Microsoft to partners: Make more money

'Digital transformation' is the new sales push for resellers

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Microsoft CEO Satya Nadella speaks at the company's Worldwide Partner Conference in Toronto on July 11, 2016. Credit: Microsoft/IDGNS

While Microsoft CEO Satya Nadella today touted "digital transformation" during a 30,000-foot-view speech before thousands of resellers, the executive in charge of the firm's global partner group got down to dollars and cents.

"It starts for us with our mission. Everything we do, every product we build, every decision we make, in even our partner programs, is grounded in our mission, to empower every person and every organization on the planet to achieve more," Nadella said shortly after he stepped onto the stage at Microsoft's Worldwide Partner Conference (WWPC) in Toronto Monday.

Nadella's "empower every person..." phrase has been his go-to description of Microsoft's strategy since June 2015, when the CEO unveiled the mission statement in an all-hands email.

Nadella stayed at that high-level view throughout his time talking to the assembled partners, stressing new language, particularly "digital transformation."

"It's not about celebrating any one of our technologies, products or services. It is about celebrating what our customers are able to do with technology, how they're transforming their own business, achieving their own success and having their own impact," Nadella continued.

"[Digital transformation] is the theme, in fact, for these three days," he said, before making the point that should have perked up partners' ears. "Every customer of ours now, is not only looking to use digital technology, but they are building digital technology of their own. And that's really the opportunity."

Opportunity, as in sales.

But while the amorphous nature of digital transformation -- and the typically-corporate mission statement before that -- may have stirred a few partners, the opportunities = sales concept was closer to their hearts, since those partners exist to sell and deploy and support the Redmond, Wash. firm's products and services.

Nadella didn't drill down to specifics of those opportunities -- CEOs don't have to, they have people for that -- but one of his lieutenants did.

"Today, opportunity means the cloud, which is driving digital transformation across industries and in businesses of all sizes," wrote Gavriella Schuster, the recently-promoted corporate vice president of Microsoft's partner division, in a post to a company blog.

Schuster put numbers to that opportunity: Microsoft partners average gross margins 20% higher than the next-closest competitor, she claimed.

And citing data from researcher IDC -- information that was assembled into an e-book sponsored by Microsoft, part one of a series that targets partners -- Schuster made the case that the opportunities were significant for those willing to follow Microsoft's charge into cloud-based services.

"Microsoft partners with more than 50% percent of their revenue in the cloud are attaching $5.87 of their own services for every $1.00 of Microsoft cloud solutions sold," Schuster said.

In plainer English, that meant for every $1 a customer spent on a Microsoft cloud service -- Office 365, say -- the partner billed $6.87, with the excess over the original dollar representing the piggybacked add-ons the IT provider sold. Those add-ons, generally but not always services, can run the gamut from pre-sale evaluations to after-sale support, from custom application development to enterprise workflow revamps.

The attach rate of "cloudy" partners was 42% higher than the average of all value-added resellers who sell Microsoft cloud services, IDC claimed, and 58% higher than the under-50%-of-revenue, or "not-so-cloudy," partners.

"And we're all just barely tapping into the potential," Schuster said.

Now that's a mission statement.

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