In a State of the Channel update Tuesday morning, Gavriella Schuster, corporate vice-president for One Commercial Partner, said Microsoft’s growth in the cloud business, which has been central to the corporation’s success since it shifted to a recurring business model a few years ago, has been significant. A lot of that success continues to stem from its partner ecosystem, she said, which has helped its commercial cloud business grow 48 per cent year-over-year, anchored by Azure revenue growth of 76 per cent.
“We’re seeing that through our Cloud Solution Providers (CSPs), partners are embedding our technology into their solutions,” said Schuster, and in a separate blog post, emphasized that the channel partner of today should be integrating cloud infrastructure offerings that use the cloud’s full capabilities. “Standout partners also have industry and domain experts who are able to bypass IT and go directly to sales, finance, and marketing leaders.”
- Microsoft says more than 7,500 partners join their ecosystem every month. Last year, that number was 7,000.
- 95 percent of Microsoft’s commercial revenue flows directly through its partner ecosystem
- The number of partners transacting through CSP is up 52 per cent from last year.
According to Microsoft, partners transacting through the CSP program grew 31 per cent in the past year, and after upending its channel strategy in 2017 with new engagement models and programs, such as the IP co-sell motion launched at that year’s Inspire event, partner revenue has soared. Through IP co-selling, partner revenue has reached $8 billion USD in just 18 months. Microsoft CEO Satya Nadella cited the figure during the company’s Q2 earnings call last week.
“This is creating a broad opportunity for everyone, including our ecosystem,” said Satya, adding Microsoft delivered $32.5 billion in revenue this quarter with double-digit top line and bottom line growth largely driven by across its commercial cloud business. “Every company is becoming a digital company, and they’re looking for a trusted partner to help them build tech intensity. Microsoft is that partner.”
From legacy to Azure
Microsoft has expanded the Azure expert MSP program, which was introduced last year, to 43 partners. These partners, in addition to independent software vendors (ISVs) will be key to their cloud migration strategy, which Schuster described as a $50 billion market.
“There are tens of millions of these servers waiting to be moved,” she said, referring to Windows Server 2008 and SQL Server 2008, which are nearing the end of their 10-year life cycle. Security updates will end on July 9, 2019 for SQL Server 2008, and on Jan. 14, 2020 for Windows Server 2008. Microsoft will continue to offer its Cloud Migration and Modernization partner playbook and Azure FastTrack program to help partners connect with Microsoft engineers and get the help they need when it comes to migration.
But the cloud is also where Microsoft’s AI services reside, and the company says it’s seen an 200 per cent year-over-year growth among partners that build AI practices. In Canada, spending on AI is expected to reach $46 billion by 2020, according to IDC, which is why Microsoft is welcoming two new partners to its Indirect Providers in the Canadian CSP program: AppRiver and Insight. These two are joining SherWeb, Ingram Micro, IT Cloud, TechData, Synnex and Arrow to help customers adopt cloud and to, eventually, get their hands on the vendor’s latest AI services. Microsoft said it expects its brand to increase to more than 50,000 IT companies across Canada through the addition of AppRiver and Insight.
In response to the global skills shortage in the technology space, which in Canada was estimated to be 42,000 full-time jobs in 2017, Microsoft is also launching a new playbook called Recruit, Hire, Onboard and Retain Talent. Its AI Partner Development Playbook, according to Schuster, has been downloaded more than 1 million times.
Our thanks to investment research platform Seeking Alpha for the transcriptions from Microsoft’s Jan. 30 Q2 earnings call.