95% of Microsoft’s commercial revenue flows through partner ecosystem

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Partner ecosystem is helping Microsoft to generate 95% of its commercial revenue, with more than 7500 partners joining the partner ecosystem every month. The growth of partner ecosystem is significantly fueling the growth of Microsoft’s commercial cloud.

The company recently announced its second quarter (Q2) earnings, stating $32.5 billion in revenue. The revenue from commercial cloud business has been impressive, growing 48% year-over-year to $9 billion.

Microsoft has hundreds of thousands of partners around the world. The partnership is driven through a number of programs, including Microsoft Cloud Solution Provider (CSP) program, Azure Expert MSP program, and IP Co-Sell program.

Microsoft CSP program

Through the Microsoft CSP program, partners are integrating Microsoft solutions into their own services to deliver long-term and differentiated value to customers. 52% of partners are currently transacting through CSP program and delivering solutions to over 2 million customers.

At Microsoft Inspire 2018, Gavriella Schuster – Corporate Vice President, One Commercial Partner, had unveiled the first set of Azure Expert MSPs. The program now has 43 partners that provide consistent, repeatable, and high-fidelity managed services on Azure. These partners are generating over $100k every month in Azure consumption.

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The opportunities for these partners are increasing as the SQL Server 2008 and Windows Server 2008 are near end of support. The MSPs will have the opportunity to help customers migrate their existing on-premises workloads to Azure. As per Microsoft, a $50 billion opportunity lies for partners.

Microsoft’s IP Co-Sell program rewards partners for reaching more customers and accelerating revenue through Azure Marketplace and AppSource. Since its launch in July 2017, the program is generating $8 billion in contracted partner revenue.

“It’s exciting to see the success of our partners, and to know we are collaborating with businesses of all types and sizes wherever there is opportunity. We’re working together with partners old and new to help them build their own digital capability to compete and grow,” wrote Gavriella Schuster, in a blog post.

The tech giant is increasing its commitment to independent software vendors (ISVs) with significant investment in Azure Marketplace and AppSource. The company plans to build the largest commercial marketplace in the industry.

The reason for investment is Gartner’s estimation that an opportunity worth $133 billion in 2019 exist for business applications. ISVs are driving over half of this opportunity.

Through its marketplaces, Microsoft allows partners to sell their solutions directly to over a billion customers and partners. Also, the deployment costs are lower. Microsoft claims that its go-to-market (GTM) services help partners reduce an average of 40% cost per lead, and boost lead conversion by two times as compared to industry averages.

As part of its investments, Microsoft has announced new capabilities in Azure Marketplace and AppSource. Partners will soon be able to deliver their solutions to Microsoft partner ecosystem though the CSP program, with a single click, said the company.

Microsoft will also allow partners to set up private marketplaces so that they can customize the terms for any specific customer. This means that the partners will be able to bill or meter their services on a per-user, per-app, per-month, or per-day basis.

Suggested reading: Microsoft improves Azure purchase experience with new agreement

“We’re also improving the user experience and interface with natural language and recommendations features,” added Gavriella Schuster.

“And soon we’ll be offering curated portfolio IP & Services solutions that leverage Azure, Dynamics, Power BI, Power Apps, and Office.”

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According to Forrester Research, the adoption of cloud marketplaces among enterprises is expected to grow from just 29% to 75% in next two years. Microsoft’s investment in marketplaces will broaden the catalog of enterprise software solutions, so that the company can serve enterprises and customers of all sizes.

Source: Microsoft

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