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Microsoft Partners In Uproar Over Cloud Sales Commission Cuts

edited January 2014

imageMicrosoft Partners In Uproar Over Cloud Sales Commission Cuts

Microsoft is cutting its Online Services Advisor Incentives, and partners that sell Office 365, Exchange Online and other cloud services will get smaller Microsoft partner fees.

Read the full story here


  • Well, it may not have been obvious when Mr. Ballmer said Microsoft was "all in" on the cloud that it would entail a certain level of disintermediation between Microsoft and its customers. A new IT services delivery model like the cloud was bound to prove disruptive to the channel. Microsoft's channel partners now need to imagine a future not dependent on Microsoft paying large sales commissions for driving customers to Microsoft's cloud. Microsoft is apparently betting the customers will get there by themselves.
  • Twessels, I believe that you are correct when you say that Microsoft is banking on customers going direct. It's part of a stated plan to become a device and services company ... like Apple. The big problem with that shift is that up to this point Microsoft has had a very different business model that focused on operating systems and desktop productivity programs. Microsoft partners were the sales force that carried Microsoft on their shoulders, but those same partners feel as if they are now getting the cold shoulder for many reasons. As a result, Microsoft partners are trying to decide just how valuable that partnership is in light of Microsoft's shift to the cloud. Things change. So do loyalties.
  • edited January 2014
    A BREACH OF TRUST: Microsoft should be offering their cloud services using an Agency model just like insurance companies. Insurance companies recognize that their agents need to make a living and so should Microsoft. Microsoft is where they are today thanks to a committed partner network. We've been partners in a true sense of the word. And unilaterally changing the rules so that they can cover up their bad choices using our hard-earned revenues is frankly detestable. Still, a fact is a fact. We erroneously put our faith AND TRUST in what in the end is just another large corporation. In my view the new guard is driven entirely by the money ethic. I remember my participation in cloud computing discussions early on at Microsoft. One of the most exciting things be promoted in the session was the notion that the mass marketing of cloud computing would reduce the need of highly compensated professionals. Replacing people that earned 80k per year with people that earn 30k. There is no doubt that if they could eliminate partner margins altogether they would and will. However it needs to be done incrementally in order to prevent an all out revolt. I was told that reeduced margins were intentional and part of the over-all strategy. Microsoft is not the same company it used to be. It is being run by a group of largely foreigners that only care about their personal wealth. They don't care about the fact that the company is where it is today thanks to its partners. They don't care that you see your costly and risky sales process as an investment that you'll recover over time. They only care about how much more money they can make today and tomorrow. It is a philisophical change that has filled me with sadness. It's like a divorce where one party has chosen to leave the relationship. Microsoft has packed its bags and has them by the door. In the end I must realize that my commitment to Microsoft is a choice that I've grown comfortable with. But just like in a divorce, it is a commitment that is ending whether I want it to or not. But often a divorce can also be very liberating, opening one to new opporunities. Perhaps in the end it is not all bad. My loyalty should belong to the customer, not to Microsoft. And if my interests have been too aligned with Microsoft's then perhaps they haven't been aligned enough with the customer. Change is happening whether we like it or not. While the motives of that change aren't pleasant the result could ultimately be partners in the drivers seat of the entire industry. It may also give way for a new star to arise. Who knows. But opportunity awaits for those of us who realize that it's time to move on! :)
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