WASHINGTON, D.C. -- Microsoft is altering the way its sells with partners, as it sets its sights on digital transformation, a marketplace the company pegs at $4.5 trillion.
Those developments emerged at the Microsoft Inspire 2017 conference, which opened today in the nation's capital. The annual channel partner meetup, which was formerly called the Worldwide Partner Conference, has drawn about 17,000 attendees. Microsoft made digital transformation a key theme at the conference and made it clear the road to that destination runs through partners.
With digital transformation, organizations create digital products and use technologies, such as cloud and artificial intelligence (AI), to reinvent the way they engage with customers. In Microsoft's view, transformation "outcomes" also include optimizing operations and empowering employees.
Satya Nadella, CEO at Microsoft, said he sees the $4.5 trillion in customers' digital transformation spending occurring at what he termed the "intelligent cloud and the intelligence edge," areas characterized by the infusion of AI. He suggested the channel transition to digital transformation is already underway.
"In the last year, I have seen a marked difference in terms of the ambition level of the partners, the transformative projects that are getting deployed in the real world."
Microsoft Inspire 2017: Consumption emphasis
Against that backdrop, Microsoft is changing its approach to selling with partners and establishing new incentives. In one move, Microsoft is shifting how it compensates its field sales for Azure from paying on the basis of billed revenue to paying on the basis of consumed revenue. Microsoft channel partners already are compensated according to consumed revenue, which is the revenue derived from actual cloud usage versus an anticipated, precommitted amount of cloud usage.
Ron Huddleston, corporate vice president of Microsoft's One Commercial Partner organization, said that difference in compensation had "caused friction" in the partner ecosystem.
Tony Safoian, president and CEO at SADA Systems, a cloud consulting firm in Los Angeles, said the compensation shift marks a huge change for Microsoft. He said the move to pay sales reps on actual usage places the emphasis on project success and also paves the way for digital transformation.
The idea, Safoian said, "is not just selling software for software's sake," but uncovering opportunities in which customers can build digital transformation capabilities that "actually land successfully."
David Lucky, director of product management at Datapipe, a managed cloud services provider based in Jersey City, N.J., said Microsoft's emphasis on compensation plays to the partners' strength.
"We can help customers consume Azure," Lucky said, noting that the task includes establishing monitoring and security. "It's not point and click," he added.
The move to get partners and sales on the same page was well-received at Microsoft Inspire 2017, given the applause during a reference to the initiative during the keynote presentation.
Alysa Taylor, Microsoft business applications and industry general manager, said field sales and partner incentives are now aligned, "and that way, there isn't channel conflict," she said.
Learn about Microsoft's relationship with developers
Read about Microsoft's Cloudyn acquisition
Gain insight into Microsoft's cloud strategy