21 Sep Building Your Business with Microsoft feat. John Schmelzeis
Tune in to Matt and Mike’s discussion with John Schmelzeis from Microsoft’s Global Partner Solutions group as they talk through the changes, focus, and opportunities within the Microsoft partner program and how tighter alignment can lead to improved performance. Hear how Revenue Rockets SVP program perfectly integrates into Microsoft’s renewed focus surrounding Advanced Specialization as part of their partner effectiveness measurements now implemented within the program. From awareness, to acquisition and new ways to work with the Microsoft team, you don’t want to miss this episode of Shoot the Moon!
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Episode Transcript:
Mike Harvath 00:04
Hello, this is Mike Harvath in this week’s Shoot the Moon podcast, broadcasting live and direct from Revenue Rocket world headquarters in Bloomington, Minnesota. We’re pleased to welcome John Schmelzeis from Microsoft, as our special guest today. As you guys know, if you tuned into Revenue Rocket regularly, we are the premier M&A and strategy advisory for IT Services companies worldwide. I’m going to turn it over to my partner, Matt Lockhart to facilitate the podcast today. And over to you Matt.
Matt Lockhart 00:38
Thanks, Mike. And John, welcome to the Shoot the Moon podcast, we are excited to have you with us. Just by way of introduction I have had I have worked within the Microsoft Partner Network for 25 years now and actually had the opportunity to work directly with John and, learned a lot from him. So but I don’t want to steal your thunder john, if if you could just introduce yourself and your role at Microsoft today in the One Commercial Partner Program. And then you’ve had a great 15-year run, we’d love to hear a little bit about your history at Microsoft.
John Schmelzeis 01:23
Thank you, Matt. Thank you, Mike. It’s great to be here and appreciate the discussion. You know, Revenue Rocket has for many years made a very positive contribution to the Microsoft partner community, Mike in particular, as well. So great to be here. Yeah, so my background, I joined Microsoft 15 years ago from by way of Apple, and joined the product team for Windows Server, and then spent some time working there helping with our channels. And then I actually joined the channels marketing organization in the United States, work there for a while with our licensing and our distribution partners, then worked for a good number of years in the US with the SPLA licensing business, which crossed many partner types, ISVs, managed services providers, posters, etc, anybody who was providing Microsoft or using Microsoft technology and data centers, and providing services, and then when OCP was formed three years ago, I joined that organization working with our national services partners, and love working with those partners and continue to work in that organization. And we recently rebranded to global partner solutions as well.
Matt Lockhart 02:37
So I was dated and the one thing that I did learn is it is a bit to keep up on all the appropriate Microsoft terminology.
John Schmelzeis 02:50
Indeed, that you do you I’ve we’ve worked together Matt, you do a very good job of that. So
Matt Lockhart 02:57
I gotta say that a few more times. John, you know, Microsoft inspire Isn’t that too far back in the rearview mirror and, you know, for for the listeners that you know, maybe don’t know, Microsoft kicks off their year at the sort of the, the midpoint in the calendar year. and Inspire is oftentimes an opportunity for announcements to the field, to the partner network, you know, changes and tweaks in messaging, go to market emphasis, etc, etc. You know, there’s always some interesting news, what can you share with us about the new year and what’s new?
John Schmelzeis 03:40
Sure, in addition to a number of exciting technology announcements, there’s really four things that stood out to me. And I’d probably want to highlight here one is the marketplace fees. And we’re going to talk a little more about marketplace in its role in our go to market strategy. So I’d say the marketplace fees dropping from 20% to 3%, was a significant announcement. Also, we announced a number of additional advanced specializations, which is a really big focus area for the business. And then also industry clouds, we announced our six industry cloud, which is a sustainability cloud. And then probably what I would call a category changer, we announced Windows PC.
Matt Lockhart 04:27
Okay, well, let’s dig into a couple of those. Those things, you know, first off, you know, tell us about the drop in in fees, you know, it we know that more and more is going to be driven through the Marketplace overall and it sort of fits into something we’ll talk about later, which is productization. But you know, what was the mentality for making it so much more accessible?
John Schmelzeis 04:54
I think that’s it, it’s about making it more accessible and you know, as we evolve the business to best meet market demands, you know, the market is looking for digital experiences and very focused on consumption, especially its role in cloud services. So it was really important for us to do that to make the marketplace even more accessible, as it continues to expand its reach, and the partner response and cut more importantly, the customers response as well, both have been very positive.
Matt Lockhart 05:25
That’s great. Now, specialization is something that we advocate for a lot, you know, be great at one thing, and I’m going to have Mike talk about our SVP process a little later on. But tell us about the new advanced specializations.
John Schmelzeis 05:43
Sure, there’s number of so advanced specializations in terms of its role in the partnership is is really key, there’s, in fact, I’ll put some context to it, there’s really three key things that you know, a partner of Microsoft want to be aware of, and, and what we look at, in this in this context, as well. And that’s technical skills, we’re obviously advanced specialization applies. Also, we do solution validation, which is notable as well on what is published in the marketplace, field engagement. So the amount of inbound and outbound opportunities that are flowing between our organizations, and business impact as measured by usage or revenue, and customer acquisition. So just important, I think, to understand the context as well, and the role that advanced specializations are playing in the increasing opportunity for partners in this marketplace model.
Matt Lockhart 06:41
Well, that’s great, Mike, you know, let’s, let’s kind of jump in a little bit. And, and, you know, you, you see hundreds and hundreds and hundreds of IT services firms, and have been advocating for the context of productization for years and years. Ttell us a little bit more about why that why that creates a differentiated IT services firm.
Mike Harvath 07:11
Yeah, absolutely. Matt, you know, we’ve, we’ve talked a lot about our SVP process over the years within the Microsoft community, you know, SVP stands for specialize verticalize and productize. And, essentially, you know, specialize is really around a core set of technologies within the Microsoft stack. Verticalize is what it is right? Pick your vertical run, then productize is really the wrapper of IP, whether that be you know, technology based IP, and/or process based IP, that can really help that help that vertical, be successful and differentiate. But more importantly, it allows you to have a very large impact on that business client beyond the technology. and we’ve always believed that, you know, the best IT services firms, or service enabled technology companies need to have a very broad and material impact to the business, not only technology in that business, but ultimately the business itself, and certainly following a route like SVP and productization. will do just that.
Matt Lockhart 08:21
Yeah, that’s great. And, you know, I think a good opportunity to transition to how the marketplace enables it, john, you know, you, you sort it made it clear to me that Microsoft wants to be and I love this word, the App Store for the enterprise. Right? And, and the marketplace. And so tell us how, you know, the advances of the marketplace is pulling that together in terms of enabling partners to, you know, productize, but then also make it easy for customers to identify the the right specialization and the right partner for their needs.
John Schmelzeis 09:03
Sure, yeah. Happy to do so. So, you know, the marketplace, in fact, is it’s, you know, I made the comment earlier about a digital experience, right, that’s expected by customers. And so there’s an ease of acquiring technology and services that is expected. And a lot of that has been set as an expectation for us as consumers. If we think about how often now we’re purchasing online, and we’re using our phones for so many different aspects of our lives. And also, there’s a generational component as well, as younger generations assume leadership positions in customer accounts. There’s an expectation there that that type of experience which they’ve often grown up with, or certainly for a larger portion of their lives than I certainly had. They have that expectation when it comes to acquiring technology that will help them run their businesses better. So it’s in that context that you know, we’ve really are focused on support That and meeting the customer where they would like to be met as effectively as we can. And the marketplace is how we’re doing that. And from a partner perspective, it really provides three channels for a partner to leverage to scale their business. And that’s directly to customers through the Marketplace itself. There’s the opportunity for co selling of marketplace, Publix published solutions with the Microsoft Field Sales Team, and the opportunity to also sell one services and IP through other Microsoft partners through the CSP partner for the cloud services partners ecosystem.
Matt Lockhart 10:38
That’s great, and I mean, lots to dig into their co selling with Microsoft is really the way of the future. But you mentioned sort of being able to sell through other csps and, and that really brings up this idea of joint partnerships, right and, and, and, you know, putting together a couple of different specializations to meet customer needs. Tell us a little bit about that.
John Schmelzeis 11:07
Sure. So you know, as partners are publishing, going through the process, which is done in partner center, so you go to partner.microsoft.com and there’s a link in the upper right hand side to what used to say dashboard and says partner center. And that’s where a partner can manage all aspects of their relationship with Microsoft, everything from literally deploying services there if desired to any licensing programs, advanced specializations and publishing. And then during that publishing process, the partner has the opportunity to choose which marketplaces or which I should say channels, they’d like to leverage directly to customer. And they have choices between Azure Marketplace, which is more oriented on tooling and tools that help customers in Azure, and then app source which is targeted towards business decision makers. And then they also have the choice to select making these are co selling with the Microsoft Field Sales Team and publishing any unique assets that they’d like to leverage in doing so. And another choice is the one here partner to partner so publishing a solution to the CSP partner community is another option within that publishing process.
Matt Lockhart 12:22
Well, you know, Mike, from your history, I mean, you know, that those firms that do well, within this, in this partner ecosystem are the winners, right? And so to do well, moving forward, you need to really think about services in in sort of a product management mentality. And so back to that sort of productization. Mike, what do you see in those winners, those those IT services firms in the, in the, you know, Microsoft ecosystem that enable them to kind of work well, in this new publishing to marketplace environment.
Mike Harvath 13:07
Well, certainly, Matt, you know, we’ve seen the winners, be able to not only, you know, publish to the marketplace, but they’re able to do that if they have a repeatable process, and repeatable offering. You know, in many ways, it’s like an assembly line, right? You know, the old adage of Henry Ford said to get any color cars when it was black, in many ways applies to IT services companies, if they’re going to scale and scale profitably, which we, you know, feel is obviously very, very important to not only their ability to build stakeholder value into the business, but also to be able to, you know, scale the business beyond a small enterprise. And, and so certainly, by thinking through how they bring their services to market and their IP to market, which which their services based on how they bundle them, and how they choose to bundle it with technology based IP and targeted to the vertical, all as we’ve talked about before interrelated in the ability to have a repeatable and scalable series of services that are offered along the lifecycle, certainly, is the key to success and one that we’ve seen implemented successfully in the Microsoft ecosystem many times.
Matt Lockhart 14:25
Yeah, that’s great. And, and, john, I know from our a bit of our past experience, you’ve and you’ve enabled a lot of partners in your role to think differently about what the functions and the skills that they need within their own organization, to to build that repeatability of working within this new sort of ecosystem and, and, and taking advantage of the marketplace. So let’s, let’s talk a little bit about that. JOHN, what do you advocate for organizations To build internally, what are the roles that they need? How do they need to enable you know, this repeatability?
John Schmelzeis 15:08
Yeah, well, I think we’re, you know, in thinking building on Mike’s comments as well, you know, this is a really key part of it. And I, you know, just quickly circling back to the partner piece, cloud is broad. And this is going to have direct, obviously application to as we talk through the Marketplace and best practices. But the cloud provides broad capabilities. And it’s very challenging for a single organization to provide all of the capabilities that a customer might need to leverage. And so partner to partner not just in the sense of publishing a solution, other partners, but I’d also encourage partners to identify areas where they have a solution. And there are very closely related technology areas or solutions, whether it be IP or services that are complimentary. And so we’re also seeing an increase in partner to partner in that context between organizations as well, for the reasons I mentioned, just the broad capabilities and the expectations of customers that they can work with fewer partners who can provide even further depth. So partner partner becomes key in publishing in general, and in the, in this context of thinking through best practices. In terms of roles, it’s very different to be a publisher, right than it is to be providing services or in a scenario where you go in and you talk to a customer. And you’re you’re trying to determine what are the challenges and how can I provide services or tailor different skills that are on different teams or practices in my organization, to meet those needs, it’s a very different conversation to go in. With a specific solution, often or ideally, tailored, that specialized, that’s really industry specialized is often key, as well, are increasingly a key. And so there are different roles within the partner organization that need to exist that may not have existed before. And I’m seeing the partners that are most successful, are staffing these roles and making some of the organizational changes that are necessary to move to a not I want to say product, but a solution oriented approach and go to market where you when you’re talking to customers, you’re providing a solution out of the gate to start that conversation, it may or may not resonate, and then you can change course, but you’re leading with something, and you also have defined boundaries. So instead of trying to accommodate a unique services opportunity, if a customer scenario doesn’t meet that opportunity, or doesn’t map to the solution, areas of focus, then moving on. And that’s also a different mindset approach as well. So those are some of the things I’ve observed. And the partners that are most successful with it, are really embracing that change, identifying how they might need to structure their organization a little differently to have a little have stronger capabilities and demand generation as an example, have specific roles that are become quite skilled at the different Microsoft programs. And depending on which Microsoft sales team, they’re working with the motions a little bit different as well. So they the most successful partners also typically have an alliance director, at minimum focused on that. And then I’d say in a final comment, the probably not only successful where I see the largest amount of co-selling the largest number of engagements is partners that have a marketing role. And by marketing role, I don’t mean an events management role. Somebody who does everything from product management, to inbound marketing, positioning and messaging, and helping them drive demand for those solutions.
Matt Lockhart 18:53
that’s incredible. Yeah. I’m chuckling because moving on from any potential customer scenario is a difficult skill in and of itself. But Mike, you know, I just can’t, you know, advocating for marketing, Mike, in all capacities, not just for enabling the the best of the best in in building your business with Microsoft, but building your business overall. You know, we see it all the time that companies understand in marketing, don’t you think?
Mike Harvath 19:31
Oh, absolutely. I’d say overall, most tech companies, SaaS companies, particularly those that are around the partner ecosystem, suffer from gaps in marketing is probably the best way to put it. Whether that be through underspending or not spending appropriately, or not immediately seeing a return so they suspend the spend you know, Marketing effectively, your business and the Microsoft ecosystem is critical to your long term success, there’s no question, being able to have a differentiated message, particularly one that’s aligned to sort of the vertical market. SVP, if you will, you know, specialized verticalized productize, is critical to break through the noise, as well. And the companies that do marketing Well, in our industry wildly outperform the ones that don’t. So I certainly would challenge our listeners to think about that and focus on, you know, how do they get the message out? And how do they move, sort of, through the marketing, drive demand to their solutions and their offerings, in ways that, you know, a lot of tech firms just don’t know how to do?
Matt Lockhart 20:49
Yeah, well, and let, let’s, let’s talk a little bit, john, you, you reinforce that, you know, Microsoft is, is knowing all of our customers better through this industry approach. And as as represented by continuing to build upon these industry clouds, you know, which really plays into the verticalization approach that that we see at revenue rocket and have been advocating for, and, and this really applies, you know, to service companies across the board, as well as, you know, tech enabled service companies, SAS companies, and, and, and the like. And, you know, we, you know, shoot, it can be a managed services provider that has a specialization in healthcare, and they become, and their growth and their profitability and their value to customers is, is that much greater because they’ve got that, or it can be a custom solutions are data firm with a specialization in, in fin serve. And so, you know, we’ve seen this, but now Microsoft is, is both organizing around it, and then building incredible value through these industry clouds. And so what do you see? And and you mentioned that there’s a new industry cloud this year, john?
John Schmelzeis 22:09
That’s right. Yes, the sustainability cloud. So yeah, key point. And this is exciting. Well, I’ve I’ve answered that. And then we’ll also, I’ll bring it back to what we just talked about, because what’s exciting and working with partners, is many of them actually have these skills or capabilities with these patterns, but they haven’t been productized yet put packaged into a solution and focused on an industry. And frankly, it’s a lot of fun to be involved in working with partners and and, you know, collectively realize that, identify it and then execute on it. So I want to make sure, I’d encourage the partners listening to think about where patterns have emerged, do they happen to have a lot of customers in a given industry, and what what’s consistent between how they’re supporting or engaging with those customers, but in terms of industry, overall, Microsoft is all in on industry. And what I mean by that is, you know, we appreciate the more focused and specialized that one is the higher probability that they’re going to hit their revenue targets, right. And so just in terms of growth in terms of value back to what customers are expecting, not only are they wanting to work with fewer partners that they that have, but those they want to work with partners that had the industry expertise, as well. And that’s really key understand the business challenges that they’re addressing. And the connection between the tech how that technology they’re discussing directly relates to those desired outcomes on the business side and supports innovation there. And that’s a that’s a, an evolved conversation, I’ll call it right. And Industry Focus is key to that. So what we’ve done is for a number of years now our enterprise team has had industry sales teams for financial services, healthcare, manufacturing, retail to name a few energy would be another example. And this year, we’ve also now begun having dedicated industry sales team is in our mid market sales team as well. So that’s a strong statement Previously, we and we continue to have where the specialists and the sellers in a given in the mid market will declare a major and a minor so they’ll notice where they have a large number of say financial services customer, they’d might make that their major, and then they have many a good number, but not as large of manufacturing, they’ll make that their minor. And so when you know pulling this all together, when we think about the three channels that are available, there’s a very clear model here. And that’s a key point I want to hit on because the models very clear, it’s data driven. It’s industry focused, and it’s supported by those three, you know, elements that I talked about earlier. Field engagement lead sharing inbound and outbound. business impact, including not only consumption, but customer acquisition and technical skills because if you’re thinking about a marketplace model, then and customers are seeking industry specific solutions that they can connect to their business needs. This is the kind of structure and the go to market model that that the approach we’re taking. And when it comes to our sellers, working with partners, we were fortunate to have a great partner ecosystem with very highly skilled partners. And increasingly, industry focused either partner organizations or solutions. And with those, we do see our highest success rate. You know, I think we all know, the more specialized you are, the more successful you tend to generally are in your sales engagements in your conversion rates, from opportunities to close deals, etc. You also see our industry cloud. So this all aligns, right, our sales, our marketplace, having industry specific solutions, our sales teams being organized by industry, both in the enterprise and the mid market, and then industry cloud that support and enable the unique requirements of a given industry.
Matt Lockhart 26:09
That’s amazing, john, and and, Mike, I think, you know, we’ve seen on the, on the merger and acquisition side of our business, you know, firms that, you know, have buying mandates, and they are looking for, for partners that have started to, or maybe they are mature in building this approach with Microsoft, that, that they they can demonstrate the field engagement, they have shown how they are driving more consumption through the cloud. Right. And they’ve got the the specialization in their technical approach. But you know, tell us more about that, Mike, where, you know, it’s, it’s clear in, in our m&a mandates?
Mike Harvath 27:00
Yeah, absolutely. Man, I would say that, you know, these, the focus on these areas, certainly drive enterprise value and drive demand. You know, I think it’s no, if you’re a regular listener to this podcast, it’s no mystery, or if you’re even just operating your business, it’s no mystery that, you know, the market is pretty hot, and when consolidation is occurring, but we certainly see what you know, within the Microsoft ecosystem, is that those buyers are getting more selective, and they are certainly looking for in embracing this strategy. And, and, and they’re paying up for that, and I think that translates to, you know, higher enterprise value, and, and certainly is in is in great demand. And I think it also speaks to the merits of adopting and embracing the strategy, not just to, you know, frankly, if you’re a future seller of a business, as a Microsoft partner, and enhancing value, but, you know, creating much more value to the marketplace in general, and, and ultimately being able to scale and grow much more quickly, like we talked about before. Yeah,
Matt Lockhart 28:10
well, that’s great. I mean, and then it’s an exciting time, john, you can hear it in your voice, it’s an exciting time to, to be working with Microsoft issued, it’s just an exciting time to be in, in technology. And we’ve only, you know, really scratched the surface, man, we haven’t even really talked about security, we haven’t died. There’s so much. And so, you know, what an exciting time for us. And, and, john, you know, we’d love to have you back and continue to reinforce upon this, because I think the models that that you guys are driving out to the partner ecosystem are, you know, similar to what we’ve been advocating for. And you know, sometimes you just got to repeat yourself and repeat yourself and repeat yourself before it starts to stick. But you know, john, we can’t thank you enough for joining us today. Any final thoughts on your behalf? JOHN?
John Schmelzeis 29:06
No, it’s I’d probably connect some of the things that we’ve touched on, we’ve touched on a number of key topics here, and I really appreciate it and echo your and Mike’s comments. It’s, it’s a clear model. What’s exciting is that we’ve improved through partner center and other areas, the way that we digitally engage, which means more active, simpler information flow, easier to find things which historically had been a challenge for partners working with Microsoft, because the breadth of the programs, it’s really putting everything in one place. We talked about organizational structure, really capitalize upon the opportunity, and we talked about where we’re working to meet best meet the expectations of customers, and we talked about a digital experience. We’ve talked about industry. We think about pulling all that together. I’d encourage the partners listening to think about that model. And really what I like to highlight that the ROI increases for partners and working with Microsoft in this model. And what I mean by that is the very clear model around engaging with customers and providing opportunities bi directionally. Having business impact and measuring it, and the advanced specializations, because if you keep going, we keep going back, because it’s such a key point to this marketplace concept in a marketplace. Microsoft, in effect, we don’t have resellers anymore. Right? We are a marketplace. And there are publishers that we work with. So our partners are publishers, whether it be IP or services. So that has those implications and considerations that SVP is helping partners to address. And we’ve touched on and talked a bit about on this on today’s session as well. So exciting time, to your point, the ROI is in fact, even further increased. The key is to really understand this model, and leverage this model, and then see the accelerate growth that we are seeing with partners as a result of doing so. Yeah, the opportunity to for sure, that’s, that’s awesome.
Matt Lockhart 31:03
And you know, maybe you could come back in when the snow is flying up here in Minnesota. And we can talk a little bit more about some of the data and the data driven approaches that you’re seeing, because I know that you know, you’re you’re in the catbird seat and so I think that might be exciting for our audience. Sounds great. Yeah. But with that, Mike, I’ll turn it over to you to wrap us up.
Mike Harvath 31:28
That was great, man. Thanks a lot for for your time today. And John, we we appreciate you attending as a guest on podcast, very interesting podcast and we love your input. With that, as we say every week we’re gonna tie a ribbon on it. Everybody have a fantastic week and we look forward to you to tune into next week’s podcast. Take care.