(The following is an excerpt from “Partnering With Microsoft: How To Make Money In Trusted Partnership With The Global Software Powerhouse” by CMP Books)
High-technology firms come in all shapes and sizes, but they are generally one of three types: IT solution and service providers-including systems-integration (SI) and custom application-development (AD) as well as technical education and training firms-independent software vendors (ISVs), and resellers-including original equipment manufacturers (OEMs) and software resellers focused on various market segments and with various degrees of service accompanying the software that they sell.
Firms of each type that have successfully partnered with Microsoft have defied the common myths about doing so. The myths of partnering with Microsoft are many and well known. They tend to boil down to the following, which are most often registered as complaints.
Myth #1: “Microsoft is fickle-at first they adore you, then they ignore you-and there is no one on the Microsoft team to represent its partners.” This complaint is most often heard from services firms that may have challenges sustaining a relationship with Microsoft. Often, these services firms are in highly competitive markets in which demand for Microsoft’s attention is keen and coming from many quarters. Some ISVs, however, have also been known to utter this complaint. There is no shortage of add-on products and complementary solutions to Microsoft’s product line. Disparate, often untargeted requests for Microsoft’s help and facilitation from these quarters can get lost in the shuffle. This complaint often indicates an ineffective approach to partnering, but it is valid nonetheless because Microsoft only tells its top-tier partners how to partner most effectively with Microsoft. So, in the absence of this formal guidance, it is not astonishing that some Microsoft partners would characterize the company as aloof or, indeed, even fickle. The present book is intended to reverse this perception by offering practical, field-level advice about creating and sustaining successful partnerships with Microsoft in the context of a responsible understanding of the company itself. To foster strong ties to its partners in the field, Microsoft has increased its number of partner account managers, instituted its new Empower partner program for ISVs and hired more executives to oversee ISVs on a global basis.
Myth #2: “Microsoft will neither give you preferential treatment nor steer business to your firm.” One hears such a complaint from services firms and ISVs on occasion, but it is a corollary of the above myth and simply not true. Yet there are reasonable grounds for this concern based on available resources: Microsoft has a large and growing but finite number of partner account managers and an overwhelming number of partners to manage: more than 841,000 globally at last count. There are limited engagements or business opportunities that Microsoft can steer its partners to and yet a seemingly unlimited number of partners from which it can choose. This complaint, too, obscures more fundamental realities. The question services firms and ISVs ought to ask is, “how can we partner with Microsoft to gain equitable treatment?” It should be obvious that Microsoft will not simply give away prospects or leads to an unknown entity when it has so many proven partners to choose from in steering opportunities, granting recognition and investing resources. One’s standing as a Microsoft partner must be earned, nurtured and carefully managed. It is common knowledge that Microsoft typically recommends about three different partners per engagement that have special skill sets sought after by customers. So this myth fails to take into account the many successful Microsoft partners that get apparently preferential treatment and earn business opportunities from Microsoft. Do these successful partners have any special attributes that distinguish them from the ISVs and services firms who tend to make this complaint? If so, what are those distinguishing attributes? Read on.
Myth #3: “Microsoft will steal your intellectual property or co-opt your product’s capabilities.” This complaint is seemingly pervasive among ISVs. There are many instances of Microsoft’s crafting its own solution to compete with and neutralize its erstwhile partners’ products when customer demand is there. Netscape, Stac Electronics, Burst.com and Eolas Technologies are ISVs that have filed lawsuits against Microsoft on these grounds. When such products were manufactured and sold as unique or complementary solutions to a Microsoft solution, their latent functionality or market potential may not even have been on Microsoft’s radar. In time, however, Microsoft may have crafted its own alternative solution to be sold as a separate product or integrated with Windows. For example, Plumtree is an ISV-partner of Microsoft’s with a successful web-portal product. Microsoft’s subsequent release of SharePoint Portal Server included much of Plumtree’s functionality and beat Plumtree on pricing. In order to survive, Plumtree had to cut its pricing to compete with SharePoint, which continues to thrive at the expense of Plumtree and other web portal products, thanks, in no small part, to Microsoft’s other partners in the space. Plumtree’s experience is an example of Microsoft’s ability to seize on an idea of its partner and to benefit while its partner languishes. There are numerous other ISVs that have been eliminated or marginalized by Microsoft’s integration of data-compression, Internet-browsing, video/audio streaming, multimedia and wireless features into the Windows desktop, as well as its inroads into new collaboration, commerce, content-management, corporate instant-messaging, security software and business-applications markets. Services firms also face a sensitive issue when they develop intellectual property in sub-contracting assignments with Microsoft Consulting Services. Microsoft’s standard contract requires its services partners to waive the rights to this intellectual property, and many of them have recognized their code in subsequent server application and solution accelerators from Microsoft. This book will guide both ISVs and services partners on how to share and protect their intellectual property in Microsoft engagements, and how to draw up contracts that protect the interests of both. These are problems not unique to Microsoft, however, as there are many firms that have done the same thing. Software developers like Microsoft and Oracle continue to innovate and add new features and functions to their products in order to sell upgrades and stay in business. IBM, Sun, and Red Hat sell middleware applications that compete with middleware offerings from their ISV-partners and opensource foundations. At the same time, there are numerous examples of ISVs whose products have peacefully co-existed with Microsoft’s products and platforms, and fuller versions that have made those ISVs handsome profits. One need only cite Veritas, which develops Microsoft’s Backup utility that has been bundled with every operating-system version since Windows NT 3.5; Veritas has successfully retained a premium edition of that software on the market. One could also cite Executive Software, whose Defragmenter utility has also been bundled with Windows for years. The integration of that code into Windows to the present day has neither crushed nor curtailed its business; in fact, it served as a built-in hook for a fuller version retained and sold on the market by Executive Software. The functionality and potential of these products have not been seized by Microsoft, nor have these ISVs seen their success impaired at all by Microsoft. Quite the contrary. The question, then, is what have ISVs such as Veritas and Executive Software done differently from other ISVs to partner so successfully with Microsoft? This question is one among many that this book answers.
Myth #4: “Microsoft will buy you out, but only after it has taken steps to put you ou