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1106rcp_cover.v4
10/10/06
3:32 PM
Page 1
Redmond
ChannelPartner
www.rcpmag.com ■ November 2006
D R I V I N G S U C C E S S I N T H E M I C R O S O F T P A R T N E R C O M MHonored
U N I asT Y
BEST START-UP
PUBLICATION
Jesse H. Neal
National Business
Journalism Awards
2006
Springboards to
Software as a Service 28
Boost Your Business with
Microsoft Financing 34
IN SECURITY
Microsoft looks to
lockdown a new market.
20
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An advantage to get excited about.
Announcing the new Intel® Channel Partner Program
Project2
10/6/06
11:23 AM
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One of the world’s best channel programs just
got a little better.
If you want to strengthen and grow your business,
you’ve come to the right place. We want to help.
If you build, resell, install or recommend IT solutions based on Intel®
• The Intel® Platform Branding Advantage
technology, now you have more advantages than ever in the newly
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redesigned Intel® Channel Partner Program. From technical resources
designed to generate additional business while giving your
and warranty support to marketing kits and hands-on training
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RSSRUWXQLWLHV JHWWKHEHQHÀWVWRKHOS\RXVXFFHHGDVD6\VWHP
Builder or Technology Provider in this award-winning program.
• Three straight years: Best Overall Company, VARBusiness Annual
Report Card
• Get the Training You Need
From face-to-face training and events to online knowledge builder
courses, Intel offers a robust suite of training to help you compete
and succeed.
• Three straight years: Best Channel Program at IT ChannelVision
• Three straight years: Best Channel Program at Tech Builder XChange
Two Membership Tracks, each with the right mix of
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based on Intel® technology.
• The System Builder track provides resources for members who
build white box systems—custom desktops, notebooks and servers—
• Go to Market Faster
Make the most of your marketing campaigns. Intel channel members
receive special demand-creation tools—including retail and advertising
assets, end-user messaging guides, product briefs and sales collateral.
Have a retail storefront? Build a distinctive presence with our memberonly merchandise and sales tools.
• Warranty Replacement Program
containing Intel boxed products purchased from an authorized
Fast. Easy. Consistent. Intel’s Channel Warranty Replacement Program
distributor. If technical support and warranty are critical to how
is available to all members of the Intel Channel Partner Program.¹
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And top tier members are eligible for Advanced Warranty Replacement.
• The Technology Provider Track is designed for members who
We’ll ship replacement products overnight—without waiting for the
buy desktop, server and mobile platforms from a supplier. Technology
defective part to be returned.²
Providers resell complete branded or third-party systems, provide
consulting or support services, but do not purchase boxed Intel
products. If you are not building your own hardware platforms, the
Technology Provider track is right for you.
The Intel® Channel Partner Program.
Membership is free.
See what’s waiting for you.
And don’t miss the Intel Microsoft Ready 2 Rock Road Show
Visit www.IntelMicrosoftR2R.com for details.
Visit www.intel.com/go/IntelChannelPrograms today and
learn how you can get the advantage.
¹ Warranty replacement is valid only on qualifying purchases from Intel Authorized Distributors. Replacement within 30 days of purchase should be made through your Intel Authorized Distributor.
Intel Warranty Replacement begins 30 days after purchase date. If your Intel Authorized Distributor is not available, contact Intel directly.
² Restrictions apply. Premier members can receive a maximum of ten (10) units at any given time. Associate members can receive a maximum of six (6) units at any given time.
Intel, the Intel logo, Intel. Leap ahead., and the Intel. Leap ahead. logo are trademarks or registered trademarks of Intel Corporation or its subsidiaries in the United States and other countries.
* Other names and brands may be claimed as the property of others.
Copyright © 2006. Intel Corporation. All rights reserved.
10/6/06
11:55 AM
Page 1
Now You Can Dig Deeper Into Your
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position as a trusted advisor.
© 2006 Raritan, Inc. All rights reserved. Raritan and CommandCenter are registered
trademarks or trademarks of Raritan, Inc. or its wholly owned subsidiaries.
Project3
How would you like to go so deep into your customers’ IT operations that you get e-mail alerts when a problem is brewing – before
they even know it? Or to have an assessment tool that gives you a valuable window into your customers’ IT needs, so you can deliver
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Raritan CommandCenter® NOC offers you all this and more with availability and performance monitoring, integrated with asset and
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services around, scaled and priced for your mid-market customers.
For more than 20 years, we’ve offered secure, remote access KVM and serial console products exclusively through our resellers. This,
plus our solid channel loyalty, deal registration and partner support programs, have been the reasons why so many resellers work with
Raritan. Maybe it’s time you did, too.
Contact Raritan today for a live demo. And see for yourself how Raritan’s
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www.ResellTheBest.com
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1106rcp_TOC_3.v5
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Contents
NOVEMBER 2006 •VOLUME 1•NUMBER 13
D E PA R T M E N T S
F E AT U R E S
20
20
34
7 Channel Report
Microsoft speakers at the SMB Nation conference
talk up their forthcoming releases, drawing a
mixed response . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
LIFESTYLE: Fore! . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
28
MICROSOFT PARTNER CALENDAR . . . . . . . . . . . . . . . . . . . 10
BOOKSHELF: The New Leadership Landscape . . . . . . . 11
ANATOMY OF THE DEAL: Microsoft-Cisco . . . . . . . . . . . . 12
20 Partners in Security
Microsoft hasn’t always had a great reputation for keeping things safe.
The company hopes to change that impression and its partner relationships
with a serious move into the enterprise security market.
28 Software as a Service:
You’re Not in This Alone
47 Solution Spotlight
As SaaS picks up steam, more resources are coming online to help
with the transition to on-demand delivery.
Partners land bigger deals and report better cash flow from steering
customers toward Microsoft’s seldom-used financing program.
42 Best Practices: Merger & Acquisition
Survival Guide
Experienced hands suggest keeping surprises to a minimum and staying
sensitive to cultural challenges.
Download this free PDF now (registration required).
FindIT code: RSalSur2006
COV E R P H OTO BY CH R I S TO P H E R H A R T I N G
PARTNER ADVOCATE: Scott Bekker
Profitability, Skills Shortage,
Solution Finder, More . . . . . . . . . . . . . . . . . . . . . . . . . . 4
PARTNER VIEW: Ron Huxtable
Life as a Small Fish in Microsoft’s Big Pond . . . . . . . . . 18
MARKETING MICROSOFT: Mac McIntosh
Quotes that Define Marketing . . . . . . . . . . . . . . . . . . . 52
SELLING MICROSOFT: Ken Thoreson
Your Most Important Sales Investment: Yourself . . . . 54
RCPmag.com
Certification is a big part of being a Microsoft partner,
and knowing what you should pay your certified
employees (or what others will pay them) can help you
retain your most valuable IT folks. That’s why you’ll
want the special expanded version of our sister publication Redmond’s 2006 Salary Survey. In the expanded
PDF, you’ll find charts showing the average pay for a
number of Microsoft certifications, including MCP,
MCSE, MCDBA, etc., broken down in a variety of ways.
Even your most artistically challenged customers
can use Visio to create complex technical diagrams.
COLUMNS
34 Finance It!
Do You Employ Microsoft
Certified Professionals?
PARTNER SPOTLIGHT: Iteration2
It’s not yet three years old, but Dynamics partner
Iteration2 has two U.S. Partner of the Year Awards
under its belt, a tribute to its ability to focus . . . . . . . . 13
DIRECTIONS: Paul DeGroot
Profiting from Microsoft’s Profitability. . . . . . . . . . . . 56
FindIT Codes
You’ll see FindIT codes
embedded throughout
Redmond Channel
Partner. Simply type
these into the FindIT code
box on any RCPmag.com
page and you’ll jump
directly to the desired
information. (Note that all
FindIT codes are one
word, and they are not
case-sensitive.)
42
RCPmag.com
NOVEMBER 2006 REDMOND CHANNEL PARTNER 3
1106rcp_Advocate_4.v3
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PartnerAdvocate
Redmond
ChannelPartner
RCPmag.com
November 2006 ✚ Volume 1 ✚ Number 13
Profitability, Skills
Shortage, Solution
Finder, More
Editor in Chief
Scott Bekker
sbekker@rcpmag.com
Executive Editor
Anne Stuart
astuart@rcpmag.com
Senior Editor
Managing Editor
Solution Spotlight Editor
Editors, RCPmag.com
R
Remember those Columbia House mail
catalogs that listed an album title followed by
a handful of top hits? I feel like one of those
caption writers trying to pick out the top tunes
from a Greatest Hits release as I try to
summarize a day with Microsoft’s Worldwide
Partner Group executives.
Recently, Redmond Channel Partner
Executive Editor Anne Stuart and I spent a
day with Allison Watson and her Worldwide
Partner Group team in Redmond. They’re
hitting on all cylinders up there in a lot of
areas, preparing for Microsoft to roll out
major products like Windows Vista and
Office 2007.
We heard some new information; much
of the rest expanded on themes from the
Microsoft Worldwide Partner Conference in
July. The highlights:
■ The partner group remains extremely
serious about the partner profitability push
that they’ve been talking about all year.
They’re not just repeating the same message—they’ve been aggressively refining
what they do. For example, a high-production value booklet called the “Executive
Partner Guide” on the Information Worker
business may not be repeated across
the competencies because partners have
complained that it’s too general. Instead,
expect to see more targeted resources. One
example: the online Partner Profitability
tool, which allows partners to define themselves more precisely for tailored advice on
becoming more profitable.
■ Meanwhile, the group is continuing the
series of partner profitability studies in vari-
ous competencies, a project done in cooperation with analysts at IDC. This month,
Microsoft and IDC expect to release a study
identifying the key performance indicators
for ISV profitability.
■ The IT skill shortage is top of mind
among partner executives. Just back from a
Partner Advisory Council meeting, Microsoft
executives were full of concern about this
skills gap driven by the combination of
increased IT spending and the new generation of Microsoft technologies.
■ Channel readiness efforts are ramping
up in a big way. The wait for Windows Vista
Release Candidates was a gating factor, but
now preparation of curriculum and content
is fully underway. Case in point: Microsoft
is just starting to hand out offers to partners
from its $30 million investment in the
Partner Skills Plus program. Talk to your
partner account manager to find out
whether you’re eligible.
■ The Partner Solution Finder is a major
focus for the partner team. The online directory of partner solutions generated 1,400
leads in September from a standing start earlier in the year. That’s still a tiny proportion of
channel business, but you’ll be hearing a lot
more about Solution Finder in the future.
Here’s one telling piece of evidence about
Microsoft’s commitment to this resource:
When customers visit the link provided in all
those Microsoft People Ready mass media
ads, they end up at the Solution Finder.
Like those Columbia House caption
writers, I wish I had room to go into more
detail. We’ll fill you in online and in
upcoming issues. •
4 REDMOND CHANNEL PARTNER NOVEMBER 2006 RCPmag.com
Wendy Gonchar
wgonchar@rcpmag.com
Lafe Low
llow@rcpmag.com
Becky Nagel
bnagel@rcpmag.com
Michael Domingo
mdomingo@rcpmag.com
Associate Managing Editor
By Scott Bekker
Lee Pender
lpender@rcpmag.com
Art Director
Senior Graphic Designer
Katrina Carrasco
(kcarrasco@rcpmag.com)
Scott Shultz
sshultz@rcpmag.com
Alan Tao
atao@rcpmag.com
Group Publisher
Henry Allain
hallain@1105media.com
Editorial Director
Doug Barney
dbarney@1105media.com
Group Associate Publisher
Director of Marketing
Matt N. Morollo
mmorollo@1105media.com
Michele Imgrund
mimgrund@1105media.com
Senior Web Developer
Rita Zurcher
rzurcher@1105media.com
Marketing Programs
Manager
Videssa Djucich
vdjucich@1105media.com
Editor, ENTmag.com
Scott Bekker
sbekker@entmag.com
Editor, MCPmag.com
Michael Domingo
mdomingo@mcpmag.com
Editor, Redmondmag.com
CertCities.com
Associate Editor, Web
Intern
Becky Nagel
bnagel@1105media.com
Gladys Rama
grama@1105media.com
Michelle Rutledge
(mrutledge@1105media.com)
President & CEO
Neal Vitale
nvitale@1105media.com
CFO
Richard Vitale
rvitale@1105media.com
Executive Vice President
Director of Circulation and
Data Services
Michael J. Valenti
mvalenti@1105media.com
Abraham Langer
alanger@1105media.com
Director of Web Operations
Marlin Mowatt
mmowatt@1105media.com
Director, Print Production
Mary Ann Paniccia
mpaniccia@1105media.com
Controller
Director of Finance
Chairman of the Board
Janice Ryan
jryan@1105media.com
Paul Weinberger
pweinberger@1105media.com
Jeffrey S. Klein
jklein@1105media.com
Redmond Channel Partner
The opinions expressed within the articles and other contents
hereindo not necessarily express those of the publisher.
BPA Worldwide Membership Applied for March 2006
Project3
5/9/06
9:37 AM
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12:22 PM
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ChannelReport
T R E N D S + I S S U E S + A N A LY S I S
EDITED BY ANNE STUART
THE CHANNEL
Redmond
to Small
Businesses:
Ride the Wave
Microsoft speakers at the SMB Nation
conference talk up forthcoming
releases, drawing a mixed response.
By Rich Freeman
I LLU S T R AT I O N BY JA M E S S T E I N B E R G
L
ooking to ignite pre-launch excitement among small-business partners, Microsoft speakers at the
SMB Nation conference started
the drumbeat for Windows Vista,
Office 2007 and other major upcoming product releases.
“We’re at the beginning of a growth wave for your business and
ours,” keynoter Marie Huwe, general manager for marketing in
Microsoft’s Worldwide Partner Group, told attendees at the privately run conference. Held on the company’s Redmond, Wash.,
campus in September, the event attracted 600 people from as far
away as Australia.
Now in its fourth year, SMB Nation caters to the vast community
of one- to five-person resellers, integrators and solution providers that
primarily serve small business customers. Microsoft views the smallbusiness market as a rich potential source of future sales growth.
According to internal company data cited by Huwe, the world’s 40
million small businesses spent $37 billion on software in 2005.
Microsoft expects that figure to rise by 10 percent in 2006.
Huwe and other Microsoft speakers positioned Vista and Office
2007 as offering significant revenue opportunities for small busi-
ness partners. Microsoft anticipates $20 billion of spending by businesses of all sizes on Vista deployment services in the next two years,
said Brad Brooks, general manager for Windows client product marketing. Meanwhile, Rachel Bondi, a senior director in Microsoft’s
Office product group, predicted that Office 2007 will spark increased
demand for partner services as well.
Some conference attendees, however, questioned whether
penny-pinching small businesses will be clamoring for Vista and
Office 2007 anytime soon. “Our customer base is probably three years
behind the power curve when it comes to early adopters,” said
Randall Spangler, president of Chesapeake, Va.-based integrator
MERIT Solutions, a Registered Member. “A lot of them still use
[Office] 97 and it works fine, so they’re not going to upgrade to
[Office] 2007 just because it’s there.”
In addition to Vista and Office 2007, Microsoft speakers also
encouraged small business partners to push Dynamics CRM. Citing
Get daily updates from our new blogs at RCPmag.com. Also available via RSS.
RCPmag.com
1106rcp_CR_7-12.v13
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ChannelReport
L to R: John Sage, CEO, Pura Vida Coffee;
Harry Brelsford, CEO, SMB Nation; Ryan Olson, Channel
Solution Account Manager, Intel; Darlene Johnson, TSG
SMB Marketing Manager, HP
John Sage, a retired Microsoft executive, shares stories with SMB Nation attendees about his days
working closely with Microsoft CEO Steve Ballmer. Sage now runs Seattle-based Pura Vida Coffee.
exams. According to Robert Crissman, Microsoft’s general manager for U.S. partner enablement, there are currently about 7,500 Small Business Specialists worldwide, including 2,500 in the United States. Microsoft aims to double that number
during its current fiscal year.
To that end, Microsoft executives announced the creation of a team of telephonebased Partner Account Managers (telePAMs) for U.S.-based Small Business
Specialists, enabling those partners to have a direct relationship with Microsoft for
the first time. Paige Boesen, a marketing manager in Microsoft’s U.S. Small Business
Specialist partner group, promised more benefits as that community expands. “As we
continue to get bigger, it only gets better,” she said. •
Rich Freeman (richfree99@hotmail.com) is a Seattle-based freelance writer
specializing in business and technology.
By the Numbers:
Microsoft
Milestones
4 Years Ago: Nov. 7, 2002
Microsoft and partners launch the muchanticipated Tablet PC. Designed for mobile
workers, the devices add pen-based
computing capability to laptop machines.
105:
Number of countries or
regions in which Microsoft has
subsidiary offices*; locations
range from Argentina to
Zimbabwe. * AS O F AU G U S T 20 0 6
S O U R CE : M I C R O S O F T
P H OTO CO U R T E S Y H A R R Y B R E L S FO R D
data from Stamford, Conn.-based analyst firm
Gartner Inc., Brad Wilson, general manager of
Microsoft’s Dynamics CRM product group, said that
small businesses will spend $550 million on customer relationship management software in 2007.
Wilson also referred to internal Microsoft research
showing that the total value of a typical 20-seat
Dynamics CRM deal is $73,200,of which 67 percent
goes to partners.
Turning his attention briefly to Dynamics CRM
Live, Microsoft’s forthcoming Software as a Service
(SaaS) CRM offering, Wilson said that while plans
call for Microsoft to host that product itself and bill
customers directly, the software giant will share a
yet-to-be determined portion of its subscription
fees with resellers.
Presentations on topics such as negotiating
mergers and acquisitions and building a managedservices practice drew the largest crowds. “The business tracks are always more popular than the
technical tracks,” said Harry Brelsford, CEO of SMB
Nation Inc., the Poulsbo, Wash.-based company that
sponsors the show. Because they’re small businesspeople themselves, most attendees have technical
backgrounds and limited management experience, Brelsford noted. Most come to SMB Nation to
learn about growth strategies and leadership techniques from peers and experts.
For Microsoft, SMB Nation offers direct access
to the small IT shops it was targeting when it created the Small Business Specialist (SBS) partner designation in July 2005. SBS status is open to any
member of the Microsoft Partner Program, including Registered members, provided that at least one
employee has passed a small business marketing
and sales assessment test and one of two technical
Project1
6/8/06
11:04 AM
Page 1
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Other names may be trademarks of their respective owners.
1106rcp_CR_7-12.v13
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Page 10
LIFESTYLE
NOVEMBER 2006
Fore!
Following are listings for upcoming events that
may be of interest to Microsoft channel partners.
By Anne Stuart
As a group, you certainly enjoy
the links.
You’re also fond ofcourts—both
basketball and tennis—and many
ofyou know your wayaround baseball and softball diamonds as well.
That’s what approximately 500
RCP readers told us in a recent
informal survey, which focused
primarily on business issues but
included a few lifestyle questions
just for fun. Among them: What’s
your favorite participatory sport?
Golf was byfar the most common response. Second place went
to baseball/softball. Basketball
ranked third. Tennis came in
fourth, followed closely byfootball
and soccer, which tied for fifth.
Volleyball, bicycling, running and
hiking or walking all showed up
several times as well. Cricket and
table tennis each made a surprisingly respectable showing.
Afew ofyou prefer adventurous
activitiessuch asskydiving, scuba
diving, hang-gliding and auto racing. You’ve got at least one triathlete and one seriouspaintball
combatant in your ranks.
Otherscited more leisurelypursuits: darts, poker, chess; while two
wagscited an activitythat, while
physical, isn’t technicallya sport.
Not everyone listed a best-loved
pastime, X-rated or otherwise. “I’m
too lazyfor sports,” reported one
brutallyhonest respondent.
Another listed her favorite activity
as“getting home in time to make
dinner with mykids, hang out with
them [and] read ... All the other stuff
isin the ‘used to’ category.” •
TS2 Events
Microsoft'sTS2 Team
has scheduled a
series offree partner
events nationwide.
Each half-day session
offers networking
opportunities, technology demonstrations and updates on
Microsoft's newest
product offerings,
programs and incentives. Events are free,
but pre-registration is
required.
TS2 events are scheduled for the following
dates and locations:
2
Fort Collins, Colo.
(Event ID: 1032307480)
Tallahassee, Fla.
(Event ID: 1032307481)
Toledo, Ohio
(Event ID: 1032307482)
7
Redmond’s Real Estate
Property owned
worldwide:
9.9 million square feet
Property leased
12 million square feet
worldwide:
Total amount
of property:
21.9 million square feet *
S O U R CE : M I C R O S O F T
* AS O F AU G U S T 20 0 6
Baton Rouge, La.
(Event ID: 1032307484)
Bedford, N.H.
(Event ID: 1032307485)
Open Door Day
Thisthree-hour
roundtable discussion
isopen to Gold
Certified Partnersonly.
1
San Diego
(Event ID: 1032309166)
8
Irvine, Calif.
(Event ID: 1032309334)
8
Honolulu, Hawaii
(Event ID: 1032307486)
9
New Orleans, La.
(Event ID: 1032307487)
Burlington, Mass.
(Event ID: 1032307489)
Charlotte, N.C.
(Event ID: 1032307488)
14
Modesto, Calif.
(Event ID: 1032307494)
Lexington, Ky.
(Event ID: 1032307492)
Columbia, Mo.
(Event ID: 1032307491)
Provo, Utah
(Event ID: 1032307493)
16
Fresno, Calif.
(Event ID: 1032307497)
OtherEvents
7
ePartners Presents:
Dynamics Software
Shootout
Alpharetta, Ga.
(Event ID: 1032306225)
Partner Solutions
Briefing
Bloomington, Minn.
(Event ID: 1032311556)
Grand Junction, Colo.
(Event ID: 1032307496)
Springfield, Mo.
(Event ID: 1032307498)
Dayton, Ohio
(Event ID: 1032307495)
28
Little Rock, Ark.
(Event ID: 1032307499)
Ontario, Calif.
(Event ID: 1032307500)
Princeton, N.J.
(Event ID: 1032307501)
Columbia, S.C.
(Event ID: 1032307502)
30
Long Beach, Calif.
(Event ID: 1032307503)
Tyngsboro, Mass.
(Event ID: 1032307505)
Jackson, Miss.
(Event ID: 1032307504)
Charleston, S.C.
(Event ID: 1032307506)
Know any partner-related activities that you’d like Redmond Channel
Partner to promote? Send details to Executive Editor Anne Stuart at
astuart@rcpmag.com. Please include your name and contact
information for verification. For more information and to register, visit
www.microsoft.com/events.
IPLLU
S T SR AT
BYCK .CO M
H OTO
BYI OI SNTO
Please note that times
and dates are subject
to change; visit
www.microsoft.com/
events for updates.
1106rcp_CR_7-12.v13
10/10/06
3:55 PM
Page 11
ChannelReport
BOOKSHELF
The New Leadership Landscape
I
n the great garden ofbusiness, leadership is a perennial. Unlike trendymanagement concepts that pop up
everyfew years and disappear just as quickly, leadership is an evergreen, always within sight, seldom changing. So it’s particularlychallenging for business leaders to come up with fresh insights on the topic. These three
new books, however, manage to lookat leadership from different angles.
Leading Through Conflict: How Successful Leaders Transform Differences Into Opportunities byMarkGerzon
(Harvard BusinessSchool Press, 2006). Gerzon, founder ofthe nonprofit Mediators Foundation, argues that the best
leaders at anylevel successfullymediate conflict to keep their companies moving forward. His bookoffers eight tools,
or strategies, designed to help leaders excel as mediators.
Taking Advice: How Leaders GetGood Counsel and Use itWisely byDan Ciampa (Harvard BusinessSchool Press,
2006). Consultant Ciampa blames manybusinessfailures on executives who fail to get the right advice. “Taking
Advice” suggests how leaders should seekhelp dealing with specificchallenges and make the most ofthe counsel
theyreceive. It also describes ways to build a personal “advice network.”
YourLeadership Legacy: Why Looking Toward the Future Will Make You a BetterLeaderToday byRobert M.
Galford and Regina Fazio Maruca (Harvard BusinessSchool Press, 2006). Galford, an executive educator, and Maruca, a former Harvard Business Review editor, sayit’s never too earlyfor leaders to start
thinking about what theyleave behind. Their bookoffers practical ways that executives can shape their
legacies so that they—and their organizations—benefit both now and down the road. • — A.S.
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they will run faster — period. Through the use of brand-new InvisiTasking™ technology,
Diskeeper eliminates potential problems by defragmenting on the fly, IN REAL TIME without affecting system
resources or intruding on system demands.
Moving beyond the concept of “Set It and Forget It,”® Diskeeper 2007 represents a quantum leap in system
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Forget It” are either registered trademarks or trademarks owned by Diskeeper Corporation in the United States and/or other countries. The Ingram Micro logo is a registered
trademark of Ingram Micro. The Tech Data logo is a registered trademark of Tech Data. Diskeeper Corporation, 7590 N. Glenoaks Blvd., Burbank, CA 91504 www.diskeeper.com
RCPmag.com
1106rcp_CR_7-12.v13
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ChannelReport
ANATOMY OF THE DEAL
Microsoft Corp. and Cisco Systems Inc.
Sept. 6, 2006
Conn., says NAC-NAP interoperability will reduce the
complexity of deploying
network security infrastructures. As a result, both
partners and customers
will benefit, MacDonald
says: “It makes life a whole
lot easier.”
An inside lookatprominentdeals
within the Microsoftpartner
community. Partofan occasional
series. By Lee Pender
The Partner
C
Cisco SystemsInc. isthe leading vendor of
networking devicesand applicationsfor the
Internet. The networking giant racked up $28.5
billion in salesin itsfiscal year 2006, ended July29.
Cisco and Microsoft have a historyofcollaboration on products, architecturesand technologies.
The Deal
Cisco and Microsoft announced in September
at the Security Standard conference in Boston
that the companies’ network protocol technologies—Cisco’s Network Admission Control
(NAC) and Microsoft’s Network Access
Protection (NAP)—will interoperate. The
companies had announced two years ago
that they would work toward interoperability
of the standards.
Both protocols are aimed at preventing
infected devices from accessing corporate
networks. MarkAshida, general manager of
Windows enterprise networking at Microsoft,
says NAP consists of two pieces: a client component that will be included in the forthcoming
Vista operating system and a network policy
server component that will run on the forthcoming Windows “Longhorn” server. Therefore,
Ashida says, NAP won’t be fully available until
Longhorn server ships in the second half of
2007. Cisco’s NACis currently in operation, and
the two protocols will interoperate as soon
as NAP is available.
“Start rolling out Cisco NAC, and as
Longhorn server ships and you start deploying
Vista, you can phase your rollouts,” says Joe
Sirrianni, senior solutions manager for Cisco’s
security technology group. “You don’t have to
do any creative scheduling and management
of all of that.”
How Partners Will Benefit
Independent software vendors (ISVs) have a
single application programming interface (API)
to write to, Sirrianni notes. “VARs can create a
solution that leverages most efficiently what
the customer has already and deploy where
the customer is going,” he says.
Neil MacDonald, vice president and distinguished analyst at Gartner Inc. in Stamford,
Interoperability will satisfy
customers of both companies who were complaining that a lack of NAC-NAP
integration would make for
difficult network set-ups,
MacDonald says. “They
were under tremendous
pressure from their
customers saying this was
ridiculous—it made no
sense,” he says.
“[Customers] wanted to ensure that the
two companies were working together,”
Sirrianni says. “Most customers have a fairly
large Microsoft investment and a fairly large
Cisco investment.”
Ashida adds that aside from just interoperating with NAC, Microsoft intends to eventually
make NAP available on multiple platforms,
including Unix, Linux and the Macintosh
operating system.
“I believe NAP is one of the most open things
that Microsoft has done,” Ashida says. •
I LLU S T R AT I O N BY J E R E MY Z S CH AU
How Cisco and Microsoft
Will Benefit
1106rcp_PartnerSpot_13-16_v.6
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ChannelReport
PARTNER SPOTLIGHT
Focus Pays
It’s not yet three years old, but Dynamics partner Iteration2 has
two U.S. Partner of the Year Awards under its belt, a tribute to its
ability to focus. By Paul Desmond
L
Less than three years since its inception in January 2004,
Iteration2 is closing in on $30 million in annual sales,
has more than 100 employees and has not once but
twice been named the Microsoft Business Solutions
Outstanding Partner of the Year for the U.S. To
Mike Gillis, president of the Irvine, Calif.-based
Gold Certified Partner, those achievements are
P H OTO CO U R TS E Y G R EG SA D
largely the result of a single attribute: focus.
“Whenever you want to do better than you’re currently doing, focus,” he says. “Wherever you can, focus,
focus.” For Iteration2, that means focusing on select
vertical markets and being the best at delivering
Microsoft Dynamics solutions in those markets. It also
means focusing on the company’s core corporate values every day, and its overall mission to be recognized
as the world’s finest Dynamics partner—a goal its
two Partner of the Year awards certainly indicate that
it’s on the way to achieving. Winning those awards
stems from focusing on being a good partner, which
involves getting strategic wins, turning them into
references, and sharing knowledge with partners in
other verticals to collectively raise the Dynamics tide
and float all MBS partner boats.
Gillis has maintained his focus since he founded
Iteration2 with two colleagues—Gary Peterson
and Greg Carter, both now company vice presidents—who each had experience with JD Edwards
enterprise resource planning (ERP) software,
either as JD Edwards employees or partners. Gillis
Mike Gillis, president of
Iteration2, found success
by going vertical.
RCPmag.com
10/10/06
3:23 PM
Page 14
ChannelReport
was with Systematic Systems Integration,
a Microsoft partner that performed custom application development to integrate
with ERP packages from SAP AG, JD
Edwards (now part of Oracle Corp.) and
others with Windows. After that company
was acquired in 2000, he took a few years
of semi-retirement.
During that time, Gillis and his partners
watched with interest as Microsoft entered
the ERP market, buying up companies such
as Great Plains and Axapta. “We knew there
had to be a better way to do ERP, but you
had to have the application and infrastructure pieces to execute it,” Gillis says. “We
decided to bet our careers on Microsoft.”
Before he started Iteration2, Gillis attended the 2003 Worldwide Partner Conference
in New Orleans and was “captivated” with
presentations by partner- and Dynamicsoriented Microsoft executives such as
Allison Watson, Orlando Ayala and Doug
Burgum. Perhaps most importantly, he also
attended the awards ceremony. “I wrote furiously the qualities of the winners, what they
did, how they helped other partners,” he
says. “I took the awards ceremony speeches
almost as prescriptive guidance in how to
build a top partner.”
ence,” he says. That included attending a
beta version of a Microsoft workshop on
how to make a vertical approach work.
First targeting Axapta software (now the
Headquarters: Irvine, Calif.
Dynamics AX ERP suite), Iteration2 learned
how to build a matrix that would identify
President: Mike Gillis
vertical opportunities. The goal was to find
Founded: 2004
verticals where Axapta did not have a good
natural fit. “That’s where we could build our
Line of Business:
Microsoft Business Solutions
value,” Gillis says. “You need to get out and
build some functionality yourself and build
Microsoft Partner Program Level:
some domain expertise that will differentiGold Certified
ate you in the marketplace.”
Microsoft Competencies: Microsoft
To fill out the matrix, the company anaBusiness Solutions, ISV/Software
lyzed
criteria such as how many existing
Solutions, MobilitySolutions
ERP software companies had deep peneAnnual Revenue: 2005: $20 million;
tration in each vertical, the viability of the
2006 forecast: $30 million
hardware and software platform those
Growth Rate:
companies employed, and their financial
110% year-to-year, 2004 to 2005
viability. Its first target turned out to be
produce companies, particularly those
Employees: 108
that chop, cool and package produce, such
Customer Base: Agricultural, residential
as for packaged salads. Only a couple of
construction, field service companies,
players had deep penetration in the marmanufacturers
ket and both were built on aging software
Clients: TASER International Inc.;
platforms, which put the future of those
Calence LLC; Wonderware; NRPI;
players in question.
Growers Express; The Linc Group Inc.
“We took the foundation things like
Microsoft Awards: Microsoft MBS
financial, supply chain and customer relaOutstanding Partner ofthe Year, U.S.,
tionship management, then built deep
2005 and 2006; 2006 West Region
VERTICAL DEFINITION
vertical industry functionality on top that
General Manager Award; 2005 Microsoft
Winning Customer Award; three Area
Among the chief lessons he took away from
is specific to the grower business,” Gillis
General Manager Awards; two Area
the awards presentation was the need to
says. For example, for each of their crops,
Winning on Value Awards; one Area
have intellectual property that differentigrowers typically have multiple investors,
Marketing Excellence Award; two Area
ates your company in the market. “We
and reconciling their investments can get
Best Practice Awards; two-time
President’s Club and Inner Circle Member
knew instinctively that a vertical industry
complicated. Iteration2 software also
approach was the way to go,” Gillis says.
addresses issues such as inventory trackwww.iteration2.com
But it was encouraging to hear Microsoft
ing and cooler management, tailoring
harping on the same point—and backing it
them to the produce vertical.
up with useful education.
Using the same matrix approach, the
While Gillis and his partners had experience playing in vertical company has since expanded into two additional verticals: field
markets that were already defined by JD Edwards, they had never service and residential construction. Each of its markets is highly
done the market analysis required to decide which vertical to target. localized, giving them natural protection from off-shore competi“That’s pretty much a science and Microsoft helped teach us that sci- tion, which helps give the markets long-term viability. The verticals
Iteration2
Project2
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ChannelReport
are also largely regional, making it simple for Iteration2 to identify
potential customers and harder for competitors to find them.
cific topics. “Sharing knowledge seamlessly is something we work
on all the time,” Gillis notes.
IMPRESSIVE RESULTS
LANDING AWARDS
The results have been impressive. “We went from zero sales to close Winning awards is likewise never far from Gillis’ thinking. “Our misto $30 million of forward-looking sales, and over $20 million in the sion is to be recognized as the world’s finest Dynamics partner. Not
previous 12 months,” Gillis says. “And we have more than 100 peo- just to be the finest partner, but to be recognized,” he says. “That’s
ple. We have a lot of momentum.”
what the awards do—make us a recognized industry leader.”
Much of that momentum he attributes to Microsoft’s “PeopleWhat does it take to be named U.S. Partner of the Year two years
Ready” marketing campaign. “It’s everywhere. You can’t open a running? Closing deals certainly helps. “Get strategic wins. Make
Fortune, Business Week, Business 2.0 or any of those magazines with- them referenceable, then share those references with other partout seeing People-Ready or Dynamics adverners so they can create strategic wins,” he says.
tising all through it,” he says. The campaign
He also advises would-be award winners
is making it difficult for anyone considering
to communicate openly with Microsoft
ERP not to look at Dynamics, Gillis says. As a
about ways to improve its partner program.
The name Iteration2 stems from the fact
result, the Iteration2 pipeline is growing
Iteration2, for example, has successfully lobthat the company represents a second
faster than ever, with more deals coming
bied Microsoft to deliver more and deeper
go-round
in
the
career
of
each
of
its
through to close.
video-based training and has worked with
founders. For President Mike Gillis, it’s
The ability to keep up with that everMicrosoft to create and refine some vertical
his second time being a Microsoft
expanding pipeline requires speed, which
industry marketing programs. Microsoft is
partner, while Gary Peterson and Greg
is the company’s real differentiator, Gillis
now running a series of vertical campaigns
Carter each previously worked for ISVs.
says. Crucial to maintaining speed, he says,
throughout the United States that are much
are recruiting and retaining the best people
like those first prototypes, Gillis says.
and sharing knowledge seamlessly.
“So get in a leadership position, help make
“We work like crazy on creating the coolest place to work, and that the program better, and make sure that [you] keep growing, getting
leads to good retention of people,” he says. Toward that end, the more customers and more people involved in the success of
company throws four family-oriented events per year, including a Dynamics,” he advises. Doing those three things better than other
company picnic and holiday party, as well as four staff-only events partners do leads to winning Partner of the Year awards, Gillis says.
where people can get to know each other better. Employees are also
Part of making the program better involves openly sharing inforencouraged to continually go after more advanced Microsoft certifi- mation on what works and what doesn’t. “It’s important for us to
cations. “We have 100 people who are becoming 100 experts,” as share so we can all be more competitive, so we can beat SAP all the
Gillis puts it. In fact, a commitment to personal and team growth is time and beat Oracle all the time,” he says. “We have to get out there
one of the guiding principles, or, as Gillis puts it, “Pillars of and carve out our own niches and show the world just how good
Strength,” upon which the company was built.
[Dynamics] is. They can’t know unless we show ’em.” •
Team members who know and like each other are also far more
likely to share knowledge. “Friends share information better than Paul Desmond (paul@pdedit.com), the founding editor in chief of
knowledge management systems,” Gillis says. After any given Redmond Channel Partner magazine, is president of the IT pubmeeting at Iteration2, a flurry of e-mails and phone calls will go lishing firm PDEdit in Southborough, Mass.
back and forth with staffers sharing information. While Gillis
maintains that’s the best way to share knowledge, he acknowledges it has limits in terms of scalability. So the company also
Upon founding Iteration2, Mike Gillis and his partners defined the
employs systems for sharing knowledge, such as Web sites for each
company’s guiding principles, or Pillars of Strength. Go to RCPmag.com to
learn what they are and whether they may apply to your company.
project, which take advantage of Microsoft collaboration tools.
The company also has subject matter expert groups devoted to speFindIT code: FocusPays
What’s in a Name
Project1
10/9/06
12:31 PM
Page 1
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1106rcp_PartnerView_18.v8
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Page 18
Partner View
Life as a Small Fish in
Microsoft’s Big Pond
B Y R O N H U X TA B L E
L
ife as an “unmanaged partner”—one too small to be assigned a
Microsoft account manager—is typically like being lost at sea:
You’ve got a sail and a rudder but no idea where to go.
A smaller, unmanaged partner gets a lot of what Microsoft calls
“breadth” advice and tools—meaning that they’re directed at partners without dedicated account managers— but it’s up to the partner to decide which tools to use. Small partners’ expectations for
what Microsoft will provide are usually bigger than what
they’ll actually receive. Still, becoming a
Registered Member can be the first step to
something good—if you don’t stop there.
When partners visit the Microsoft
Partner Program Web site, they’re greeted with an incredible amount of useful
information, including recommended
contacts to make, region by region.
Unfortunately, this is where smaller partners can begin to see how different their
experiences will be from those of larger
partners or, in some cases, partners based
in different parts of the country. For
example, the West Region Web site does a
great job of letting partners know how
they can make contact with partner program employees in that
area. The East Region site makes it much harder to figure out
whom to contact. That’s the first lesson—each region, area and
office in the program is different from the others. The structure is
different, the people are different and, for the most part, partners’
experiences will be different as well.
Where there’s similarity is that all sales organizations within
Microsoft are intensely focused on achieving their goals. These days,
Microsoft sales employees will lose their jobs if they don’t make their
numbers. It’s important to understand the focus, goals and objectives
of the people in your local Microsoft sales organization. Once you do,
you can figure out what your sales contacts need and what you can
do to help them make their numbers.
It’s also particularly important to understand the partner role in
Microsoft’s “People-Ready” marketing campaign. Know where
Microsoft is placing the most emphasis on its employees locally—
whether, for instance, they’re focusing on Small Business Specialist
certifications and licensing—and know the incentives available to
partners and customers. Attend the quarterly partner briefings and the annual
Worldwide Partner Conference. Join user
groups and the International Association
of Microsoft Certified Professionals.
Some local Microsoft offices have an
analysis of their partners’ expertise in
certain areas of technology or customer
service as they apply to the campaigns,
so it makes sense to know where you
stand, whether you’re on their radar and
whether there’s anything you can do to
fill a gap. Of course, being Certified or
Gold Certified improves your chances of
being on the radar. So, at a minimum,
work toward becoming a Certified Partner.
Finally, smaller partners should avoid placing all their bets on
Microsoft—a relationship with Redmond helps enable success but
doesn’t guarantee it. Smaller partners must make their way primarily on their own, through focus, talent and solid business-management practices. Ultimately, partners must leverage the unique
offerings that make them special. It’s a good thing if those offerings
just happen to satisfy the hungry beast that Microsoft can be. •
Ron Huxtable (ron@peakpresence.com) is a senior partner at Peak Presence
Inc. (www.peakpresence.com), a Long Beach, Calif.-based Registered
Member that works with Microsoft partners to narrow their focus, develop
new business opportunities and expand upon existing relationships.
P O R T R A I T BY J I LLI A N S CH N A R E
Small partners’
expectations for what
Microsoft will provide
are usually bigger
than what they’ll
actually receive.
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P H OTO O F CH A I N BY CH R I S TO P H E R H A R T I N G
Microsoft hasn’t always had a great reputation
10/10/06
3:26 PM
Page 21
for keeping things safe. The company hopes to change that impression and its partner
relationships with a serious move into the enterprise security market.
By Lee Pender
IN SECURITY
Microsoft and security.
The two words appear together all the time, but mostly in a negative context. Read
the IT industry news on almost any given day, and you’re likely to see stories about
Microsoft’s security struggles: vulnerabilities in Windows and other applications, virus
attacks, patches—and sometimes even patches for patches.
Microsoft has worked for years to improve security for its own operating system and
applications and has made significant progress in that area. But many business users and
IT professionals remain skeptical about how secure the company’s products really are.
And now, against the backdrop of this still-questionable reputation for securing its products, Microsoft is making the bold move of selling a full suite of security applications for
the enterprise. (See “On the Forefront,” p. 22.)
With its Forefront line of security applications for businesses, officially introduced in
June, the company is starting an effort to establish itself as a key vendor in a market that
it has previously been happy to turn over to Independent Software Vendor (ISV) partners. Those partner-turned-competitor ISVs will have to respond to Microsoft’s challenge, just as other partners will need to manage relationships both with current ISV
security partners and with Microsoft in order to fully exploit the opportunities that
Forefront creates.
RCPmag.com
FEATURE
10/10/06
3:26 PM
Page 22
| Security
CHANGING PERCEPTIONS
Partners say that they still struggle with Microsoft’s spotty reputation for security. “It’s something that gets brought up at every sales
call,” says Hugh Kelly, vice president of marketing at Network
Engines Inc., a Canton, Mass.-based Gold Certified Partner and
provider of appliances for mission-critical software applications. In
fact, poor perceptions about Microsoft security have become so
common that a lot of customers respond negatively without really
knowing why.
“That’s more of an emotional or visceral reaction,” says Neil
Rosenberg, president and CEO of Quality Technology Solutions Inc.
(QTS), a network integrator and Gold Certified Partner based in
Morris Plains, N.J. “It’s almost instinctive or knee-jerk: ‘Microsoft
security—I need to say something sarcastic about that.’”
In fact, Microsoft has improved its security infrastructure over the
last several years, particularly with the recent release of its network
security gateway, Internet Security and Acceleration (ISA) Server,
says Rand Morimoto, president and CEO of Oakland, Calif.-based
Convergent Computing, a network consulting and design specialist
and Gold Certified Partner. “We’ve crossed that bridge already over
the last couple of years with the ISA product,” Morimotosays. “Time has
proven that Microsoft’s product has proven not to be full of holes.”
Not surprisingly, Microsoft officials also say that they’ve made
progress, particularly since the inception of the Security Development
Lifecycle, the company’s development methodology aimed at minimizing security bugs. “We’ve made significant investments over the
On the
Forefront
Microsoft Forefront represents the company’s first move into
the enterprise security market with a single-brand strategy
and comprehensive suite of applications. Microsoft is doing
away with the Antigen name it bought with its acquisition of
Sybari Software Inc. in 2005 and folding its Antigen product line
into the larger Forefront suite. Following is Microsoft’s Forefront
product roadmap:
Available now, Microsoft InternetSecurity and Acceleration
(ISA) Server 2006 is a gateway server designed to protect a
networkfrom Internet-based threats and give users remote
last three to five years in particular,” says Paul Bryan, director of
product management for Forefront Security Products at Microsoft.
“We took a large part of the resources of Microsoft and applied
them [to security for] the operating system. We certainly take our
lumps, and a lot of times unfairly so, but that’s the responsibility we
have given the size and impact we have on the industry. As far as
messaging that we’re conveying to everybody, it is that we continue
to make those investments and make things more secure from the
base level.”
Natalie Lambert, security analyst at Forrester Research Inc., in
Cambridge, Mass., says the company’s message is working. “Although
many experts view Microsoft’s Security Development Lifecycle … as
mere table stakes, Microsoft is committed to improving its software
development and has seen results from this effort,” she wrote in a May
report on Microsoft’s move into the security market.
But, despite notable progress, there’s still plenty of doubt about
Microsoft security, and it will take time for Microsoft to build positive perceptions where negative ones have existed for so long, says
Dennis Szerszen, vice president of marketing and corporate strategy
at SecureWave SA, a Luxembourg-based Gold Certified Partner with
U.S. headquarters in Herndon, Va.
“It takes a long time to establish a reputation of trust and security,” says Szerszen, whose company specializes in endpoint security
solutions. “It just takes nanoseconds to ruin it. As long as there are
going to be hacks and cracks and major vulnerabilities, it’s going to be
hard [for Microsoft] to establish credibility.”
access to applications, the company’s literature says. Microsoft’s
Steve Brown says the company expects to release a new Forefront
version of ISA with the release of Longhorn server in late 2007.
The other components of the Forefront suite are scheduled for
general release in the first half of 2007, Brown says. They include
three applications for server security:
■ Microsoft ForefrontSecurity for Exchange Server (currently
called Microsoft Antigen for Exchange)
■ Microsoft ForefrontSecurity forSharePoint (currently called
Antigen for SharePoint)
■ Microsoft ForefrontSecurity for Office Communications
Server (currently called Antigen for Instant Messaging)
The suite also includes Microsoft Forefront ClientSecurity
(formerly called Microsoft Client Protection) for client and server
operating system protection.
— L.P.
Project1
10/9/06
11:29 AM
Page 1
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Seize the market; go to https://partner.microsoft.com/secureopportunity
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FEATURE
10/10/06
3:26 PM
Page 24
| Security
HowCame
Forefront
To Be
A string of acquisitions by Microsoft laid the groundwork
for Forefront:
■ 2003, GeCAD Software, Romania (anti-virus)
■ 2004, GIANT CompanySoftware Inc., New York (anti-spyware)
■ 2005, Sybari Software Inc., Northport, N.Y. (message scanning)
■ 2005, FrontBridge Technologies, Los Angeles
— L.P.
(hosted-message scanning)
MOVING INTO THE MARKET
Establishing credibility is exactly what Microsoft wants and needs
to do with Forefront, components of which the company will be
rolling out and upgrading over the next 12 to 18 months. Microsoft
introduced the Forefront name and marketing strategy at its Tech
Ed conference in Boston in June.
“We focused a lot in the past on improving the core security in
our products,” Microsoft CEO Steve Ballmer told a keynote audience at the company’s Worldwide Partner Conference in July.
“Really this year we will enter the security market in full force … And
while there’s going to be very healthy competition in the security
business, I think having a rich and complete security offer from
Microsoft will provide incredible value to our customers and give
you incredible new alternatives to build business.”
A mix of acquired technologies and in-house development (see
“How Forefront Came to Be,” this page), the suite goes beyond builtin operating system security measures and anti-virus protection and
offers a central point of management for network security. The
applications are designed primarily for integration into a Microsoft
technology stack.
Some observers wonder why Microsoft isn’t building Forefront
functionality into the stack from the start. Neil MacDonald, vice president and distinguished analyst at Gartner Inc. in Stamford, Conn., says
the company should explain that its security products should eventually disappear from the market. “They are selling products that help to
protect from vulnerabilities that they created,” he says. “There will
always be suspicions as to Microsoft’s intention in the security market.
Microsoft should preface any security discussion by saying that their
goal is to eliminate the need for these products altogether. They should
say that it’s going to take years. They need to start by saying their goal is
ultimately to put themselves out of [the security] business.”
For his part, Microsoft’s Bryan says that partners should make it
clear to potentially confused customers that Forefront provides a
suite of applications designed to protect an entire network at levels
that can’t be built into an operating system or existing application.
“There’s still a need for securing an enterprise and enabling that
central management control,” he says. “That goes beyond anything
that can be placed into the operating system because you’re talking
about a network of machines.”
In addition, Forrester’s Lambert says that Microsoft’s security
efforts aren’t just focused on the company’s own technologies.
“Viruses and vulnerabilities are an industry problem in terms of all
software,” she says. “(Microsoft is) focusing on the bigger problems.
They’re protecting themselves more because people will target
them more.”
Sold as a separate product, Forefront’s broad-based enterprise
offering puts Microsoft into competition with a bevy of partners and
other competitors offering similar solutions, and analysts and partners agree that Redmond’s offerings won’t necessarily be the best on
the market. “It’s hard to say that Microsoft products are better,”
Morimoto says. “They’re as good as what exists out there.”
“They’re not best of breed, but I believe they’re good enough,”
MacDonald says. “All of (Forefront’s) components are solid.”
A CLASSIC CASE FOR INTEGRATION
So, without a best-of-breed product, how can partners approach
customers with Forefront? By pushing that most common and effective of Microsoft messages—that the solution offers product integration and ease of administration within a Microsoft environment.
The hard sell is Microsoft’s classic “better together” pitch: Deploy a
homogeneous Microsoft environment, and avoid hassles with product integration and licensing. That message should resonate with
resource-strapped IT departments, says Steve Brown, director of
product management for Microsoft’s Security Business and
Technology Unit. “They don’t want to have to be deep security
experts,” he says.
Partners and analysts say that simplicity of implementation
and management will be a key Forefront marketing point. “When
you’re going through to do patches, the more homogenous the
environment is, the easier it is to license, support and update,”
Morimoto says. “When you sit back and say, ‘I have my choice of
deploying this product or that product and this product will patch
and maintain [the same way that] my Office and Windows [do],’
you say, ‘That’s a lot easier.’”
IT departments’ need to reduce complexity, improve ease of use
and ease integration, combined with their desire to work with fewer
vendors, will all be advantages for Microsoft, MacDonald says. “We’re
seeing best of need over best of breed,” he says. “That plays to
Project1
9/7/06
12:09 PM
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5:19 PM
Page 26
| Security
Microsoft’s strength. The fact that Microsoft
is not best of breed for some companies will
not matter.”
Lambert adds that Forefront’s management capabilities and integration into the
Microsoft stack will be an attractive offer in
a changing security market. “If we think
about this market, we are no longer looking
for security products,” Lambert says. “We
are looking for secure infrastructures.
Security is becoming management. If you
can add anti-threat technologies to the bigger configuration problem, you’ll be a full
step up. That’s something that security
vendors are just trying to get into now.
Microsoft has management capabilities
that security vendors don’t have.”
NO EASY ROAD AHEAD
The integration story alone, though, won’t
be enough to guarantee Microsoft success
in the crowded and complex enterprise
security market. Vendors ranging from traditional security players such as Symantec
Corp., McAfee Inc. and Trend Micro Inc. to
networking vendors like Cisco Systems Inc.
and Citrix Systems Inc. all claim some
territory in the space. And, partners and
analysts say, most companies already
have some sort of security infrastructure.
Microsoft will, in many cases, have to
unseat or at least complement incumbent
vendors at many companies in order to pick
up market share.
Microsoft can do that, in part, by undercutting prices competing vendors charge for applications, MacDonald
says, which should drive prices down across the market. “Microsoft is a
latecomer to markets that already exist,” MacDonald says. “There are
incumbent vendors installed. Microsoft has to come in and at least be cost
neutral after you take into consideration the switching costs.”
Nevertheless, MacDonald says that Microsoft could own 40 percent of
the enterprise security market four to five years after the full suite ships.
MacDonald and Lambert agree that small and midsize businesses will be the first to embrace Forefront and will present the
best targets for partners selling the applications. “I think [Forefront]
will be more of an SMB play than an enterprise play,” Lambert
says. “[SMBs are] buying into the argument that they have to
“Microsoft is
ensuring that we
keep Microsoft
solutions in mind.
You don’t bite
the hand that
feeds you.”
— Rand Morimoto, President and CEO,
Convergent Computing
decrease the number of vendors and manage everything centrally.
SMBs are going to be much more likely to buy the whole package
because management is difficult for them.” She, too, predicts that
Microsoft will eventually become a major player in enterprise
security, especially once its applications catch up with those of its
competitors in terms of functionality. And the bigger a player
Microsoft becomes, she says, the more other vendors will innovate
in order to compete.
Meanwhile, Morimoto sees a heated battle ahead. “Microsoft
has to rip and replace, and that’s not going to be pretty,” Morimoto
says. “They’re going to be ripping out Symantec, and the Symantec
people aren’t going to be happy.”
P H OTO BY M E LI S SA BA R N E S
FEATURE
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10/10/06
3:26 PM
Page 27
TORN BETWEEN TWO (OR MORE) PARTNERS
For the channel, that conflict could cause some confusion. Partners
that deal with both Microsoft and competitors like Symantec could
find two of their major sources of revenue coming into conflict. And
Microsoft, once happy to turn security over to its ISV partners, is now
offering incentives to court security partners of its own. (See “SSA’s
Sweet Deal,” this page.)
Partners who work with multiple security vendors say that
Microsoft is, not surprisingly, stepping up efforts to have them promote its products to their clients. And, although they say they’re not
feeling pressure to push Forefront at the expense of other options,
they are getting the message that Redmond considers the suite
important. “I’m not sure whether ‘pressure’ is a good political term,”
says Morimoto, who works with multiple security vendors.
“Microsoft is ensuring that we keep Microsoft solutions in mind. You
don’t bite the hand that feeds you.”
“I shouldn’t say it’s pressure as much as an expectation,” says
Rosenberg, who also works heavily with Symantec. “The expectation is that we’re going to convey the new messaging as much as
we’ve conveyed the old messaging. The pressure will notch up when
the products are actually shipping.”
SSA’s Sweet
Deal
Microsoft hopes to bring multiple vendors’ security partners into
the Forefront fold and entice its current partners to the new suite
with its Security Software Advisor (SSA) program, an incentive
program it launched in July.
According to Microsoft’s Steve Brown, partners that take part in
the SSA program will receive referral fees for sales ofAntigen and
Forefront applications—20 percent of the sales price of the product,
and 30 percent with a special deal Microsoft is offering through
February. That’s on top of the original partner margin for the sale.
VARs can also get a 5 percent fee on renewals of existing products on
top of normal margins.
In order to participate in the SSA program, partners must be at
least Registered Members of the Microsoft Partner Program.
Then, they must either be members of the Security Solutions
Competency or have passed the exams to meet requirements for
the competency, or be Sybari partners, or be top-tier members
— L.P.
of another security vendor’s program.
He adds that competing vendors, including Microsoft, don’t
always overlap in terms of functionality. It’s possible to continue to
work with a range of partners and to deploy hybrid security infrastructures. “There are complementary offerings to the extent that
Microsoft doesn’t delve into certain fields” such as e-mail archiving
and management, he says. “I’ve been able to grow Symantec business
based on Microsoft business.” QTS, Rosenberg’s company, has held
joint security seminars with Microsoft, Symantec and Citrix to discuss how the vendors’ solutions can complement each other, he says.
And partners-turned-competitors aren’t ready to cede their market share to Microsoft, either. “We want to compete with Microsoft in
the marketplace based on the merits of the technology,” says Julie
Parrish, vice president of the Global Channel Office at Cupertino,
Calif.-based security giant Symantec, a Gold Certified Partner.
“Our belief is that partners invest in a vendor based on the core
competency of that vendor, which, in Symantec’s case, is absolutely
security. We’re not looking at this in terms of a new revenue stream.
It’s a core business.”
Parrish is confident that partners will stick with Symantec
despite strong incentives from Microsoft to sell Forefront. She says
that Symantec isn’t offering new incentives to partners to counter
Microsoft. “Trying to over-incent the partners to do something which is not necessarily in concert with where the end
customers are does not work very well,” Parrish says.
Symantec’s message to its partners, Parrish says, is to “stay
the course—focus on the vendors that are offering you that
choice and that core technology that your customers want.”
GET THE WORD OUT
For those partners who do choose to adopt Forefront,
Rosenberg says, the main challenge isn’t managing relationships with multiple partners but spreading the news about
Forefront to potential clients. “There are a lot of people who
don’t know half the products Microsoft offers,” he says.
“Most people are trying to keep their networks running. They
don’t have time to read [Microsoft] press releases about the
new stuff.”
And, despite the challenges both Microsoft and partners
face with Redmond’s entry into a new and complex market,
Morimoto sees an upside. “There’s an opportunity for
Microsoft to take advantage of their relationships with their
customers,” he says. “It means more integration consulting
business for us as a partner. It has the potential to be good.” •
Lee Pender (lpender@rcpmag.com) is senior editor at
Redmond Channel Partner and editor of its newsletter,
Redmond Channel Partner Update.
RCPmag.com
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SOFTWARE AS A SERVICE:
You’re Not
in This Alone
As SaaS picks up steam, more
resources are coming online to
help with the transition to on-demand
delivery. By Keith Ward
Lots of businesses are starting to examine whether the emerging Software
as a Service (SaaS) model will work for them. If you’re one of them, consider
this: It’s working fine for a company that does twice eBay’s volume of business.
Ariba Inc., based in Sunnyvale, Calif., claims the world’s largest supplier
network, handling about $93 billion worth of transactions annually. It has
deciding to rework its flagship solutions for helping corporations manage
their corporate spending, a category known as spend management, was not an
easy or quick decision. But, once decided, there was no turning back, says Rick
Collison, Ariba’s director of spend management solutions.
I LLU S T R AT I O N S BY LI LLI A N CH A N
annual revenues in the $300 million range and about 1,600 employees. Thus,
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| Software as a Service
Ariba implemented the first wave of
its SaaS offerings in November 2005, and
has been solution complete on SaaS for
about nine months. As with most companies’ transition to SaaS, it’s been a bumpy
road, but worth the wear and tear. “We’re
walking, not running,” Collison asserts.
SaaS Advantages
“Our commitment
is to make sure
that across our
Live offerings,
we have a model
for each type of
partner, so
they can take
advantage
of new
properties that
enable, for
instance, a small
company that
can’t afford a server to take advantage of a CRM offering.”
But it’s also walking in the right direction
both for the company and for its customers. For instance, Pittsburgh, Pa.based regional grocery store chain Giant
Eagle turned to Ariba’s SaaS offering to
more efficiently manage its supply chain
and saved $17 million in the first year.
According to Christine Crandell, Ariba’s
vice president of marketing, efficiency is
where customers usually start seeing the
savings. “They say, ‘Now that I’ve done
that [utilizing SaaS] and seen the savings, I can now move to do other things
like visibility’—and that way, they can
— Marie Huwe, General Manager ofMarketing, Microsoft Worldwide Partner Group
see where they’re spending their money,”
she says.
Ariba, which plans to become a Registered
Turning Tide
Member, is a large company with significant resources to spend on a
John Rowell, CTO of OpSource Inc., a Santa Clara, Calif.-based comconversion to SaaS. But what about the smaller, established ISV or
pany and Gold Certified Partner that helps other businesses with the
start-up with less capital that still wants the advantages of SaaS?
switch to SaaS, agrees that Microsoft is wading in cautiously, but
(For more on Microsoft and SaaS, see “Get Ready for Software as a
he’s confident that Redmond will do well. “[Microsoft has] put some
Service,” March 2006.)
of its best and brightest on this. [It has] a lot of tactical challenges to
The happy fact is that there are probably more resources availdelivering SaaS.” But he sees promise in some of Microsoft’s nascent
able for those types of companies. Among the first places to start
efforts. “The Dynamics platform is going to take a run at Salesforce.
looking is in Redmond, with Microsoft’s Live offerings. The softcom. Most people don’t think of the Microsoft platform in that way,”
ware titan has jumped into the SaaS space, rolling out a number of
Rowell says, but adds that the tide may be turning.
initiatives aimed at capturing a slice of the burgeoning market, says
Huwe believes a major part of that tide is small and midsize
Marie Huwe, general manager of marketing for the Microsoft
organizations. “What’s attractive about Live is that there are a lot
Worldwide Partner Group: “Our commitment is to make sure that
of medium and small partners that don’t want to be service
across our Live offerings, we have a model for each type of partner,
providers, but want to extend their reach. Our message to them is
so they can take advantage of new properties that enable, for
‘get engaged with us now.’ If you have a CRM business today, it’s
instance, a small company that can’t afford a server to take advanvery easy for you to add smaller customers with CRM Live, and you
tage of a CRM offering.”
can grow your customer [base].”
Huwe admits, however, that even Microsoft is still trying to find
Increasing your customer list without building out additional
its way in the SaaS world. “We don’t have it all figured it out, and we
infrastructure or becoming an IT services company is among
want to make sure we’re building the right programs around the
the goals of Microsoft’s SaaS offering, says Huwe: “If you’re a
Live offerings,” she says. “Live itself is a huge move to advertising
small customer, it’s not how you want to grow from $10 million
and subscription-based models.” Microsoft’s Live offerings aren’t
to $100 million [in revenue] per year, but how you maintain
complete yet, but Huwe estimates that they will be by late 2007.
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| Software as a Service
current customers and add customers without adding additional
infrastructure.”
Beyond its in-house programs, Microsoft is also building an
impressive list of SaaS partners such as OpSource and Andover,
Mass.-based NaviSite Inc., which is adding SaaS components that
Microsoft doesn’t currently handle.
NaviSite, a Gold Certified Partner, was originally a hosting and
co-location company, says Doug Mow, vice president of marketing.
Although it still offers those functions, along with managed services, it moved into SaaS when it saw an opportunity.
“We have an initiative with Microsoft to develop an ISV sandbox.
It’s a rack in our data center with Microsoft technologies in a virtual
slice of server capacity,” Mow explains. The several-months-old
sandbox contains a messaging component and database component. Mow says NaviSite is complementing Microsoft’s offerings to
the SaaS community.
“We’re filling in the blanks with very, very specific components
in areas for which they’re not able to provide direct support,” Mow
continues. These include messaging and provisioning components.
Partnering with Microsoft has worked out well for NaviSite, which
has SaaS-enabled about 70 clients so far.
OpSource’s SaaS offerings are more comprehensive. It specializes
in helping companies convert—or start from scratch—to the SaaS
paradigm. OpSource classifies the types of companies by color:
■ Greens are brand-new companies that build in SaaS capabilities from the beginning.
■ Yellows are established companies starting the transition
to SaaS.
■ Blues are large companies that may have a particular pain
point, such as multiple distribution nodes.
Rowell estimates that slightly less than half of OpSource’s clients
are greens, about half are yellows and the remaining few are blues.
He warns all companies, regardless of size, that the changeover to
SaaS can be “extremely painful.”
But the pain won’t last forever, Rowell adds, “Companies that
jump with both feet into the marketplace and deliver full functionality have found success.”
That advice is seconded by Mike McDonald, CEO of Visual
Mining Inc., a Rockville, Md.-based Registered Member. His 10year-old ISV provides data visualization to convert data into actionable intelligence through a dashboard program. “You have to make a
real commitment to it. It’s far too easy to want to go back to the cash
cows” of perpetual licensing, he says.
Although Visual Mining still sells software packages that way,
they’re adding SaaS capabilities and not looking back. “What got us
into the SaaS model was our experience with CRM software that
caused problems with consultants, [high] costs, maintenance,” and
more, McDonald says.
“Companies that jump with both feet into the
[SaaS] marketplace and deliver full functionality have found success.” —John Rowell, CTO, OpSource Inc.
Visual Mining is a “yellow” company that’s used OpSource to
help prepare for SaaS. McDonald says the biggest obstacle his company faced in its conversion was process changes, the discipline
required before moving new software onto a production machine.
“If you put something on a production server that has a bug in it,
your customers are all done. You have to be very aware of every customer, and how it can affect them,” he says. (OpSource isn’t the
only SaaS partner Visual Mining’s been working with. San
Francisco-based Salesforce.com has been a valuable resource as
well, especially its AppExchange platform.)
The Live Umbrella
Visual Mining is just the kind of company Microsoft is heavily targeting with its SaaS offerings: small and midsize businesses. Those offerings fall under the umbrella of the new catchall phrase “Live.” “We’d
like to see all our partners on Live,” Huwe says. One big advantage for
those smaller clients is data, Huwe adds: “You’d be amazed at how
many [small and midsize companies] don’t have the best lists.”
Of course, you don’t have to bring in partners to switch to SaaS.
Qdabra Software, for instance, chose the mostly go-it-alone
method. Qdabra, a Registered Member, started about three years
1106rcp_F2SaaS_28-33.v10
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Page 33
ago as a solution provider for Microsoft technologies, explains
Shiraz Cupala, Qdabra’s general manager and marketing director.
Through its work Qdabra started to see a pattern emerge. “Lots of
small businesses wanted access to databases without any infrastructure or knowledge,” Cupala says. “We realized there was a market for
folks who needed solutions but without the infrastructure.”
That meant building out Qdabra’s own infrastructure to handle
a different business model; initially, though, that model wasn’t
SaaS. “First, we were building an internal application, but soon we
decided the service model was the way to go,” Cupala says.
Being a bootstrap company, Kirkland, Wash.-based Qdabra built
out its infrastructure and software packages with no outside investment, instead using its consulting business to fund the changeover.
Qdabra’s first SaaS offering, expected to be in public beta in
December, is a project planning and traffic tracking application for
small businesses.
Qdabra didn’t seek assistance from Microsoft, OpSource,
Salesforce.com or other vendors, but that doesn’t mean it didn’t
have any help. “We have the tech people we need for the baseline,
but we had to hire experts in large scale, distributed SaaS-type environments,” Cupala says.
Quick Time to Success
Qdabra, a 100 percent Microsoft shop, sees gradual growth as a key
to cash flow. “The architecture is one where we start small, maybe
five or six servers, and as customers and data grow, we add more
bricks,” Cupala says.
Working with smaller companies such as Qdabra, which has
fewer than 40 employees, is a key part of Microsoft’s strategy. Huwe
says the company is finding creative ways to work with clients to save
on expenses such as advertising. “There’s been a huge shift in the
advertising business. About $18 billion today is spent on online advertising. Today, if you’re a large company, you
can take advantage of [that]. But if you’re a
smaller company, it’s harder. We’re trying
to make online advertising accessible to
smaller companies by offering partners
credit toward online [ads].” Huwe says the
advertising credit program will soon be a
pilot effort in the United States.
OpSource is taking much the same
— RickCollison, Director
ofSpend Management
approach. For the “green” companies that
Solutions, Ariba Inc.
are still in the startup phase, OpSource
offers an online SaaS Resource Center.
The center, Rowell says, contains information for ISVs—for example, on how to structure an application for SaaS delivery, along with
sales and marketing help.
In addition, Rowell says, “a green company needs to know how
to get a product to market, and deliver it, with the lowest amount of
capital. A company can come on to our incubation platform and use
resources for six months at no charge. We’re fully into building the
SaaS ecosystem.”
Ariba’s Collison cautions those about to join the ecosystem, however, to keep their eyes on the ball. “The transition to SaaS is much
more [involved] than you think, so you have to think about every
aspect of your business very deeply,” he says. “And don’t get confused
about your objective: it’s not about delivering a URL and password.
Quick time to success is the focal point, not quick time to go live.” •
“The transition to SaaS is much more [involved] than you
think, so you have to think about every aspect of your
business
very deeply.”
Keith Ward (keith@fullquiverproductions.com), former editor of
Redmond, is now a freelance writer based in Westminster, Md.
Visit RCPmag.com for a directory of resources to help your firm make the
transition to Software as a Service. FindIT code: Springboard
RCPmag.com
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Finance
It!
Afinety Inc. reorganized its business around Microsoft Financing. The experiences of this Los Angeles-based consultancy and of several other partner companies make
the expanding Microsoft offering worth a hard look from other Microsoft partners.
“It’s the best thing that they’ve ever done. It has absolutely revolutionized our business,” enthuses Doug Hafford, vice president of Afinety, a Gold Certified Partner that sells
complete networks to small professional services firms, especially law firms.
The idea behind Microsoft Financing is similar to those of the credit arms of major
automakers such as Ford or General Motors, which can offer customers sweeter loan deals
than banks to help dealers sell cars. It’s also distinct from leasing, because customers own
the merchandise outright at the end of the financing term, without having to worry about a
balloon payment or a product return.
Despite being around for several years, Microsoft Financing has a low profile, especially outside the Microsoft Business Solutions community where it got its start. Under
the program, Microsoft uses its substantial pile of cash to finance customer purchases of
hardware, software and partner services at interest rates competitive to banks loans.
Finance terms generally range from 24 to 60 months. Deals must include some Microsoft
software, but they may involve as little as one license. Meanwhile, the financing for part-
P H OTO BY R O N K R I S E L
Partners land bigger deals and report better cash flow from steering
customers toward Microsoft’s seldom-used financing program.
By Scott Bekker
10/10/06
3:24 PM
Page 35
Doug Hafford is vice president at
Afinety, which reorganized its
business around Microsoft
Financing. The result? A cash
flow improvement so good that
Hafford calls it “ridiculous.”
RCPmag.com
OCTOBER 2006 REDMOND CHANNEL PARTNER 35
FEATURE
10/10/06
3:24 PM
Page 36
| Microsoft Financing
Microsoft recently raised the maximum deal
size eligible for instant online credit
approval from $100,000 to $250,000.
ner services is unavailable elsewhere in the industry, Microsoft
and its partners say.
Although the program is in use by only a few thousand of
Microsoft’s 600,000 partners, the company is aggressively
investing in the program. Microsoft hopes to loan twice as much
money in the next year (the current portfolio is just under
$500,000), while expanding from about 11 markets worldwide
to 20. Meanwhile, the company recently cut the minimum deal
size eligible for finance from $10,000 to $3,000, making the program an important option for partners who serve even the smallest of SMBs. At the same time, Microsoft Financing is improving
upon the speed with which it can facilitate larger deals. The company recently raised the maximum deal size eligible for instant
online credit approval from $100,000 to $250,000.
Afinety has reorganized its business model and its sales pitch
around Microsoft Financing. When talking to customers, “we lead
with [Microsoft Financing]. It’s on our quote,” Hafford says.
Afinety’s solution usually involves taking over maintenance of the
network through monitoring and patching and may be as simple
as standardizing some equipment or as complicated as replacing
the entire network, including both servers and PCs. The proposal
to the customer, however, abstracts the technical aspects beneath
a purely business discussion of the business goals that the company needs to achieve with the network, Hafford says. By encouraging financing through Microsoft, Afinety gets paid in full up front,
but the customer has a predictable and reasonable IT bill.
“We can go in and say, Mr. Small Business, you need to spend
$75,000. But when you say $2,500 a month, or $100 a user, that’s
not so bad,” Hafford says. “We can use the financing to promote
this sort of model. Is it worth $100 per user per month to solve
your IT? Of course it is.” Hafford doesn’t have hard numbers, but
he estimates Afinety’s business has increased by 10 percent to 25
percent from emphasizing Microsoft Financing.
One of the main advantages can be measured in cash flow, an
issue that bedevils almost all SMBs. “We have 10 times more
money in the bank. It’s ridiculous. We never worry about cash,”
Hafford says.
Other partners share his enthusiasm for the cash flow bonanza enabled by financing. “We’re paid when the loan gets signed
and sealed. As a result, we don’t have to track accounts receiv36 REDMOND CHANNEL PARTNER NOVEMBER 2006 RCPmag.com
able, we don’t have to go back to the customer for collections. It’s
an enormous benefit,” says Judy Thomas, vice president of business development for the TM Group Inc., a Gold Certified Partner
in Farmington Hills, Mich.
For Bryan Stuart, vice president of corporate development
and CFO at Junction Solutions LLC, a Lincolnshire, Ill.-based
Gold Certified Partner, financing means flexibility. “If you have
nine months of implementation services and those fees are paid
up front, it allows you to hire a little sooner,” he says. “Instead of
waiting for that next deal to happen, you can do it now.” Junction
Solutions has gone from a dozen people at the end of 2003 to
about 130 today, partly on the financial strength of doing business through Microsoft Financing.
Larger deals also result. According to Microsoft’s analysis of
internal sales data, to take one example, Microsoft Dynamics AX
(formerly Axapta) deals are 80 percent larger when financed and
discounting is less. “We can’t state unequivocally that because
they’re financed, they’re larger, but financed deals are [generally] larger,” says Brian D. Madison, general manager of Microsoft
Financing. Hafford provides anecdotal confirmation of
Madison’s trend: “We are able to do more business, larger deals,
with our clients for the network.”
Thomas describes a recent deal with a national personalservices company that had been struggling to afford some add-on
components in addition to the TM Group’s services. “They had a
$50,000 budget to pay out of pocket,” Thomas says. The add-ons
would have pushed the total to about $150,000, which the company couldn’t afford. “By using financing, they were spending
less than $50,000 [a year].” Ultimately the customer got a solution to move its business forward, and the TM Group got all its
money up front from Microsoft. It’s not the only time a TM Group
deal has doubled or tripled because Microsoft Financing was
available, Thomas says.
Stuart, of Junction Solutions, which develops and sells
Dynamics AX-based ERP solutions for retail, food and beverage
processing, says deals done through Microsoft Financing involve
less haggling and close faster. “The whole notion of nickel-anddiming during the sales cycle is gone,” he says, comparing the
process to an automotive purchase. “If you’re buying a car, you’re
going to negotiate as much as you can. If you’re leasing, all you’re
Project1
10/9/06
10:38 AM
Page 1
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For more information or to become a certified NetOp Reseller contact NetOp Tech Inc.
www.netoptech.com • ussales@netop.com • 312-376-0510
FEATURE
10/10/06
3:24 PM
Page 38
concerned about is what you’re paying monthly.” Junction
Solutions sells to larger customers, with annual sales of about
$50 million to $1 billion, but even there, the initial lump payment often gives prospective clients pause. “For most of our customers, it’s hard to swallow writing that first check for $500,000
or $1 million,” he says. Financing the deal with regular payments
over two to five years takes the sting out.
Microsoft has played with the financing mix to come up with
attractive packages. In July, the company launched its “6/50”
promotion. Customers pay $50 per month for six months, then
pay the balance in even monthly installments over the following
36 months. “The fact that they come up with these creative products is important,” Stuart says of those deals.
There’s only one downside to Microsoft Financing for customers, according to Thomas: interest. Rates are generally com-
parable to what banks charge. Even those rates are sometimes
negotiable. While banks and leasing companies don’t particularly
care whether partners close a particular deal with a customer,
Microsoft has a vested interest in every transaction. All three
partners quoted in this article reported instances where
Microsoft made exceptions on terms to close important sales.
“They really come to the plate,” Thomas says. “On a couple of
occasions, where the interest rate was too high, but the deal was
big enough to warrant it, they lowered the rate.”
Microsoft began the Microsoft Financing program in 2002.
The brainchild of then-treasurer and now corporate vice president and CFO Brent Callinicos, the idea was to use some of
Microsoft’s tens of millions of dollars in cash on hand to finance
deals. “Our primary role is to drive more sales,” Madison
explains. “We use the financing as a sales tool—as a closing tool.”
Section 179 + Microsoft Financing = Customer Opportunity
You may know the Internal Revenue
Code’s Section 179 as the tax loophole
that lets some businesses write off the
purchase of luxury SUVs. But Section
179 isn’t just for Hummers anymore.
Congress clamped down on
the SUV loophole in October
2004, but the rest of Section
179, designed to stimulate
business spending with an upfront tax break, remains in force
and has even improved with
age. Some partners have discovered that combining Section
179 with Microsoft Financing
can give customers another
reason to do a deal.
Asked if many partners are
taking advantage of Section
179, Microsoft’s Brian Madison
jokes, “The smarter ones.”
Most business property that
is useful for a few years is
accounted for as depreciating
over time. For tax purposes, a
portion of the cost can be
deducted each year. What
Section 179 does is allow a business to receive all those tax benefits in the first year. In 2003, the
one-year write-off limit was
quadrupled from $25,000 to
$100,000. Indexed for inflation,
that amount is now $108,000.
One other important change
came through in 2003. The IRS
added off-the-shelf software to
a list of property eligible under
Section 179, joining another
relevant category for Microsoft
partners—machinery and
equipment. The changes will
last at least through 2009.
Microsoft periodically puts
together messaging for partners
about taking advantage of
Section 179. “You ought to be
having conversations [about
this with your customers],”
Madison says. “We started coming up with creative payment
solutions to work around
[Section 179], as well. A customer can acquire, but not start
paying until the fiscal year.” In
other words, they can get the tax
benefits one year and begin
payments the next.
One Gold Certified Partner
putting Section 179 to good use
is Afinety Inc. “A really good
thing about [Microsoft
Financing] is it qualifies for
Section 179,” says Afinety’s
Doug Hafford.
“You can buy a network in
December. Let’s say it costs you
$100,000. You don’t start making payments for several
months. You get to write off
$100,000 against your income.
The client can actually use tax
savings to pay for the entire
first year of ownership for their
computer system,” Hafford
explains. “We typically go with
three-year financing. The typical corporate tax rate is 34 percent. You take that and you figure, of the $100,000 you’re
going to pay a third of it each
year. Your tax savings almost
identically match your first
year’s payments.”
In fact, Hafford says, some
customers opt for two-stage
deals, with part closing in Q4 of
one year and the rest closing in
Q1 of the following year. The
arrangement allows for up to
$200,000 of a project to come
under Section 179.
— S.B.
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12:22 PM
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FEATURE
10/10/06
3:24 PM
Page 40
The program started inside Microsoft Business Solutions,
now Dynamics, and expanded into nine countries. “Part of our
discovery was that Microsoft is a lot more effective when we
message across our entire platform, not just MBS,” Madison
says. In 2004, the company extended the program to the
Enterprise Partner Group. Then in July 2005, Microsoft
Financing was extended to the company’s Small and
Midmarket Solutions and Partners (SMS&P) group, allowing
the program to reach all of Microsoft’s distribution network
aside from OEM sales.
Microsoft has aggressive plans to increase the number of
financed deals because executives are hearing about impressive results: faster deal closes, incrementally larger deals,
lower discounts. When you aim to nearly double your business each year, you usually run out of headroom fairly quickly. But Microsoft believes there’s still plenty of space for
financing to grow. “We’ve sized the market opportunity at
$50-billion-plus globally per year for new software and services,” Madison says. “The hardware market is larger. That
being the case, if we were to hit 10 percent penetration, that
would be $5 billion right there.” Madison calls 10 percent a
conservative figure compared to other industries where
financing is available.
Right now, the program’s growth is being driven by
financing in the United States, although the company is seeding markets worldwide. “The United States is a bit more of a
mature market for us, so it’s on a real hockey-stick [growth
pattern] right now. The other markets usually take two to
three years to develop,” Madison says. In the short term, executives expect strong growth in the United States, he says.
“Longer term is when the other markets that we’ll be adding
will start to kick in. Ultimately, financing originations will
pretty much mirror Microsoft’s new business.”
Meanwhile, there’s a lot of room in the program for new
partners to come aboard. While Madison wouldn’t specify
how many partner companies take advantage of Microsoft
Financing, he did provide a range: between 1,000 and 3,000.
The addressable universe of partners who actually resell
CreditCheck
To qualifyfor Microsoft Financing, a partner must:
■ Be at least a Registered Member of the Microsoft Partner
Program
■ Have at least one Microsoft license in the end customer’s
purchase
■ Subject the customer to the standard loan approval
process
— S.B.
Right now, the
program’s growth is
being driven by
financing in the United
States, although the
company is seeding
markets worldwide.
Microsoft products in some capacity is probably somewhere
between 200,000 to 300,000, he says. In any case, Microsoft’s
goal is customer-focused. “We want to see a financing offer for
every customer,” Madison says.
In addition to the extra money, Microsoft is ramping up
the financing department, which currently includes about 50
employees and is increasing fast. That fact actually raises a
concern. Partners currently engaged with the program cite
the can-do attitude and flexibility of Microsoft employees as a
huge factor in the program’s value. Can Microsoft maintain
that ethos amid rapid growth?
Madison believes it can. “It’s one of my big concerns, that
we would lose that level of interface. If anything, with the scaling up of the business, we’ve actually gotten better,” he says.
He acknowledges that with a relatively small team, Microsoft
Financing has been able to handpick employees. He knows the
job falls to him to set standards at his level that everybody
adheres to as the staff gets larger.
Partners using the program have reason to hope the
quality of people in the Microsoft financing department
stays high.
“The best client relationships we have are on those
loans,” says Thomas, of the TM Group. “There’s no calling
over a $40 invoice. There’s no arguing over an hour of time. It
just goes into the loan payment and they’re happy. It
improves the working relationship between us, the customer
and Microsoft.” •
Scott Bekker (sbekker@rcpmag.com) is editor in chief of
Redmond Channel Partner.
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FEATURE
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| THE SIXTH INSTALLMENT IN OUR SERIES ON MANAGEMENT BEST PRACTICES
Mergers & Acquisitions:
A Survival Guide
It has been a heady four years for Arlin Sorensen.
In that short time his original company, Sorensen Computer Connection Inc.,
has gone through three mergers and acquisitions to become Heartland Technology
Solutions, a Gold Certified Partner specializing in network infrastructures. His original staff has grown from 25 to 75, and his one-office operation in Harlan, Iowa, has
multiplied to seven offices across five Midwestern states.
As you might expect, Sorensen has learned a lot about the intricacies of mergers
and acquisitions: the care you must give to due diligence before joining forces with
another company; the value of a good attorney and a good accountant who can check
for and clear the potential pitfalls; the jungle of human resources red tape and the
plethora of human quirks that come with merging two separate company cultures.
But one principal lesson stands out among them all: You can never anticipate
everything. No matter how many times you’ve been through a merger or acquisi-
I LLU S T R AT I O N BY D W I G H T A LLOT
Experienced hands
suggest keeping
surprises to a minimum
and staying sensitive to
cultural challenges.
By Fred Bayles
1106rcp_F2BP_42-46.v9
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3:26 PM
Page 43
Secrecy creates uncertainty and
hurts morale. Unconfirmed
rumors can often send
your most valued
employees out looking
for new jobs.
tion, each one is different—and there’s
always an unexpected gremlin lurking in
the details.
“You know what to look for from the
last two mergers you’ve gone through,
but there’s always a new area that comes
up,” Sorensen says.
Those surprises can range from an employee’s concern about a
necessary job-title change to widespread complaints about shifting pay day from, say, Tuesday to Thursday. Such examples illustrate that you can successfully navigate a merger’s financial and
logistical issues only to find that some small misunderstanding has
upset some valued employees and sent them rushing out the door.
“Even when it’s done right, it can be brutal. You must have a
good plan going into these situations,” says Petri I. Salonen, CEO
of Tellus International Inc., a Dallas-based Registered Member
that works with European firms interested in gaining a foothold
in the U.S. market.
Such words are especially important for technology companies
today. Although the surge of IT M&As during the boom of the late
1990s cooled after the bust, the numbers are rising again.
According to FactSet Mergerstat LLC, a Santa Monica, Calif.,
firm that tracks and analyzes global trends in mergers and acquisitions, the M&A craze within the IT industry peaked in 2000, when
there were 5,227 deals worldwide. Back then, merger/acquisition
fever was driven by the industry’s hothouse nature. New companies
were born daily, providing a feeding frenzy among competitors and
entrepreneurs that was fueled by a seemingly endless supply of cash
from venture capitalists eager to buy into the boom.
By 2003, of course, the bubble had burst and recession had
reduced that number by more than half, to 2,339 deals. Those
mostly involved smaller companies looking to survive. Now, those
numbers are again are on the rise, according to FactSet Mergerstat,
which recorded 3,477 deals in 2005, an increase of 11 percent
over 2004.
The new M&A boom is driven by a theme that echoes through
the IT industry: To survive in this leaner, meaner and faster world,
smaller companies must grow. “You need to expand your market
and your footprint,” says Sorensen. “You’re either growing or
falling away.” Growing “organically” by adding more customers, a
new product niche or another geographic area can be risky and
time-consuming. The alternative: Grow quickly by joining with
other firms that have different, but complementary, product lines
and territories. Mergers and acquisitions offer companies a chance
to tap into each other’s resources at a speed necessary for survival.
(For more on expansion by M&A, see “Buying Your Way to Growth,”
May 2006.)
At the same time, don’t expect miracles overnight. Those who
have been through mergers or acquisitions say the processes take an
average of 18 months to complete, which can put a near-fatal strain
on your business in the interim.
“It takes way longer than either party ever thinks,” says Jeff
Rudolph, the partner in charge of Sikich LLP’s ICS Technology
division, an Aurora, Ill.-based Gold Certified Partner specializing in
accounting and financial solutions.
Rudolph, who started his business in his basement 16 years ago,
has been through four mergers and acquisitions since 1998, first
joining with the accounting firm of Sikich and then adding other
software consulting firms with expertise and markets in compatible
geographic and technological areas.
Those machinations have created a $15 million-a-year firm with
70 employees. But the journey to that destination hasn’t always been
pleasurable. “Going from the conversation to the action [of joining
forces] can suck the life out of you if you’re being acquired,” Rudolph
says. “You become totally focused on this merger or acquisition and
[your] whole business can fall off. You can lose a lot of momentum.”
Advice for those contemplating a merger or acquisition comes in
big and small packages. The larger mechanics of the deal—the complicated bookkeeping tasks, due diligence and discovery—are the
realm of accountants and the lawyers with the skills and experience
in those processes. There the advice is simple: Find the best and most
experienced professionals. The smaller package consists of recommendations for avoiding or addressing the unexpected details of
M&As (see “7 Tips for Making M&As Easier,” p. 44). As Sorensen
puts it: “It isn’t the big stuff that’s difficult. It’s the small things that
eat your time up and cause you problems.”
RCPmag.com
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| Mergers & Acquisitions
Communication Is Key
Some deals require secrecy. You might not
want competitors to know your plans about a
potential merger or acquisition. You don’t want
to alert other suitors to the object of your desire.
In some cases, you might even face legal consequences for letting word slip that a deal is in the
works. But the experts agree that, if at all possible, you should always let your employees know
what’s coming.
The consequences of failing to do so can be
painful. Secrecy creates uncertainty and hurts
morale; unconfirmed rumors can often send your
most valued employees out looking for new jobs.
One prime reason for honesty is a practical
one: Secrets are hard to keep. Salonen, of Tellus
International, recalls being involved in the sale of
a company where dealmakers kept employees
out of the loop. Despite the best attempts at
secrecy, simple facts alerted employees to the
fact something was up. “People would come and
say, ‘What the hell is going on? Why aren’t we
signing the lease for this computer for the next
three years?’” Salonen says.
Rudolph recalls one instance where a small
company kept its employees in the dark about a
deal until 20 minutes before the final papers were
signed. “They had the deer-in-the-headlights look
when they were told,” he says. “It went downhill
fast.” Since then, all but one of the eight original
employees has moved on.
A better approach, Rudolph says: Make mergers and acquisitions a group effort from the start.
“The first time the owners tell the employees
what’s going on, [they should] all go to a restaurant and break bread and start working together,”
he says. “It’s important to be able to meet the
employees and show the love.”
Addressing Cultural Challenges
Rudolph’s second merger was with another
accounting solutions firm that based its work
on the Great Plains accounting solution (now
Microsoft Dynamics GP). His company had worked
with the competing Navision software (now
Microsoft Dynamics NAV). It was, as they say, like
mixing oil and water. The Navision crew saw the
Great Plains newcomers as a threat, a portent of a
7Tips for Making
M&As Easier
“Expect the unexpected” may be a cliché, but it’s also useful
advice when it comes to joining forces with another company.
Following are seven recommendations that may help you and
your employees better weather a merger or acquisition:
1
2
3
4
5
6
7
Let the pros do the numbers. You’ll find few complaints about the process
of due diligence and discovery among executives who rely on lawyers and
accountants experienced in mergers and acquisitions. Bring in experts
early in the process and provide them with access to all the data they need.
Expect a bumpy road. Microsoft partners have a wide range of experience
in how long a merger or acquisition takes. Realize that the process will
require being awayfrom your usual business duties; you’ll need to compensate for these extra demands on your time.
Ease the transition. Not everything shows up in the books. Consider
smoothing the transition by offering benefits such as extra vacation time to
employees and breaks on charges for shipping for customers.
Include your employees. Keeping your people in the dark leads to many
negative consequences. The most successful M&As bring employees
together before any papers are signed. Giving your workers ownership in
the process can help dispel manyfears—and keep key staffers from bolting.
Anticipate some emotional turmoil. Executives in any company have time
and emotional equity tied up in their organizations. Don’t discount the
impact of having to share that control with outsiders. Work toward a new
division of duties based on each executive’s strongest skills.
Anticipate the power of company culture. When you merge two groups,
both sides face changes. Don’t expect your staff to be thrilled about adjustments involving job duties, benefits, pay or schedules. Your best bet: Give
them plenty of advance notice about anticipated changes.
Expect attrition. No matter how well you try to manage change, some
employees won’t adjust. Executives who’ve been through the process suggest that you can expect up to 20 percent turnover in the year following the
deal. Stop the bleeding by offering key people incentives to stay, such as
bonuses, profit sharing or a bigger say in company strategy.
1106rcp_F2BP_42-46.v9
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time when they would be thrown aside for the new system. One of
Rudolph’s workers quit as a direct result of that fear.
“These were two separate teams that had been mortal enemies,”
Rudolph recalls. “It was two different, very opinionated cultures
that had competed against each other for years.”
In fact, the very reasons for joining companies—adding a different product line or bringing in another area of expertise—can cause
the deepest dissent among your employees. Sorensen sums it up this
way: “The easy part is doing the deal. The hard part is bringing the
cultures together.”
In Rudolph’s case, he was able to cool the budding in-house
war by bringing in two new deals for the Navision team, showing
those employees that they weren’t being devalued. Ultimately, the
company merged with another Navision-based company, further
easing the Navision group’s fears and allowing them to co-exist
with their Great Plains colleagues.
Paul Evans, vice president of technical services for Solbrekk Inc.,
a systems integrator and Gold Certified Partner based in Golden
Valley, Minn., took a crash course in corporate culture when he
merged his small, seven-person firm with three other Minnesota
companies in 2003. Although the four firms did similar work, each
focused on a different vertical market.
Evans says the merger’s success depended largely on making
sure that all employees understood that what had been four cultures
would now be a single new, improved hybrid. That goal was accomplished by bringing the different teams together for meetings, dinners and social events as the merger progressed.
“We really pushed the idea that ‘We are the new company’ and
spent a lot of time making sure the employees melded,” he says. As a
result, turnover was held to a minimum of six employees, close to a
standard rate in the musical-chairs world of IT.
Of course, sometimes cultural differences generate positive
results. Rudolph recalls his employees’ fears that they would have to
don the coat-and-tie uniform of bean counters when his original
company merged with the larger accounting firm. Instead, it was his
more casual IT crew that subverted the larger organization. The first
sign of the new culture: installation of a foosball table in the combined companies’ new offices. In addition, he recalls, “the accountants changed their dress code and started wearing Dockers.”
“That’s Not How We Did It Before …”
The notion that people are resistant to change might well seem like a
gross understatement to executives going through a merger or
acquisition. Even simple changes can generate an in-house uproar.
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RCPmag.com
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FEATURE
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| Mergers & Acquisitions
Sorensen, for instance, was beleaguered by employees angered
about a new policy requiring them to report to work at 8 a.m. rather
than 9 a.m. Others complained about a shift from weekly to biweekly
pay. In one case, a worker was steamed about the fact that his new
payday would come two days earlier. The reason for the employee’s
anger? He feared he would now spend the money before his automatic car payments were deducted from his bank account.
Merging two companies will, of course, create more serious
issues requiring serious attention. Among the biggest: the inevitable
turmoil that occurs when you’re standardizing health care plans
between two or more organizations.
Rudolph and his new partners took the step of raising salaries for
employees who must now pay more for their new health coverage. In
some cases, that’s involved an adjustment of $100 or more a month.
“We try to make it as fair as we can,” he says. “The goal is to make the
bottom line as good or better than it was before the merger.”
Who Gets to Drive?
Another M&A issue that can’t be anticipated by due diligence or
a look at the books is the emotional impact for company owners.
Many mergers and acquisitions, particularly in the IT world, occur
among entrepreneurs who have built their companies up from
scratch. The sale or merger of someone else’s company with
your own life’s work can bring you to a minefield of emotions
and bruised egos—and that’s something to keep in mind from initial negotiations to defining the management for the new
combined company.
Co-mingling those different personalities at the top can be tricky,
but it can also strengthen a new company by playing to individual
strengths. In Solbrekk’s case, Evans and his new partners found they
had complementary skills: He was the techie, another was skilled in
sales, a third was a management whiz, and the fourth’s strong suit
was finance.
However, that doesn’t mean everything went smoothly. There
have been spirited debates among the four on issues ranging from
the way employees are to be handled to new marketing ventures.
“We have four people with four opinions,” Evans says. “We beat
each other up to reach a consensus so when we implement we’re all
in agreement. But you have to put your ego down a bit. You have to
get over the fact you used to be the only one who had a say.” •
Fred Bayles (fbayles329@aol.com) writes frequently about business topics. He is a Boston University journalism professor and a
former national writer for The Associated Press and USA Today.
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1106rcp_SolSpot_47-51.v7
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SolutionSpotlight
MICROSOFT VISIO 2003
Picture This
Even your most artistically challenged customers can use
Visio to create complex technical diagrams. By Lafe Low
I
t’s probably a conservative estimate to say that a picture is
worth 1,000 words—especially if that picture is an intricate process diagram or a network system map. In the
worlds of business and IT, technical diagrams and flow
charts are essential for conveying complex concepts and
illustrating elaborate processes. Just the thought of having to create something like this, though, can intimidate
even the most technically minded person.
Your customers don’t need a degree from art school to outline their
systems and processes using a tool like Microsoft’s Visio. (The current
version is Visio 2003—Visio 2007 will be coming out early next year.)
Visio can create technical diagrams to concisely portray complex
processes and systems. It can also automate and update these diagrams by synchronizing directly with data sources like Office applications or SQL Server.
Customers construct diagrams by dragging predefined Microsoft
SmartShapes symbols into place. If they can’t find the right icon
or symbol, there’s a search function to locate shapes for specific
purposes within Visio’s predefined library or elsewhere on the
Web. Visio has tools to generate technical diagrams for specific
business disciplines, such as project managers, sales managers,
operations managers and engineers. If one of your customers
does have any trouble along the way, there is context-sensitive
help and there are task-specific templates updated regularly on
Microsoft’s Web site.
Visio has several features that facilitate sharing data and entire
diagrams with other applications and external users. Customers
can share diagrams through Microsoft Windows SharePoint
Services sites, publish and share diagrams by saving them as Web
pages, and import and export diagrams in Scalable Vector
Graphics format (a new XML standard for Web graphics). They
can also import data from Visio diagrams into Office applications
like Access, Excel, Word and SQL Server, and embed Visio’s drawing controls into other .NET-connected business applications.
Microsoft Visio 2003
Microsoft Corp.
Release Date: August 2003
Price: $499 Professional Edition
www.microsoft.com/visio
Using Visio’s drawing templates, your customers can generate
diagrams that demonstrate hierarchical concepts, systems and
processes; show subset and superset relationships; and outline
simple data flows, interactions and various data structures. Process
diagrams can include conceptual charts, decision trees, flow diagrams, procedural charts, and time and activity charts. They can
also track Six Sigma quality improvement initiatives and ISO 9000
documentation. Besides process diagrams for specific business
functions, there are also templates to get your customers started on
many other types of diagrams:
Brainstorming: To help guide and track sessions by showing topical relationships and providing a graphical outline.
Charts and Graphs: There are several templates to create bar
graphs, line graphs and pie charts with normal and exponential
curves and other special effects.
Marketing: Encompassing a variety of functions, these templates
include process modeling, benchmarking, simulation, path routing, time and cost analysis, activity-based costing, product portfolios, scope and marketing mix, product life and adoption cycles,
market and resource analysis, and pricing matrices.
Flowcharts: Include top-down diagrams, information-tracking
diagrams, process-planning diagrams and structure-prediction
diagrams. There are also audit diagrams for accounting processes,
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SolutionSpotlight
Spotlight Highlights
Key Features:
■ Preconfigured templates and shapes
■ SDK and ActiveX controls for custom development
■ Supports new Scalable Vector Graphics format
Competition:
■ Diagram Studio
■ SmartDraw
■ Graphviz
Opportunities:
■ Develop custom solutions for specific purposes
■ Integrate Visio controls into other Office applications
financial management, tracking fiscal data, money management
and decision processes.
Maps: Shapes for roadways, bus lines, landmarks, bridges, trees,
rivers, houses, buildings and road signs.
Organizational Charts: These represent hierarchical relationships
between people, departments and business functions. Visio
includes a wizard to generate organizational charts linked to personnel data, making it easy to keep them updated.
Project Schedules: Customers can use calendars, Gantt charts, and
program evaluation and review technique (PERT) charts to plan and
manage projects. Gantt charts are suitable for overall project management, task management, schedules, timetables, agendas, project
life cycles and goals. PERT charts are best for organizing lists of tasks
and establishing timeframes.
Timelines: Customers can illustrate the milestones and stages of a
project’s lifecycle in intervals of years, quarters, months, weeks, days,
hours, minutes and seconds in horizontal or vertical timelines.
Building Engineering: Visio can use building maps as a format to
report building-wide data, identify furniture and equipment arrangements, create and maintain seating charts, and create building
plans with the Space Planning wizard.
Electrical Engineering: Visio’s Electrical Engineering (EE) shapes
have been updated to simplify creating diagrams and to better support international EE symbol standards.
Mechanical Engineering: There are two template types for mechanical engineering—the Fluid Power diagram and the Part and
Assembly diagram. The Fluid Power diagram helps design and prototype hydraulic and pneumatic actuated systems. The Part and
Assembly diagram supports custom geometry for technical drawing.
Process Engineering: Templates for Piping and Instrumentation and
one for Process Flow diagrams. These types of diagrams are used by
manufacturing, control, mechanical and electrical engineers to document manufacturing processes, controls and instrumentation.
Network Design: Visio provides updated network templates and
shapes, including rack and cabinet shapes. Directory services templates can be used to design new directories, create alternative
designs for existing directories, or outline plans for updating or
migrating to a current network’s directory service.
Database: There are database diagrams that support IDEF1X
modeling, relational notations, object-relationship models, entitylevel and schema-level diagrams, and product data models with
EXPRESS-G notation. Compatible databases include Microsoft SQL
Server and Access, Oracle and IBM’s DB2.
Software: Visio supports a number of diagrams for software development, like Unified Modeling Language (UML). UML tracks concepts, automated processes, human interactions and associations.
Web: The Web diagramming templates help your customers choose
from a variety of display options for site map links. They can also substitute custom shapes and have a link auto-discovery capability.
Tools of the Trade
There are a variety of tools within Visio that will help your customers fine tune and customize their diagrams. Visio has new
annotation features that support pen input on the Tablet PC, which
facilitates natural markup and creating freehand sketches.
The Track Markup feature lets numerous people collaborate on the
same Visio diagram. Each reviewer’s contributions are made clear to
the other reviewers and the person who ultimately has to incorporate
all revisions back into the original file. When completed, customers
can import and export Visio diagrams in a variety of formats, such as
Scalable Vector Graphics and CAD files.
The Save as Web Page function lets your customers save their
Visio diagrams in any of several Web formats. Visio also has a
browser-based user interface to dig into the data that supports the
drawing. Visio creates Web pages with a modern, accessible interface, making it easy to share information internally and externally.
That’s not the only way they can collaborate and share diagrams.
Visio’s shared workspace supports Microsoft Windows SharePoint
Services, so customers can open Visio diagrams saved on a
SharePoint workspace directly from within the Visio shared workspace. Visio opens a Shared Workspace task pane with all necessary
workplace data, including other files, members, tasks and links.
Data-driven diagrams can automatically link to SQL Server or
Access, UML diagrams from Visual Studio .NET projects, Web
maps, timelines from Excel or Project, calendars from Outlook, and
organizational charts from Excel or Exchange Server. This is partic-
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ularly helpful for diagrams with frequently
changing data, like personnel lists or organizational charts.
Visio can also use XML data from Web services,
which can then be used to drive diagram data. Your
customers can extract that data as XML or other
formats, or export it to Excel, Microsoft Word, SQL
Server and other types of files to integrate with
business processes and systems.
If there’s a change in workflow
or network configuration, a Visio
document can reflect those
changes almost immediately.
Marketing and Sales
As always, there is plentiful assistance, training and templates to
support Visio on the Office online Web site. There are also other
components with which your customers can tie Visio directly into
their business applications, or customize it to suit their specific
needs. These also represent opportunities for you to develop customized solutions for your customers.
With the Visio software development kit (SDK), developers can
build programs using Visio as a platform. The SDK includes samples, tools and documentation to simplify custom application
development. It also has a set of reusable functions, classes and procedures that cover the most common development tasks. The Visio
SDK supports a range of languages, including Microsoft Visual
Basic (including Visual Basic .NET), Microsoft Visual C# .NET and
Microsoft Visual C++.
There are several sample applications bundled within the SDK that
show how you can use Visio to automate certain tasks and easily integrate with other Microsoft technologies. This version of the SDK also
has the new ShapeStudio tool with which either you or your customers can create your own high-quality shapes.
There’s a set of ActiveX drawing controls that let you tie Visio
directly into other applications to create customized solutions for
your customers. You can embed and program the Visio drawing
surface into custom applications or existing Office applications.
The drawing controls make it easy to include Visio’s functions in
any smart client or server-based application because you can integrate them within the host application’s interface.
Microsoft recently opened its Visio 2003 XML Reference Schema
and is providing a royalty-free documentation and license program. Microsoft is releasing the complete description of the Visio
Extensible Markup Language file format to help partners and customers alike access data within their Visio diagrams and integrate
with other XML-enabled applications.
Finally, the product guide, descriptions and frequently asked
questions for the forthcoming Visio 2007 are online. You can read
up on the new version to help your new and existing Visio customers prepare, and to help them decide if they’ll want to
upgrade right away, sometime down the road, or put that decision on hold.
If you’re still looking for ideas on how to customize and package
Visio for your customer base, there’s a short list of Microsoft Visio
Solution Providers that focus on process management, automation
and several vertical industries on the Microsoft Web site. Here you
can also look for a specific type of partner or register yourself to promote your own services.
Competitive Landscape
While other Microsoft Office programs like Word and PowerPoint
provide some basic diagramming and charting features, Visio is a
dedicated diagramming tool focused specifically on creating technical diagrams. It does have a couple of significant competitors in
the marketplace that compete on a functional level.
Probably Visio’s closest competitor is Diagram Studio, from
Gadwin Systems. Diagram Studio can create a wide variety of flow
charts, organizational charts, data flow drawings and diagrams.
Like Visio, there are templates for business diagrams, presentations
and illustrations; organization and workflow charts; software and
process flowcharts; database structures; engineering schematics
and technical drawings; Web site designs and network diagrams;
research layouts and maps; plus floor plans and street maps.
Also like Visio, artistic ability is not a prerequisite to using
Diagram Studio, as it’s vastly object-driven. Users can assemble
simple graphic components to create basic diagram objects.
Simply grab an object and place it in a diagram file. For complex
diagram types, there are graphic libraries that come with
the package. The libraries are designed for specific tasks and diagram categories. Diagram Studio users can then customize their
charts by applying line colors, fill patterns, shadow colors and
text labels. Users can also import graphics and clip art to use in
their diagrams.
SmartDraw is another close competitor to Visio. The
SmartDraw Suite Edition can create flowcharts, organizational
charts, Gantt charts, mechanical and software diagrams, floor
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SolutionSpotlight
plans and calendars. It comes with more than 63,000 ready-made
graphic elements, 1,300 templates, wizards to help guide users
through the process, and automatic chart builders. It can also
import photos and images to use within charts and diagrams. As
with Visio and Diagram Studio, users can copy and paste data
and complete diagrams into Office applications like Word,
PowerPoint and Excel.
Graphviz is an open source graph visualization package. It
includes several primary graph layout programs; web and interactive graphical interfaces; and auxiliary tools, libraries and language bindings. The Graphviz layout programs take simple text
descriptions of graphs and generate diagrams in several useful
formats, such as images and SVG for Web pages, Postscript for
inclusion in PDF or other documents or display in an interactive
graph browser. (Graphviz also supports GXL, an XML dialect.)
Graphviz has many helpful features for creating diagram files,
such as options for colors, fonts, tabular node layouts, line styles,
hyperlinks and custom shapes. Graphviz users can also manually
create and edit Graphviz files, either as raw text files or within a
graphical editor. The creators of Graphviz acknowledge that it is
not intended to be a replacement for Visio. It is more of an alternate
tool for graphs and charts.
You could also consider Microsoft’s own PowerPoint as a potential competitor to Visio, but only at the most basic level. Any of your
customers who truly need advanced graphing and diagram capabilities will quickly outstrip those functions within PowerPoint.
When putting Visio up against something like Diagram Studio, your
sales pitch can focus on the tight integration with the rest of the
Microsoft Office Suite and the customizable aspects of Visio.
The Final Word
Visio is more than a simple utility for creating organizational
charts or network maps. It can generate a broad variety of
business diagrams. The extent to which you can customize Visio
using the dozens of pre-fab templates, the Visio SDK and the ActiveX
controls presents a unique opportunity for partners. You could, quite
literally, develop applications to suit just about any client. •
Lafe Low (llow@rcpmag.com) is the Solution Spotlight editor for
Redmond Channel Partner.
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RCPmag.com
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marketing microsoft
Quotes that Define
Marketing
ike good taste, marketing is difficult to define. You know it when
you see it, but it’s tough to explain. There seems to be a practical
consensus in Microsoft partner circles that marketing means
“promotion.” Yet reference sources from the veritable Merriam-
Webster to the online Dictionary.com to the collective wisdom of
Wikipedia don’t seem to be able to agree on a definition of that
term, either.
So I’ll try to define it in another way: by quoting some of the
masters of the art and science of marketing, which generally used
to be referred to as advertising. (My thanks to the University of
Texas at Austin’s Department of Advertising for its extensive
library of quotations from the industry’s major players, spanning
more than a century.)
“[Marketing] is what you do when you can’t [afford to] go see
somebody [in person].” Fairfax Cone, principal of Foote, Cone &
Belding, 1963.
“[Marketing] is the foot on the accelerator, the hand on the
throttle, the spur on the flank that keeps our economy surging forward.” Robert W. Sarnoff, quoted in The International Dictionary
of Thoughts, by John P. Bradley, Leo F. Daniels and Thomas C.
Jones, 1969.
“I do not regard [marketing] as entertainment or an art form,
but as a medium of information.” David Ogilvy in “Ogilvy on
Advertising,” 1985.
“The more facts you tell, the more you sell. An advertisement’s
chance for success invariably increases as the number of pertinent
merchandise facts included in the advertisement increases.” Dr.
Charles Edwards, quoted in “Good Advice,” by Leonard Safire and
William Safire, 1982.
“The mystery of writing advertisements consists mainly in saying in a few plain words exactly what it is desired to say, precisely as
it would be written in a letter or told to an acquaintance.” George P.
Rowell, quoted in Advertiser’s Gazette, 1870.
“There is no way for the American economic system to func-
tion without [marketing]. There is no other way to communicate
enough information about enough products to enough people
with enough speed.” John O’Toole in “The Trouble with
Advertising,” 1981.
“We find that [marketing] works the way the grass grows. You
can never see it, but every week you have to mow the lawn.” Andy
Tarshis of the A.C. Nielsen Co., quoted in “Whatever Happened to
Madison Avenue: Advertising in the ’90s,” by Martin Mayer, 1991.
“Many a small thing has been made large by the right kind of
advertising.” Mark Twain, quoted in “The Crown Treasury of
Relevant Quotations,” by Edward F. Murphy, 1978.
“[Marketing] is Cyrano [de Bergerac]. He comes under your
window and sings; people get used to it and ignore it. But if Roxane
responds, there’s a relationship. We move the brand relationship up
a notch. [Marketing] becomes a dialogue that becomes an invitation to a relationship.” Lester Wunderman of Young & Rubicam,
quoted in “Whatever Happened to Madison Avenue,” 1991.
“You see, advertising is a substitute for a salesperson, so it
should be likeable. Who would buy from a salesperson who is rude,
arrogant or insulting? People like to do business with people they
like; therefore they respond to advertising created by people who
like people.” Jerry Goodis, quoted in The Dictionary of Canadian
Quotations, by John Robert Colombo, 1991.
But nothing defines the heart of marketing more than this quote
from Fairfax Cone in “The Trouble With Advertising”: “There is no
such thing as a Mass Mind. The Mass Audience is made up of individuals, and good [marketing] is written always from one person to
another. When it is aimed at millions, it rarely moves anyone.” •
Mac McIntosh (mcintosh@sales-lead-experts.com) helps Microsoft
partners use marketing to drive more leads and sales. For more
information about Mac’s marketing consulting and training services,
visit www.sales-lead-experts.com.
L
BY M.H. “MAC”
MCINTOSH
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IAMCP is the premier global networking forum for
Microsoft Gold and Certified Partners.
Through its 55 Chapters worldwide it fosters
Partner to Partner activity at the local, national,
and global levels.
Whether it’s a casual get together over drinks or a formal joint effort to
expand business offerings and increase customer satisfaction, you’ll find
activity nearly every day of the year in one of our local Chapters
We believe that business happens when people
meet in real life!
To join a chapter in your area please visit
www.iamcp.org
1106rcp_SellingMS_54.v5
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selling microsoft
Your Most Important
Sales Investment:Yourself
BY KEN THORESON
tance of annually reviewing your various investment
plans. That advice brought to mind the partner-company
salespeople I’ve met over the past decade. Right about
now, many are conducting their year-end reviews, looking at their
year-to-date earnings and thinking, “Am I where I want to be?” But
in doing those self-evaluations, salespeople often forget to consider one important factor: how well they’ve invested in their own
professional growth.
In sales, as in most other fields, what distinguishes the professionals from the amateurs is a high-level combination of education,
expertise and dedication. So in undertaking their annual selfassessments, serious salespeople should evaluate not only their
numbers, but what they’ve done to enhance their commitment to
their profession by improving their knowledge and skills.
The best in the business consciously strive to increase their
value by investing in themselves, often following steps like these:
■ Read several good, general-business books per year. Many
executives read business best-sellers. Doing the same provides you
with fresh business insights—and the opportunity to discuss them
with your prospects and customers. Such increased business acumen
can strengthen relationships by generating new levels of respect.
■ Read sales-training books. When I interview prospective sales
candidates for our clients, I always ask about the last sales-training
book they read and how long ago they read it. The answer is a sure
sign of the candidate’s commitment to the sales profession. Look for
guides focusing on strategy, complex sales, solutions and negotiation tactics. Tip: If you’re on the road a lot, consider listening to
audio books instead.
Subscribe to relevant business and technology magazines and
newsletters. This constantly updated reading program will keep you
■
current on important topics that are relevant in the business and technology sectors—as long as you actually read them. I read such publi54 REDMOND CHANNEL PARTNER NOVEMBER 2006 RCPmag.com
cations while relaxing and have even carried them along to the beach
in the summer; I consider this professional-development time.
■ Practice for perfection. Professionals in every field get ready for
important events. Musicians rehearse. Baseball players go through
spring training. Salespeople should prepare as well. Before every
sales call, plan your opening comments and responses to potential
objections. If you’re making sales calls with your colleagues, be sure
everyone understands who’s leading the discussion, when other participants will present and who’s playing on the prospect’s team.
■ Analyze your own performance. This is the most important
step—and the easiest. Train yourself to review every sales call you
make, whether it’s a phone call, a face-to-face meeting, a presentation or a demonstration. Ask yourself, “If I could do it over, what
would I do differently?” Professional football players analyze postgame films; professional salespeople should adapt that approach to
assess how well they’re performing.
■ Draw on Microsoft resources. Visit www.msreadiness.com for
a variety of free sales resources. You’ll find Microsoft Solution
Selling content, as well as 23 new sales-training courses created by
Acumen. There will be four additional sales-management courses
rolled out this fall.
I challenge you to evaluate your professional growth this year
and develop a game plan for investing in yourself next year. Your
efforts are likely to pay off—literally—in higher earnings. Meanwhile,
if you’d like suggestions about useful books, magazines and
newsletters, e-mail me at the address below and I’ll send you our list
of recommended resources. •
Ken Thoreson (ken@acumenmgmt.com) is managing partner of the
Acumen Management Group Ltd., a North American consulting
organization focused on improving sales management in growing
companies. Visit www.acumenmgmt.com for information and to view
free Microsoft-related sales videos.
R
ecently, I read a newspaper article emphasizing the impor-
1106rcp_AdIndex_55.v2
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AdvertisingSales
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AD INDEX
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Advertiser
Autotask Corp.
BackupAssist
Barracuda Networks
Breece Hill
CCH Tax & Accounting
Citrix Systems, Inc.
Diskeeper Corp.
Grisoft
GFI Software
IBM Corp.
Intel Corp.
Int’l Association of
Microsoft Certified Partners
Microsoft Corp.
NetOp Tech
Oracle Corp.
Raritan Inc.
Redmond Channel Partner
Sunbelt Software
SYSPRO
Trend Micro Inc.
TS Factory
Vonexus
Page
41
6
49
19
5
C3
11
25
45
31
C2, 1
URL
www.autotask.com
www.BackupAssist.com
www.barracudanetworks.com
www.breecehill.com
www.cch.com
www.citrix.com
www.diskeeper.com
www.grisoft.com
www.gfi.com
www.ibm.com
www.intel.com
53
23
37
9
2
39
17
15
C4
46
51
www.iamcp.com
www.microsoft.com
www.netop.com
www.oracle.com
www.raritan.com
RCPmag.com
www.sunbelt-software.com
www.syspro.com
www.trendmicro.com
www.tsfactory.com
www.vonexus.com
Page
34
28
12, 26
26
22
43
48
48
42
13
36
26
7
32
22
30
13
18
32
22
14
22
43
48
8
45
26
43
36
26
32
URL
www.afinety.com
www.ariba.com
www.cisco.com
www.citrix.com
www.cco.com
www.mergerstat.com
www.gadwin.com
www.graphviz.org
www.heartlandtechnologies.com
www.iteration2.com
http://junctionsolutions.com
www.mcafee.com
www.meritsolutions.net
www.navisite.com
www.networkengines.com
www.opsource.net
www.oracle.com
www.peakpresence.com
www.qdabra.com
www.qtsnet.com
www.sap.com
www.securewave.com
www.sikich.com
www.smartdraw.com
www.smbnation.com
www.solbrekk.com
www.symantec.com
www.tellusinternational.com
www.tmgroupinc.com
www.trendmicro.com
www.visualmining.com
EDITORIAL INDEX
Company
Afinety Inc.
Ariba Inc.
Cisco Systems Inc.
Citrix Systems Inc.
Convergent Computing
FactSet Mergerstat LLC
Gadwin Systems Inc.
Graphviz
Heartland Technology Solutions
Iteration2
Junction Solutions LLC
McAfee Inc.
MERIT Solutions
NaviSite Inc.
Network Engines Inc.
OpSource Inc.
Oracle Corp.
Peak Presence Inc.
Autonomy Systems LLC
Quality Technology Solutions Inc.
SAP AG
SecureWave SA
Sikich LLP
SmartDraw.com
SMB Nation Inc.
Solbrekk Inc.
Symantec Corp.
Tellus International Inc.
TM Group Inc.
Trend Micro Inc.
Visual Mining Inc.
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1106rcp_Directions_56.v6
10/10/06
3:27 PM
Page 56
directions
Profiting from
Microsoft’s Profitability
icrosoft knows something about profits, having maintained one of the most impressive balance sheets in the
history of business. After returning $30 billion to shareholders at one go a couple years ago, its cash reserves
are back up to $34 billion.
So what do Microsoft executives mean when they say one of
their goals for the coming year is to make partners more profitable?
Sharing the cash? Giving partners better margins on sales of
Microsoft products?
Actually, how Microsoft will make partners more profitable
hasn’t been explained in detail. So far the argument is that, according
to research (conducted for Microsoft by IDC), Microsoft partners are
more profitable than their counterparts who sell competing technologies. However, that raises the question: If Microsoft partners are
already so profitable, why obsess about their profitability?
One reason is that the company wants partners to give it credit
for their profitability. Another is that partners have choices, and
Microsoft wants partners to know that other choices are not,
according to research, as profitable as the Microsoft choice.
Finally, if you’ve worked with Microsoft for any length of time,
you know that it is obsessed with metrics. One of the things that
makes Microsoft so hungry, in spite of its enormous profitability, is its
passion for measuring performance. All employees, even people who
don’t have a sales role, have numbers to meet, and they’ll be on the
table come the employee’s performance review.
But you as a partner should spend less time worrying about
motives and more about how you can profit from Microsoft’s profitability campaign. For many partners, one of the first lessons will
be to understand how important it is to measure from where profits
come. A lot of companies worry about profitability only at the end
of the fiscal year. Unfortunately, if they get bad news from their
accountants then, it’s generally too late to do anything about it.
The IDC/Microsoft research can help you do something about
that. It identifies 14 performance indicators (such as cash flow from
operations, how quickly the business can deliver on sales, how well
it utilizes its service capacity and the average time it takes to close a
sale) that are important for players in the software industry.
If you have a way to break down your company’s overall performance into specific components like this, you’re in a much better
position to focus on the most profitable aspects of your business and
to improve or abandon activities that aren’t profitable.
For example, in the course of running your business, do you
record the date of your first contact for every sales lead and the date
that the customer signs the deal? If you don’t, you can’t track your
sales cycle, and therefore you can’t tell if you’re getting better or
worse at it. But if you can cut the average time it takes to close a
$10,000 deal from three weeks to two, you can make 50 percent
more deals over the course of a year. Other data, such as the source
of the lead, can help you identify your most effective sales channels
and actually quantify their value.
Microsoft backs up the metrics with tools that make it real
for partners. The online Partner Profitability Assessment, for
example, lets you plug in data for your business and see how your
numbers compare.
I’d recommend that every partner take the assessment (available on the partner Web site), not so much because you need to
know where you stand in comparison with other partners, but
because it will help you understand what kind of data you need to
track in order to measure your profitability.
What’s in this for Microsoft? Keep in mind another of the company’s strengths: its ability to take the long view (all that cash
helps). Most people stick with a good thing, and if Microsoft is the
company that taught you how to become more profitable, that’s
certainly a good thing. •
Paul DeGroot (pdegroot@directionsonmicrosoft.com) is an analyst
with Directions on Microsoft, a Kirkland, Wash.-based independent
research firm focused exclusively on Microsoft strategies and technology.
M
B Y PA U L D E G R O O T
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