announcements that this will change.
The paper relationship is the first area. Microsoft is changing this invoicing relationship with the new Office 365 Open partner program, [which] changes who owns the customer. The second part is the revenue and cash flow from [the] delivery of services. A lot of partners are still working out what they can earn from the sale of Office 365.
When you analyze Microsoft's revenues, the majority is earned through partners, and the majority of customer conversations are occurring through partners rather than between Microsoft and [the] customer. I have experience with partners who are anti-Office 365 because they are concerned for their own interests.
How does the new Office 365 Open program for partners resolve those issues?
F.B.: It's hard to know if the changes with the Open program are going to be a significant incentive to partners -- or whether they only put the invoicing process up as a stalling objection. We will have to wait and see if the Office 365 Open program changes the perspective of the partner and renews their interest to sell Office 365. There is still a need for the partners to understand how to earn money selling Office 365. Microsoft has invested a lot in education for Office 365 in the form of business transformation workshops with partners. I don't know if Microsoft will continue to run that program; I believe Microsoft has signaled [that] they are going into battle and will expand support to partners who want to sell Office 365.
What business needs does Office 365 fulfill?
F.B.: I've noticed in the past couple of years that communication and collaboration have seeped into IT language. Whether we're talking about IBM Smarter Planet, Google Apps or Microsoft, it has become a topic. What it talks to is the everyday tasks that millions of people go to work every day [to] do. These include discrete services that used to be done with a phone, a fax and a mail tray. All of those things have been brought together now through one interface: a PC with a browser. It has fundamentally changed how we go to work and how we perform our work.
Here's the challenge. Microsoft had the desktop. Google would like some of that space. The approach of Microsoft Office 365 and Google Apps are fundamentally different. One knows the desktop; one doesn't. Part of why Office 365 exists is a defensive play from Microsoft -- they want to make it difficult for Google to raid their customers. These products are designed for a world that is moving from working in one place (desktop-centric) to working from anywhere (network-centric).
The majority of Microsoft's R&D money is going to Web-based applications.
Do you think that traditional Office installations will persist?
F.B.: The installation of software like MS Office will persist. For how long? I don't know. The majority of Microsoft's research and development (R&D) money is going to Web-based applications. I don't know a company in this world that isn't pumping a lot of money into Web R&D. One thing I say to partners who are looking to shift their business to recurring revenue is this; If you're thinking about turning your lights out in the next three to five years, carry on -- there's no need to change your business. If you're looking beyond that, you need to think about how to include cloud services such as Office 365 in your portfolio. I think in that time frame there will be a big shift to those services, and you will have to be in the game or you are out of the game.
What made you want to write a book about selling Microsoft Office 365?
F.B.: I got into this when Microsoft held their first partner briefing for BPOS. Ordinarily those meetings go very well, but some attendees were hostile. This is not a typical reaction at a meeting of Microsoft partners. I had recently exited a software as a service business and had just gone through meeting all of the challenges that many of the partners in that meeting would have to confront in building their cloud services portfolio. So I saw an opportunity to share that knowledge; there was an obvious need for education in [that] area.