My open letter to Microsoft CEO Satya Nadella at the beginning of the World Partner Conference last Monday was not without a resonance. My warning of three disappointing fiscal years for established software companies in the wake of the transition from OnPremises to Cloud made its mark – and not just among German Microsoft partners. At a well-frequented “German session” with around 200 attendees we discussed possible steps in the change from the traditional business model to a new world. The Cloud Maturity Model that we presented shows the way in which existing customer installations can be transferred to the cloud step by step with a high functional benefit and cost savings effect.
Microsoft COO Kevin Turner, in charge of global channel business, also seems to see this as a blueprint for the migration of partners into perfect cloud companies. Unlike my pointed formulation of a three-year Vale of Tears, however, he sees for Microsoft und partners a twofold challenge to “perform and transform”. This will be accompanied by a series of training measures, marketing activities and product innovations that enable partners to totally reposition themselves in the Microsoft ecosphere.
His colleague Phil Sorgen, Corporate Vice President of Microsoft’s Worldwide Partner Group, identified four distinguishing features for the successful implementation of performance and change capability: concentration on one’s own intellectual property, the ability to digitize marketing and sales activities, accelerated customer acquisition and high retention rates for fixed-term contracts, and fine adjustment of in-house controlling and evaluation methods. Sorgen encouraged Microsoft partners to go fully and completely for the cloud. According to his market analysis partners whose cloud revenues amount to more than 50 percent of their total sales achieve higher growth rates and profits than those whose cloud business makes up less than 50 percent of their sales revenue. In other words, the ones have already left the Vale of Tears behind them and the others have yet to do so.
Kevin Turner underscored with impressive figures that the transition has long gained substance. Around half of the license agreements Microsoft has signed with corporate customers over the past half-year include cloud components. One million new users a month are joining the Office 365 cloud version, and the Office apps for Android and iOS have already been downloaded more than 100 million times.
As for the man to whom I wrote my open letter, Satya Nadella, irrespective of the personal response that I received immediately after he received my letter, the impression he made was that he well understands the partners’ worries. The “new Microsoft,” he assured attendees from the first day of the World Partner Conference to the last, was inconceivable without the partners and their commercial success. He made it equally clear, however, that Microsoft partners must now understand and follow up on the change of course Microsoft has undertaken. Sooner rather than later, with performance and transformation.