OK Vlad, stop apologizing already, you have done more than anyone could expect or ask already. We do understand you have a business to run and we want you to be successful, no we need you to be successful, you understand the concept of partnering and we all are in need of a trusted partner all of a sudden. So stop apologizing and get to work for the good of the community :>)

[...] been following Vlad’s posts on Microsoft’s Online Services approach and as others have said what has changed in the last [...]

I guess all I can say … we’ll see!

This episode is clearly separating the consultants from the vendors (see http://tinyurl.com/2ug76c). I understand why a vendor would be reluctant to introduce a product line that threatened its long-term profitability. But any “consultant” or “trusted advisor” who withholds information about a product or service not because of that product’s or service’s merits but because that product or service offers little in the way of commissions, markups, or kickbacks does not deserve the title of “consultant” and should not be “trusted” to give impartial advice.

Thanks for your bit of wisdom unemployee of the month.

-Vlad

I’m thinking its time to burn a bridge…

Wow Schrag! You are on a roll this month. Have you been taking your smart pills? Your comments on blogs have been so on the money that they came up in a meeting last night in Redmond where I was discussing incentives with the powers that be from MS. I hearby grant you the employee of the month parking space too.

Mark,

That’s a little disturbing.

You mean to tell me that Microsoft is looking to bet the future of its company on the people have decided that they will not grow their companies (beyond one man shop) and don’t invest in marketing beyond social networking and referrals?

Well, that should just create an enormous revenue potential for Microsoft, isn’t it.

Keep up the good job guys!!!!

-Vlad

So Vlad, you’re saying that Microsoft would earn more revenue by marketing SMB products and services that are so complex that they require end-users to hire an expert to select and install them, as opposed to marketing products and services that the small business owner can buy and install on his or her own? How do you figure that?

I still can’t really believe we’re having such collective angst here. The IT consulting industry has been saying for at least a decade that there’s no money to be made on reselling any more, and that the key to success is professional services.

A question for you other partners: what percentage of your profits today are derived from sales of goods or services that you think will no longer exist in the S+S world?

I can understand that there would be some partners who would be ripsh*t about the S+S approach, and those would be the folks who are already providing a very similar service through SPLA. But most of the complaining that I’ve read is coming from folks like me who aren’t providing but rather simply recommending and configuring services. And to them I’d say that if you really staked your business on getting big resale margins, I don’t know what you were thinking.

Schrag,

This is the case of Microsoft drinking it’s own Koolade. Let’s remember that the SBSC exists to separate legit partners from fly by nighters and promote them to the Certified status where they can be encouraged to build businesses on top of providing Microsoft solutions.

So yes, Microsoft not would but DOES make more money when they partner up with an organization that has made a committment to its platform with trained staff, marketing, sales and expertise as opposed to… David Scrag, I’m here to fix the Internet.

I know we disagree on that, and I think we all agree that services is where people make money. However, when those services leave the realm of control of the partner, what services are companies (not one man shops) going to provide to keep people employed?

That is the question a lot of partners are now struggling to answer.

-Vlad

I answered this question almost exactly a year ago: http://davidschrag.com/schlog/216/identity-check-time-for-my-profession.

I don’t know how you think I spend my time these days, but “fixing the Internet” is not it.

I agree that it will be tough in the future to build a company that employs a lot of techs who know how to do infrastructure support and not much else. But haven’t we known that for a long, long time?

Also see David Overton’s excellent response: http://uksbsguy.com/blogs/doverton/archive/2008/07/19/why-microsoft-partners-should-embrace-s-s-and-still-deliver-on-premise-solutions.aspx.

David,

Apparently you spend your time posting comments on blogs I like my gross oversimplification better

You are not going to convince me that what you do is respectable any more than I am going to convince you that you should build a business. I’m not a self help guru.

All I am trying to make you, and others, understand is that as you go along as a business you make investments. Some good, some bad. Some people tend to invest a lot in a particular vendor. They kit their tshirts, cars, train their entire staff. Person that shall remain nameless looks more like a Microsoft employee than a Microsoft employee themselves and has a stated goal that when they walk into the clients office they want the staff to feel like Microsoft just walked through the door. They pay their staff more to get trained on Microsoft solutions, they get vendor specific training and push vendor solutions.

When that vendor changes their business model to no longer back their partners 100% but goes into direct competition with them, they tend to get upset as you’ve seen on this blog. Yes, Dave made an incredibly good argument for S+S and had Turner or Ballmer pitched it that way, this would be a non-issue. But they didn’t. They pitched a model that now and going forward will have Microsoft behaving like Yahoo, marketing and doing business with end users with Partners not being solution providers but a 6-12% recommenders. I realize there is no difference between what Dave and Turner said, but you don’t position an opportunity for partners by telling them the world has changed and Microsoft will embrace it by making sure “they aren’t writing TCP/IP stacks anymore”

Microsoft doesn’t owe anything to the businesses that have been build on top of their marketing message, but I think this move will open up the SMB market for far more third party non-Microsoft solutions and Microsoft’s upper stack (System Center, etc) gets virtually ignored because IT solution providers will not want to design solutions that Microsoft can just suck up into the cloud.

I will also take another point up with you – that of the impartial IT consultant – your place is at Best Buy. I know, big bad Vlad is blowing the piggy house again. As this technology becomes far less complex and involved, there is really nothing to “consult” anymore when it comes to SMB infrastructure. Tell the 17 year old what you want to do, he’ll ask you what you currently have, they’ll give you a few options and if a week or two it doesn’t work for you, you can come back and return it for a small restocking fee. Want a Mac? It’s 20 yards that way. Need software? Let me show you your options.

The IT consulting space is dead, the IT solution businesses still have a little bit of time to adjust and work on the more complex systems.

But I agree, the lack of complexity makes a lot of this business that has been built around it… unnecessary. And as you’ve read here, there are many people who react to that emotionally because they work on an emotional level, they do not run a business.

-Vlad

Maybe my views derive primarily from the fact that I work in the 50 PC market. Maybe businesses that size care more about having single-vendor solutions that are “guaranteed” to work together because getting things to work AT ALL in such complex environments takes precedence over mixing best-of-breed solutions.

From that point of view, I can certainly understand how an IT consultant/contractor/vendor that had staked its reputation on being the best in town at delivering Microsoft solutions would be miffed that Microsoft would now be trying to go around the channel, cutting out the middleman. I wouldn’t necessarily have much sympathy for that consultant/contractor/vendor, but at least I’d better understand the feeling of betrayal.

So is that what’s happening? Do the pissed-off MS partners out there think of themselves primarily as Microsoft solution providers as opposed to small business solution providers?

The first paragraph of the previous comment doesn’t make any sense because I stupidly used the less-than and greater-than symbols, forgetting that they would be interpreted as HTML. The first paragaph should read: “Maybe my views derive primarily from the fact that I work in the less-than-50 PC market. If I showed up at prospects saying ‘I’m a Microsoft partner and I’m here to help,’ I wouldn’t get any business. My clients aren’t looking for someone who wears Microsoft on his sleeve, literally or figuratively. That’s why I only wear my SBSC Oxford shirt to meetings of other MS consultants. My clients are looking for the most cost-effective solutions. While Microsoft happens to produce a lot of very cost-effective small business solutions, they don’t own 100% of that space. I would never recommend that a client replace QuickBooks or Peachtree with MS SBA, and I would be just as quick to recommend WebEx or GoToMeeting as I would Live Meeting. Maybe things are different in the greater-than-50 PC market …”

The rest of the post makes sense (I hope).

It makes sense, I just disagree with you on everything except the final point – that Microsoft partners that have closely aligned themselves to Microsoft over the years now have to seek a branding strategy because Microsoft will go direct after their customers and they need a point of differentiation.

Or try to make a business model out of 6% commission on a $10/month transaction.

The entry level infrastructure game is over, the sad part is that most of the midmarket is consolidating faster than lower tiers SMB because they are more cost conscious and know what they are paying for licensing/maintenance as opposed to the cost-avoidance part of the SMB market.

I think Microsoft just opened a huge opportunity for us all in the marketplace, sadly it will be to their detriment because most will now have to show different solution and how they make more sense than the “For 6% Microsoft Owns My Customer” play.

Time will tell.

-Vlad

Would you believe that 6% of $10/month is actually a good thing? We sell an SBS to a SMB with 10 users and we maybe make 20% on the software. Yet, 6% x $10 x 10 user x 36 months is $216. So nothing has changed if you maintain the personal relationship with your customer. MS is incapable of EVER working directly with 10 seat customers.

Mark,

Aren’t you a nice guy. You sell a server without an MSP plan of any sort. No? Wait, you mean you charge a few hundred a month for server managed services plan? I see.. What’s your profit margin on that?

As for “we could never do that”, “we don’t have the ability to work direct”, “we would never” – cut the bullshit, if Microsoft couldn’t make money on this they wouldn’t be doing it.

And that to me justifies some of the concerns I have heard. That Microsoft is going direct because it believes it can get more customers to go direct instead of the partner intermediary, and it will market to those customers directly forever taking them out of the partner channel.

Now you can call it whatever you want – direct, without partner, unmanaged, business relationship – if Microsoft can draw a higher profit of working with the customer directly and not have another layer of competition holding back it’s update or licensing refresh cycle then guess where the marketing $ is going to flow?

I know you’re just trying to better articulate their position on this S+S thing Mark, and I appreciate that, but people know better and see right through the numbers.

-Vlad

Cherry or Grape? Come on, drink it!

I don’t believe they don’t think they can go direct, I just think that by nature they are incapable.

As for the math, what was I thinking. Oh yeah, I was thinking of what is best for my customer. If my customer can put the money they were spending into something else (maybe even something revenue generating) then maybe, just maybe that IS the best thing for them. Hopefully it they will purchase other technologies that help thier business succeed with those displaces dollars. I’m sorry, but holding them hostage to legacy services to protect my on @$$ will only last so long. I’ve got to change with the times too I guess.

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