For years Microsoft has announced the investment of tens of millions of dollars in its channel training and certification programs. Now an IDC study paid for by the software company has concluded that partners who take advantage of some of those programs outperform those who don’t.
Matthew Lawton, a Toronto-based co-author of the study, said he was “pleasantly surprised” by the results. “I didn’t expect to see such a strong correlation between the investment (Microsoft partners) have made in these competencies and their business performance.”
The study, released this week, compared the finances of 375 Microsoft VARs, solution providers and consultants in the U.S., Britain and Germany last year who had earned a competency in advanced infrastructure solutions, information worker solutions and mobility solutions with a control group of 642 Windows or Linux channel partners. They may or may not have taken these programs.
Rather than look only at bottom line profitability, IDC created 14 measures of business performance such as cash flow, revenue growth, sales speed and deal growth, as well as technical personnel utilization and daily billing rate.
In addition, financial results of Microsoft partners who earned advanced infrastructure competencies were compared against Linux partners, who, obviously, had not passed this program.
The benchmark companies who participated answered an IDC survey about their finances with the promise of confidentiality and anonymity, Lawton said. IDC conducted in-depth interviews with Microsoft partners.
The study concluded that partners who have Microsoft competencies in advanced infrastructure (AI) and information worker (IW) solutions outperformed the benchmark group in 12 of the 14 indicators. In addition, those Microsoft partners who focused on its mobility solutions are “experiencing strong business performance.” However, because there were few partners focused on mobility it couldn’t compare them against the benchmark sample.
Revenue growth of Microsoft AI partners was almost double that of both the Windows and Linux benchmark group, the study found. Their service capacity – what IDC calls the percentage of total service delivery capacity sold over a year – was 10 per cent higher, while the average deal size was at least 67 per cent higher.
Revenue growth and deal growth of IW partners was over two times greater, and customer growth nearly twice that of benchmark companies.
IDC also maintains that the study undercut what it says are some common perceptions about what impacts a channel partners’ business performance.
A company’s gross profit margins bears no relation to its net profit margin, it found. For example, Microsoft AI and IW partners had lower profit margins than the control group of companies, but almost all of their other business indicators exceeded the benchmarks, including net profit margin.
Lawton said that could indicate that Microsoft partners are able to take advantage of the software company’s sales and marketing programs to boost the bottom line.
Another myth IDC says was punctured is that smaller deals are less attractive that large deals. It found that companies having a larger average deal size did perform better than companies having a smaller average deal size. However, the price of larger deals is longer sales and implementation cycles, it also found.
“Companies with small-sized deals can perform well if the minimize the time it takes to land and delivery these deals,” the report added.
There is also an perception — IDC didn’t say where this perception came from — that Linux is more profitable to a reseller than Windows. But it says this was not proven.
When asked what was surprising in the results, given that Micrsoft spends so much on its programs, Lawton said he was struck the degree to which they outperformed the control group.
