Microsoft sees double when it comes to partnerships

Satya Nadella
Satya Nadella (Source: IDG)

IT spending is going up but the vendor isn't claiming all the credit, says Billy MacInnes

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15 April 2021 | 0

Microsoft CEO Satya Nadella gave an interview to CRN this month which contained a number of interesting statements. Three of them, in particular, I think deserve teasing out a little bit more than the space of the interview seemed to allow.

Revealing that 5% of world GDP was spent on technology, Nadella predicted that the figure would double within 10 years. “In other words, we are lucky enough to be in an industry that’s going to double,” he told CRN. “The partner opportunity therefore is clear.”

Clearly, in a world where global spending on technology is predicted to double in a decade, the opportunity for partners is going to be strong. This is especially true in the Microsoft ecosystem given Nadella’s claim that the software giant “wouldn’t exist as a company if not for the partner ecosystem taking what we build, adding value to it”.

 

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That’s the core point. Growth for Microsoft is so closely connected with growth for its partners as to be almost indistinguishable. It’s also still true that growth for the technology industry is often inseparable from growth for Microsoft. So you can see how promising it is to be on the threshold of a pretty dramatic increase.

Personally, I’m not sure whether achieving a spend of 10% of global GDP on technology is unreservedly a good thing, although I can see the benefits for the IT industry itself. It seems like a LOT to be spending on technology. But maybe that’s just me.

Further on, Nadella described the move to consumption and subscription as “tremendously more valuable” to its customers and a bigger opportunity for Microsoft and its partners.

No one is likely to dispute his contention that the model “is here to stay because it’s more aligned. After all, a customer is not going to subscribe if they’re not getting value. A customer is not going to consume if they’re not getting value”.

“Fully aligned”

There doesn’t seem to be any way that the world could or would turn back from the consumption and subscription model, especially with remote working becoming a fact of life. Nadella put his finger on why when he observed the model makes Microsoft and partners “fully aligned with customer success”.

That’s the positive case, although it also means you can be much more fully aligned with customer failure too. There are less places to hide and the customer can terminate the relationship much faster (in theory, at least).

The Microsoft CEO also had a good point when he argued this model means customer expectations are only likely to go up. “Let’s be clear,” he told CRN, “it’s not going to be like, ‘Hey, what we did last year, if we just repeat it next year, we’ll be fine’. No, we will have to improve and in nonlinear ways, and so will our partners.”

Which means that even if he’s right about technology spending doubling in the next 10 years, there will be no room for complacency for Microsoft or its partners. The opportunity is clear but so is the danger of failing to make the most of it.

And it’s worth bearing in mind that because Microsoft’s business model places such a heavy emphasis on the importance of the partner ecosystem to its success, it’s great for the channel when the company is being successful – but not so much when it isn’t. The dangers of failure by association are real. The good news is that this mutual dependency should ensure both parties do as much as they can to get the best out of any future opportunities for each other.

One of the company virtues Nadella extolled, of being able to provide “one integrated commercial cloud opportunity for partners”, shows that an intrinsic part of Microsoft’s DNA and strategy hasn’t really changed since the day it integrated all its productivity applications into a single suite.

Nadella’s argument that customers don’t want to talk about infrastructure independent of data or to talk about data independent of the SaaS applications, is similar to the strategy of providing a range of productivity applications in a single Office suite. The argument then was it made things simpler for customers because they didn’t have to talk to one company for their word processing package, a different supplier for a spreadsheet and someone else for their presentation software.

As he told CRN: “That’s the unique opportunity: That we are more comprehensive in scope, scale, depth, which then in turn translates into partner opportunity and customer value, and I think that’s important.”

Bill Gates could have said more or less the same thing more than 30 years ago when Microsoft released the first Office suite for Windows in November 1990.

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