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Microsoft Cloud-Focused Partners Beat Peers in Revenue and Growth: Study

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Microsoft cloud-oriented partners outperform their peers in revenue, gross profit, customer acquisition, and growth, a new study commissioned by Microsoft and conducted by IDC finds.

According to the study (PDF), cloud-oriented partners are Microsoft partners who make more than 50 percent of their revenue from cloud-related services. These cloud-focused partners reported 1.6x more gross profit than their non-cloud-oriented peers, and 2.4x faster growth.

Microsoft commissioned the study to understand what their most successful partners do. The answer, as IDC gathered through in-depth interviews with partners last year, is they lead with cloud, adopted cloud earlier, and take a hybrid cloud approach.

The release of the study comes ahead of Microsoft’s Worldwide Partner Conference in July, and shortly after the company launched a new program, Cloud SureStep, designed to help partners bring small and mid-sized businesses into the cloud. Microsoft’s cloud revenue has been strong, particularly thanks to Azure and Office 365, helping the company beat Wall Street expectations in Q3.

With public IT cloud services spending to reach $98 billion in 2016, five times the growth of the IT industry overall, it may seem that public cloud services are the key to partner growth. But the cloud opportunity is not limited to public cloud. Private cloud, IT for the cloud and IT services for the cloud are all areas that successful partners should be focusing on as they grow their businesses, the report suggests.

IDC said that while IT budgets will grow in public cloud and hosted private cloud over the next two years, enterprise private cloud will grow the most, from 16.4 percent of IT budgets today to 20.8 percent in 2016. The opportunity with enterprise private clouds include new capabilities like automated provisioning and hybrid management.

Traditional and on-premise IT budgets will shrink from 39.4 percent in 2014 to 33.3 percent in 2016. Despite shrinking budgets in this area, 74 percent of respondents expect their cloud service provider to be able to move a cloud offering back to on-premise if needed. The expectation from customers is that their cloud provider will have just as much knowledge about cloud implementations as they do on-premise. Therefore, partners should be leading with cloud, but maintain expertise in on-premise solutions.

Sixty-three percent of respondents expect to have a single major cloud services provider, and 67 percent expect to purchase a variety of cloud services from a single vendor. The majority of respondents, 84 percent, want an established relationship with a vendor to trust them as a cloud service provider.

With most respondents wanting a relationship with one or a few cloud service providers, IDC said that if small or very small provider businesses want success, they will need to build and sell on PaaS platforms and as part of key vendor and industry marketplaces.

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