XChange: Microsoft Dangles Incentives To Cloud-Wary Partners

With the new three-tier program, unveiled at Xchange Americas 2010 in Dallas, Microsoft is essentially chipping away at the psychological barrier of up-front costs that has kept many VARs on the sidelines of the cloud revolution.

"We want to make it easier for VARs to sustain the up-front cost associated with the move to the cloud," said Eric Martorano, Microsoft's head of U.S. SMB Channel & Online Services, in an interview with CRN. "We're trying to give partners that have really made a commitment to cloud with resources, funding and training to make them successful."

The first Cloud Champions Club tier sets the bar at three customer wins and 75 seats. Once partners meet this requirement, they'll receive online training, market development funds (MDFs) and access to a Microsoft cloud services sales team whose charter is to help partners transition to the cloud.

Partners reach the second Cloud Champions Club tier with eight customer wins and 200 seats. This gives them an additional 25 percent in MDFs as well as access to TS2, a Microsoft field technical services team that offers assistance to help VARs move their customers to the cloud.

The second tier also provides $500 in velocity funding to VARs to enable them to build proof-of-concept cloud solutions for customers without taking on the up-front cost, according to Martorano.

The third and highest tier, which kicks in with 20 customer wins and 500 seats, gives VARs a higher percentage of the first year's subscription value on Business Productivity Online Suite (BPOS). VARs also get up to $1,000 in velocity funding, as well as, an additional in market development funding.

Microsoft has approximately 7,000 partners worldwide that have signed up to sell its BPOS solution. In the U.S., 1,000 of the 4,000 signed up to sell BPOS are actively selling today.

Martorano acknowledged that some solution providers have been too reactive in moving to the cloud.

"VARs that don't commit now and start adapting and transforming their businesses will be behind," Martorano said. "The time is now to transform your business. If you don't start now, you're going to be playing catch-up."

The Cloud Champions Club unveiling comes slightly more than a month after Microsoft tapped Martorano to head up an effort to move the company's 100,000-plus U.S. SMB partners from legacy on-premise offerings to the software giant's rapidly expanding portfolio of cloud offerings. In his new role, Martorano reports to U.S. SMB Czar Cindy Bates.

The goal of the Cloud Champions Club isn't just to recruit more partners, but to also shape their development for the future. Martorano said he's giving his team incentives to move a higher percentage of partners to the higher-level program tiers.

"This isn't just about signing partners up -- we want to make sure we are assisting partners to transform their business into the world of cloud," he said.

The ongoing industry shift to the cloud is even more dramatic than resellers that made the transition to being solution providers, but the good news is that the return is much larger, noted Martorano.

"The services revenue is six times the software revenue opportunity," he declared.