Partners: Microsoft Reorganization Will Sharpen Focus On Industry Solutions And Hot Technologies

A Microsoft sales and marketing restructuring should bolster the channel's ability to target specific industries with hot emerging technologies including artificial intelligence, solution providers told CRN.

Tony Safoian, president and CEO of Los Angeles-based SADA Systems, said that while he is awaiting the full details of the restructuring "what we do know is that this shift is a positive one, in terms of the re-emphasis on specialized areas of technology in enterprise."

"In terms of the cloud and everything else, what the market is asking for is more specialization in the segments you're now working with--to bring more value to the line of business that's meaningful," Safoian said. "This is definitely a smart move."

[Related: Report: Microsoft To Lay Off Thousands, Enterprise, SME Sales Groups Could Be Affected]

Among the major changes from the restructuring: Microsoft's sales groups will be divided into two categories--enterprise and small/medium/corporate--while sales teams will also be organized by industry focus and by product category.

Industries covered are manufacturing, retail, education, financial services, government and health. The sales groups will be organized based on which product category they focus on--apps/infrastructure, data/AI, business applications and modern workplace.

"Cloud and AI are the two things that are really changing the way that Microsoft has traditionally engaged with their customers," said Tony Pagnusat, senior alliance director at St. Louis, Mo.-based Perficient, No. 57 on CRN's 2017 Solution Provider 500. "I think that's what's driving this [reorganization]."

While Perficient has spent a lot of time establishing relationships with field salespeople within Microsoft, there will probably now be a need to re-establish connections with the sales teams, Pagnusat said. Still, "I think it's a really good opportunity for us as partners to get in early, understand the model, and figure out the ways where we can plug in and help bring value to the Microsoft field sales team," he said.

Microsoft declined to comment on the reorganization beyond issuing a short statement, which reads: "Microsoft is implementing changes to better serve our customers and partners."

The reorganization – which was first reported by Geekwire last week -- was detailed in an internal memo from Microsoft’s Executive Vice President of Worldwide Commercial Business Judson Althoff; Executive Vice President of Global Sales, Marketing & Operations Jean-Philippe Courtois; and Chief Marketing Officer and Executive Vice President of Marketing and Consumer Business Chris Capossela.

Ric Opal, senior director at Oak Brook, Ill.-based SWC Technology Partners, told CRN that "unquestionably, the cloud is driving this."

While more details are likely to come at Microsoft's partner conference--Inspire--next week, Opal said the moves could enable "a much deeper and wider customer experience for Microsoft customers."

"By that I mean, I can focus on what I do and do well, and know where I need to focus. The lines are a lot clearer, on who I might co-sell with from a Microsoft perspective, and how I might do that in a very efficient way," Opal said. "This alignment is going to afford me a tremendous opportunity on a go-forward basis."

In addition, the moves by Microsoft "put a lens on the need for partners to have strong ISV relationships, where maybe they didn't in the past," he said. "If they weren't paying attention to ISV strategies, that will be important going forward."

Mike Hadley, CEO of Boston-based iCorps Technologies, said the reorganization within Microsoft should make it simpler for partners to work with the software giant.

To date, iCorps has had to work with different teams within Microsoft for serving small/medium businesses (SMB) and somewhat larger businesses (referred to as "corporate" by Microsoft).

"We definitely welcome having the ability to work with one group," Hadley said. "Technology is changing, and all these large and small companies can all pretty much do the same things now. So they can leverage the same tools and really maximize their business processes, automation, security and everything else. They're all playing by the same rules … I think this is going to help a lot of companies like ours."

The restructuring follows strong cloud sales growth during the Microsoft's fiscal third quarter, ended March 31. Azure revenue rose 93 percent, while Office 365 revenue grew 45 percent and Dynamics 365 revenue surged 81 percent.

Partners are seeing other outcomes of the cloud push within Microsoft via the company's acquisition strategy, which most recently saw the company announce the planned acquisition of a tool for managing spending on cloud services, Cloudyn.

Tracking the amount of cloud services that customers are using and what's being charged for the services can become a massive job, which Microsoft has proven it understands with the Cloudyn acquisition deal, said Michael Goldstein, CEO of Fort Lauderdale, Fla.-based LAN Infotech.

"They realize it's difficult for a small company like us to maintain that insight into all of the cloud accounts that we sell," Goldstein said. "The customer does expect on-demand type service, and we have to adjust to have the tools to be able to make the necessary billing changes."

The changes come in the wake of reports from Bloomberg and others that Microsoft is planning to lay off thousands of employees.

"It is going to mean less help in the field," said one top sales executive for a Microsoft enterprise partner, who did not want to be identified. "You are going to have to figure it out on your own. If you are connected and know how to navigate Microsoft you'll be able to figure it out. If not you are going to go into a black hole. Right now it is a moving target until we hear directly from Microsoft what the plan is and how many people are going to be laid off."

With Microsoft seeking higher revenue per employee, the software giant is going to have to depend more heavily on solution providers to drive higher Microsoft cloud software and services consumption, the solution provider sales executive said.

"Microsoft is moving from an organization that compensated it sales teams and partners on selling enterprise licensing agreements that were never fully deployed to an organization laser focused on cloud consumption usage and metering," he said. "Partners are going to be the key to whether that cloud consumption model is effective."