Microsoft Partners Working Harder, Paying More For Gold Status

It's been one year since Microsoft's partner program underwent a major overhaul, including adding more rigorous certification requirements that make it much tougher to become a Gold-level partner. So how is the new Microsoft Partner Network working out?

Most partners say that while meeting the tougher certification standards hasn't been easy, they recognize that the changes make having a "Gold" designation worth much more than in the past.

"I like the changes they've made. Before, every Tom, Dick and Harry was a gold partner," said Jerod Powell, CEO of InfinIT Consulting, a San Jose, Calif.-based solution provider. "I like that it's more elite now."

"It will be a real gold standard," agreed Mary Shaw, business development coordinator at InterKnowlogy, a Carlsbad, Calif.-based software development company and Microsoft partner. "I'm a fan. I think they've done a good job."

But that opinion isn't unanimous. Some worry that the new program favors larger solution providers with more resources to invest in training and certification, while smaller partners might get left behind. Some partners question the value of the program and complain about the added costs.

"The net is more money, less value," said Daniel Duffy, CEO of Valley Network Solutions, a solution provider in Fresno, Calif., talking about the higher costs of getting certified by Microsoft. "I think they've really devalued the program."

After more than a year of planning and preparations Microsoft officially launched its revamped partner program, renamed the Microsoft Partner Network (MPN), in November 2010. MPN requires partners to become certified in specific "competencies" or technology areas to achieve Silver or Gold partner status. They also have to meet new customer satisfaction benchmarks and minimum sales targets.

The new certification requirements and the effort needed to achieve them have generated the most controversy among channel partners. To reach MPN Gold level, partners must employ or contract with four unique Microsoft Certified Professionals (MCPs) for a specific competency, such as business intelligence, identity and security, unified communications, and virtualization. Those MCPs cannot be assigned to any other Gold competency. For Silver, 2 MCPs are required, but they can be used for multiple competencies.

To achieve and maintain Gold status, partners have to make significant investments in hiring and/or training sales and technical support personnel. While Microsoft currently offers certification in 28 competencies, according to a Microsoft partner Website, the heightened requirements mean that many partners – especially smaller ones – must focus their resources on just one or two competencies.

"For some partners, it's forced them to prioritize what their core value-proposition is in the market," said Phil Sorgen, Microsoft corporate vice president for the Small and Mid-market Solutions & Partners (SMS&P) business in the U.S., in an interview at Microsoft's Worldwide Partner Conference (WPC) in Los Angeles in July. Microsoft is now focusing its marketing efforts to emphasize the value of the Gold-level competencies, he said.

Next: "Gold" Designation Becomes More Exclusive

Microsoft has made no secret of the fact that it designed the certification program to reward partners with a more solution-focused business model and eliminate from the Microsoft channel ranks partners who bring little value-add to the table.

"We have clearly made [Gold certification] a more exclusive certification. And that was done on purpose," said Jon Roskill, corporate vice president, Worldwide Partner Group, in a recent interview. Hammering home the point, in a keynote speech at the WPC, he said: "Competencies and industry specializations are about differentiation."

Catapult Systems, an Austin, Texas-based IT consulting firm, is one solution provider that has enthusiastically embraced the new program. "We're crazy about competencies. We see them as a very strategic asset in terms of our marketability," said Emily Villaneuva, Catapult's marketing vice president.

Catapult has garnered Gold certification in 11 areas, including business intelligence, content management, virtualization, digital marketing and unified communications, and Silver certification in 17 others. Those certifications are prominently displayed on the company's Web page and in a slick promotional booklet.

Ninety percent of Catapult's consultants are certified in a Microsoft competency and Villaneuva said newly hired consultants are expected to get certified during their first year. "It's an enormous amount of work," she acknowledged, noting that Catapult offers financial incentives to its employees to go through the process.

Catapult is clearly the model for the new Microsoft partner.

Currently some 7,500 Microsoft partners as designated Gold partners under the MPN program, holding a total of more than 10,000 competency certifications, according to Roskill. Another 17,500 are designated as Silver partners with a total of 25,000 competency certifications.

That's out of the estimated 640,000 solution providers that make up the entire Microsoft partner ecosystem. And it's down from the 16,000 partners who were ranked as Gold last year before the new requirements became effective. Roskill expects that ultimately only the top one or two percent of its partner base will make Gold.

The most popular competencies so far are data platform, systems management and virtualization, unified communications and mobility.

The tougher certification requirements also are helping Microsoft "clean up the accidental ecosystem" of solution providers who opportunistically resold Dynamics ERP and CRM applications without having the proper technical implementation skills, according to Doug Kennedy, vice president of Microsoft Dynamics partners.

Earlier last year about 70 percent of the 3,000-plus solution providers who resold Dynamics ERP and CRM applications were designated Gold. Today that number is down to a little more than 700, about 20 percent of the total, which Kennedy said was the goal.

To help discourage unqualified partners from selling Dynamics ERP and CRM applications, Microsoft has launched an "influencer" program that pays a referral fee to encourage partners to pass along ERP and CRM sales leads to more qualified partners.

Next: The Costs Of Certification

Microsoft is now studying the distribution of Gold and Silver partners by geography and workload to determine where there are gaps in coverage, according to Roskill. While that might mean more recruiting, the channel chief said a more likely scenario is that Microsoft will help existing Gold partners texpand into new areas.

Roskill noted that some partners still promote themselves as Gold partners even though their certifications under the old program may be years old and in some cases have lapsed. Those partners, the channel chief said, must remove that Gold logo from their Web sites and business cards.

The transition to MPN hasn't been entirely smooth. Several partners said there was some confusion about processes and requirements when MPN launched in late 2010. Powell at InfinIT said the sales requirements under the new program weren't initially clear ("Even our Partner Account Manager didn't know what that might be," he said). And Shaw said InterKnowlogy's systems provider had trouble downloading Microsoft Developer Network benefits when the change was made.

But partners said those hurdles have been cleared and the program seems to be running smoothly now. Shaw, for example, credited the MPN "Expert Team" that was created to respond to partner problems during the transition with resolving the benefit download issue.

The cost of certification also has been an issue for some. Earlier this year Microsoft increased the cost of the certification exams in the U.S. and Canada from $125 to $150. Microsoft said at the time that it would use the price hike to improve the program with new certifications and types of questions, as well as more frequent exam updates and better exam security.

"In this economy, it seems to me to be the worst time to be jacking up prices," said Duffy at Valley Network Solutions. While the solution provider previously held Gold status in a half a dozen areas, including Office deployment and Exchange, the company is now designated Silver. Duffy questioned the value of a Silver certification ("It's not even worth the money," he said) and the cost of Gold certification puts it out of reach for small companies like his. "Microsoft has really lost touch with its partners."

InterKnowlogy's Shaw agreed the certification process can be a financial burden. In addition to the exams, there's an annual fee of $3,800 for each Gold competency and $1,850 for Silver. Throw in the fact that InterKnowlogy and other solution providers offer employees bonuses to get certified and it begins to add up.

Roskill noted that this is the first increase in certification fees in seven years. "And we're certainly not doing this to make money from the partners," he said. Microsoft has taken steps to reduce the impact of certification costs on partners, including offering a 30-percent discount for partners who purchase 8-pack exam vouchers.

Microsoft has budgeted $5.8 billion in the current fiscal year for its partner programs, including offering partner incentives to seek gold and silver certifications and to provide them with training (both online and instructor-led workshops) and other assistance. "They really bend over backwards to make sure you have everything you need to get certified," Powell said. "They've also backed it up with more support once you get there."

Next: The Challenge For Small Solution Providers

Qualifying for multiple competencies can be especially difficult for smaller partners. "Based on the partner's size, you have to pick and choose carefully," said Ric Opal, vice president at Peters & Associates, a long-time Microsoft partner based in Oakbrook Terrace, Ill. Under MPN, he said, the solution provider, which has 55 employees, "has had to really figure out what's important to our business and what parts of the program we really want to participate in."

Peters & Assoc. is Gold-certified in server platforms, is working on Gold for Microsoft Lync, and is Silver-certified in virtualization, systems management, and security and identity.

"We don't have enough people to be Gold," said Steve Hall, CEO and engineer at District Computers in Washington D.C. The solution provider was a Gold partner under Microsoft's old program, but is now Silver in several areas including mid-market solutions, server platforms and virtualization. Hall notes that District Computers' sales would easily qualify the company for Gold status and he said small partners "shouldn't be penalized" for having small staffs.

Hall, nevertheless, said he understands why Microsoft implemented the competency program, saying the bar to reach Gold status was too low. While he said MPN still needs fine-tuning -- he'd like to see a cloud-computing competency, for example -- the initiative is "heading in the right direction" and Microsoft is listening to partners about making needed changes. He also praised the SMB Cloud Champions Club through which MPN recognizes partners like District Computers that have aggressively moved into cloud computing.

While Shaw said the transition to the new program wasn't especially difficult for InterKnowlogy, she acknowledged that having a dedicated business development person like herself to help oversee the process is an advantage that some smaller partners might not enjoy. The company is certified Silver in a number of areas, including software development and Web development, and at the time of an interview was working toward Gold in software development.

MPN appears to be more geared toward solution providers who sell Microsoft software licenses, said Andrew Brust, CTO of Hartford-based Tallan, a Microsoft partner, and CEO of Blue Badge Insights, which provides Microsoft-related consulting services. While he said focusing on license sales is understandable from Microsoft's viewpoint, it runs the risk of making it tougher for "boutique shops" -- those who build custom solutions for customers using Microsoft software the customer has already purchased -- to get noticed.

While such smaller partners may not be big revenue generators, Brust said, they "add to the overall satisfaction of the Microsoft customer base" and often spearhead adoption of leading-edge Microsoft products. He said Microsoft should develop some kind of criteria for recognizing such small channel partners.

Brust, nevertheless, generally applauds MPN, especially the significant number of software licenses partners get for their own use. "I think if you compare the program to that offered by other megavendors, it's still quite generous."

"They've aggregated a lot of great content and materials for partners," agreed Opal at Peters & Assoc. MPN, he said, "is still the program all others are measured against."

One point a number of partners make is that while they understand the value of having a gold certification, Microsoft has to do more to communicate that to the wider market. And Microsoft executives agree.

"We need to do more. And we'd love our partners to do more with us," said Julie Bennani, general manager of MPN, Worldwide Partner Group, in a WPC interview. She, Roskill and other Microsoft channel executives said that branding the value of the MPN competencies is a priority for the current fiscal 2012.

One way Microsoft is helping here is by leveraging the partner profiles in the vendor's Pinpoint online directory of software applications and professional services offered by channel partners. The searchable directory, launched in 2008, has profiles of more than 30,000 partners and Microsoft is giving priority to solution providers with Gold and Silver certifications. Roskill said Pinpoint generated one million leads for channel partners in the last year.

Is it all worth it? "We realize we're asking partners to do a whole lot of extra work," Roskill said.

"What Microsoft is asking its partners to do should improve them and the career paths of their employees," said Opal, noting that under MPN solution providers must have business discipline, clearly understand what they're good at, and have staff development plans.

Others say time will tell. The market value of the new Gold designations will be hard to measure until after the old certifications are gone, leaving only those deemed Gold under the new program, Shaw said.