Hello partners, I don’t know about you, but I’m getting excited for #WPC15! The closer we get to WPC, the more coffee I consume as we prepare what I think will be the best WPC yet. In today’s blog I want to give you a sneak peek into some of the exciting new content we’ll be showcasing during our Profitability Deep Dive sessions at WPC.
One of the most common requests I have received from partners since taking on the role of Partner Profitability lead several months ago is to provide tools and resources to understand the profitability model associated with taking Microsoft cloud services to market. A few months back I set out to answer the following questions through a survey of 1,260 partners and 66 deep dive partner interviews:
  • What are the most common scenarios Microsoft partners are selling and deploying to customers across Office 365, Azure, CRM Online and Windows/Devices?

  • What are the specific Project Services, Managed Services and IP that partners are wrapping around these scenarios when they deliver them to customers, what are they charging for these services, and what are the average margins and costs in delivery?
I’m excited to dive deeper into the learning we took away from this survey in the profitability sessions. As a quick sneak peek, I wanted to highlight two key insights I learned through the survey:
  • Project services account for almost half (46%) of cloud partner revenue overall. 36% of revenue is coming from Managed Services and 14% is coming from IP.*

  • Half of survey respondents offer Project Services, Managed Services, and IP.*
I mention these two points because I think they illustrate the rapid evolution of the Microsoft cloud partner ecosystem to managed services and IP, which allows partners to capture recurring revenue streams, increase profitability and shareholder value, and add higher value services to their customers. I challenge you to ask yourself these questions: where does your business stand in this evolution, and what do you need to do to take it to the next level in the next 3 months, 6 months, 12 months?
With these key insights in mind, and the other top learnings from the survey, we created the following resources that are available to you now to help you build a more profitable business in the cloud with Microsoft.
  • Scenario-focused value proposition decks across twenty Office 365, Azure, CRM Online and Windows and devices scenarios/workloads. These decks provide a summary of the customer needs, market opportunity, and partner opportunity in the form of a list of project services, managed services, and IP partners are wrapping around each scenario, along with the average revenue and margins obtained for each.

  • Financial models which allow you to model out the potential revenue, contribution margin, and valuation impact that taking a new scenario to market will deliver. Models are provided for Office 365, Azure, CRM Online, and in the form of a combination model which combines Office 365, Azure, CRM online, and Windows/Devices.
To help you determine what your key strategy should be, we have put together a series of Partner Profitability focused sessions at WPC. I welcome you to join the sessions and then share your feedback on your #1 cloud aspiration to #MyCloudAspiration and reference #WPC15 on Twitter.
Check out the full schedule here!
See you in Orlando!

* MDC Research, Microsoft Cloud Profitability Scenarios May 2015
Do you have additional feedback or comments? Let us know on our Facebook page!