Unprecedented digital transformation opportunity
$20 trillion. With a T. That’s what IDC estimates the economic value of digital transformation to be over the next five years—equivalent to more than 20 percent of the world’s Gross Domestic Product. It reveals the opportunity in front of companies looking to ride the wave of business innovation being fueled by cloud technologies. Microsoft is helping partners make the most of this staggering opportunity, implementing a fresh business approach and renewing our commitment to partners.
Last July, we made big, bold changes to how we work with partners, and began our own sales transformation. We introduced One Commercial Partner, a new organization that unified Microsoft’s partner-facing workforce and narrowed its focus to three areas:
- Building solutions with partners
- Helping take those solutions to market
- Co-selling with partners
These changes were designed to help us bring more innovative and impactful solutions to our mutual customers in four solutions areas: Modern Workplace, Business Applications, Applications and Infrastructure, and Data and AI. While there is still more work to do here, we’re off to a strong start together.
Partner success and momentum
We generate more than 95 percent of our business through our robust and constantly evolving partner ecosystem. Last fall, partners helped us exceed a $20 billion commercial cloud annualized revenue run rate goal we set just two years ago. And the momentum continues:
This momentum sets the stage for a big year in 2018. I encourage you to explore the blog Looking ahead: Opportunities for partners in 2018, in which Microsoft leaders share their perspectives around security, GDPR compliance, micro-revolutions, IoT, and building deeper customer relationships.
Consumption-based compensation drives customer value
In 2017 we initiated the largest sales transformation the company has seen in decades. We re-focused our global enterprise sales team and invested $250 million in incentives for our sellers to drive more sales and revenue together with partners. In a co-sell incentive unparalleled in the industry, our enterprise sellers are now paid 10 percent of the partner’s annualized customer contract value. The model helps partners and customers alike to enter new markets and scale by tapping into the deep customer relationships and technical expertise of our enterprise sales team. Selling together also results in more active customers over the long haul, which translates to higher customer value, customer satisfaction, and revenue.
In just six months with 500 partners, last year’s co-sell pilot generated $6 billion in partner pipeline and more than $1 billion in partner revenue. Project size was on average nearly six times larger, and partners closed deals nearly three times faster when we sold together. Since formally introducing our approach to co-sell at Inspire, more than 9,000 partners have become co-sell ready—a 543 percent increase since July—and that number continues to rise.
OSIsoft “By leveraging Microsoft Go-To-Market Services, OSIsoft has been able to create new subscription-based revenue streams and has achieved 12 joint wins.”
Barracuda Barracuda’s business has grown by more than 300 percent in large part due to co-selling with Microsoft. “Our global partnership with Microsoft has been a game changer for us … due to our co-sell motions and the partner-to-partner (P2P) traction we have cultivated.”
DataStax “DataStax has seen a 140 percent increase in pipeline growth by leveraging co-selling opportunities with Microsoft. To date, we have achieved 14 joint wins.”
New AI Practice Development Playbook
As Microsoft sellers deepen their relationships with partners through co-sell conversations, they want to build and expand their practices across the solution areas, especially artificial intelligence. By 2025, the anticipated market in the space is expected to reach nearly $60 billion, so it’s a greenfield opportunity—and partners are already creating customer solutions in new and unexpected ways.
In her blog post today, Melissa Mulholland shared more on AI and unveiled a new Artificial Intelligence Practice Development Playbook, , featuring new research and guidance around developing strategy, gaining skills, and marketing and selling service offerings in this space. The playbook was written in conjunction with partners that shared their experiences and best practices. It includes a closer look at InterKnowlogy, a boutique partner that took its expertise in computer vision and sentiment analysis in a new direction when it envisioned a better way for Hollywood studios to conduct advance movie screenings.
“Solutions like this would have been impossible for to build just a couple of years ago. With AI, new problems can be tackled and solutions can be built in weeks versus months and have fewer zeroes in the final cost. These are exciting times for Microsoft partners like us.”
Rodney Guzman, Co-Founder and CEO, InterKnowlogy
The new playbook—which I encourage you to download today for free—is the sixth in our series designed to help partners build successful, profitable cloud practices. Stay tuned for more new partner resources coming soon!
Join the conversation on the Microsoft Partner Community.