New Expectations: Microsoft Seeks Dynamics Resellers Who Can Accelerate Growth

October 21 2011

In the last year or so, Microsoft has announced significant changes to its overall partner strategy, including the ways that partners are measured, compensated, trained, branded and promoted.

That means that there been changes to partner discounts and incentives under the "pay-for-performance" model as well as an increase of requirements and benefits for the Gold and Silver ERP competencies under MPN. The changes, which take effect January 1, 2012, send a clear message: Microsoft wants Dynamics VARs who can add more customers and accelerate growth.

For VARs who cannot manage such growth, reselling Dynamics will become a smaller, or vanishing, part of their businesses in the coming years.  The best margins will now be reserved for resellers who commit to getting on a path to tripling their new customer growth over the next three to four years. 

At a recent GP Partner Connections town hall meeting, Jeff Edwards, Microsoft's Director of Partner Strategy spoke to VARs and ISVs about the changes. 

"On average right now of all the partners that transact that's around five or six customer adds per year," said Jeff Edwards, Microsoft. "We'd like to get that between fifteen and twenty. Largely we want to take the partners that we have and triple the sizes of those firms."

In Microsoft's most recent earnings release, the company highlighted 17% revenue growth for the Dynamics product line in the first quarter of fiscal year 2012 compared to the year-ago quarter.

Edwards said Microsoft wants to reward its current partners for increased growth and performance-the partners that are growing and executing well get paid more, those that are smaller and are not executing well get paid less. However, Microsoft will still recruit new partners-in a more targeted way than in the past-if current partners are unable or unwilling to expand.

"We recruit partners that we think can grow to be driving fifteen to twenty customer adds a year after three or four years," he said.

Under the new program, partner margins will go up by up to 20 percentage points if license revenue growth hits one-year and two-year targets, and if they add a certain number of new customers. But if partners don't hit Microsoft's targets, margins can go down by as much as 15 percentage points, according to Edwards.

Under the new Solution Provider Agreement (SPA), out of the 3,000 partners reselling Dynamics-about 1,000 in the US-a little less than 1/3 will no longer qualify "as they currently sit today," Edwards said. "That's a result of a combination of the revenue requirement and the two-body requirement ."

Now, Microsoft has truly differentiated the entry-level SPA designed for smaller partners not driving a larger amount of volume or having more certifications of those just choosing to be in that space, he said.

"Now there's not the overlap that we had in the past between good and better that we had in the past between SPA and certified," he said. "Then there's silver and gold that are tougher to get-proven with a level of revenue and certifications. Experience selling the product, implementing the product is critical. Putting a partner in front of a prospect and saying they're our best, our gold or silver, when they hadn't sold a deal for a year or two just wasn't reflective of the requirements of the market."

Edwards also touched in Microsoft's new Master VAR program, trying to alleviate the fear of smaller partners that feel they're being pushed aside. The Master VAR is a unique partnership model designed to strategically drive growth for resellers and Microsoft through effective intra-channel partnering, Microsoft has said in the past.

Master VARs are selected based on a minimum capitalization, revenue level, and BREP revenue recapture rate of no less than 90%. After Master VARs are selected, their contact information will be made available for partners interested in pursuing collaboration opportunities, according to Microsoft.

"We ask both sides to do things that are hard," he said. "For our Master VAR program we are looking at our biggest, most successful current partners."

Edwards said smaller partners will still retain the relationships they already have with their customers.  "That won't change," said Edwards, adding that Microsoft will be announcing the names of those partners very soon.

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About Linda Rosencrance

Linda Rosencrance is a freelance writer/editor in the Boston area. Rosencrance has over 25 years experience as an reporter/investigative reporter, writing for many newspapers in the metropolitan Boston area. Rosencrance has been writing about information technology for the past 16 years.

She has covered a variety of IT subjects, including Microsoft Dynamics, mobile security issues such as data loss prevention, network management, secure mobile app development, privacy, cloud computing, BI, big data, analytics, HR, CRM, ERP, and enterprise IT.

Rosencrance is the author of six true crime books for Kensington Publishing Corp.

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Comments

mukhan's picture

Is there any documents which gives comparision between SAP and Microsoft Dynamics (GP) to convience the customer that Microsoft Dynamics is better choice.