Microsoft's Cloud Channel Begins to Mature

 
 
By Michael Vizard  |  Posted 2017-06-06 Email
 
 
 
 
 
 
 
 
 
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    Microsoft's Cloud Channel Begins to Mature
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    Microsoft's Cloud Channel Begins to Mature

    A study finds that Microsoft partners are generating revenue across multiple services, especially in cloud infrastructure management and cloud app deployments.
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    Top Cloud Practices Offered by Microsoft Partners
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    Top Cloud Practices Offered by Microsoft Partners

    Cloud infrastructure and management: 78%, Cloud application development: 53%, Mobility and security: 46%, Data platform and analytics: 43%
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    Age of Microsoft Cloud Practices
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    Age of Microsoft Cloud Practices

    Just over half of these practices are less than two years old. Nearly all offer Azure, and about 75% offer Office 365. Fewer than half offer Enterprise Mobility + Security or CRM Online.
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    Percent of Revenue Driven by the Cloud
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    Percent of Revenue Driven by the Cloud

    An average of 20% of overall revenue is driven by cloud-based products and services. Value-added services—including Project Services, Managed Services & Packaged Software—represent 74% of partner revenue in the SMB space and 82% in the enterprise.
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    Cloud Profitability
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    Cloud Profitability

    Two-thirds of the partners surveyed said less than one year was required for their company to reach profitability on new practices. About a third cited one to two years or longer.
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    U.S. Partners' Top Barriers to Cloud Adoption
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    U.S. Partners' Top Barriers to Cloud Adoption

    Keeping employees up to speed on latest tech: 32%, Generating leads: 31%, Overcoming customer objections: 27%
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    Cost of Cloud Talent
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    Cost of Cloud Talent

    In the U.S., hiring a cloud architect costs an average of $125,000; sales and marketing professionals and developers are paid about $100,000 each.
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    Sources of Leads
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    Sources of Leads

    Partners surveyed reported that the majority of their leads are generated by their own efforts. Microsoft is credited with providing fewer than 10% of their leads.
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    Top Microsoft Services
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    Top Microsoft Services

    Virtual machines and networking, followed by SQL Server and Microsoft Intune mobile device management, are cited as the top services layered on top of Microsoft Azure.
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    Top Services Partners Add to Microsoft Azure
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    Top Services Partners Add to Microsoft Azure

    Backup and storage management, followed by virtual machine management, are the top two services partners add on top of Azure.
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    Revenue Per Cloud Infrastructure Engagement
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    Revenue Per Cloud Infrastructure Engagement

    The median project-based revenue generated per cloud infrastructure engagement is $150,000. The median revenues for managed services and other forms of intellectual property services are $100,000 and $50,000, respectively.
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    Revenue Per Cloud Application Engagement
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    Revenue Per Cloud Application Engagement

    The median revenue partners generate per cloud application engagement is $200,000. The median revenue for managed services and other forms of intellectual property services is $100,000 each.
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    Revenue Per Data Platform and Analytics Engagement
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    Revenue Per Data Platform and Analytics Engagement

    The median revenue generated per data platform and analytics engagement is $55,000. The median revenues for managed services and other forms of intellectual property services are $30,000 and $14,500, respectively.
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    Revenue Per Mobile and Security Engagement
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    Revenue Per Mobile and Security Engagement

    The median revenue generated per mobile and security project engagement is $50,000. The median revenues for managed services and other forms of intellectual property services are $50,000 and $20,000, respectively.
 

Given Microsoft's latest financial disclosures, it's clear that the cloud represents the fastest growing segment of the company's business. But a new report also suggests that revenue is also trickling down to Microsoft partners. A global survey of 1,136 partners published by Microsoft in collaboration with MDC Research suggests that the company's channel partners are generating revenue across multiple services, especially in the areas of cloud infrastructure management and cloud application deployments. The survey also makes it clear that partners are not getting that much help from Microsoft in terms of generating leads to drive those services, which suggests that partners that have migrated to the cloud have developed their own sales and marketing programs. In addition, most Microsoft partners report they are attaining levels of profitability delivering cloud services in under a year. Put it altogether and it becomes clear that Microsoft is finally making extensive use of its channel to close the gap with Amazon Web Services (AWS).

 
 
 
 
 
 
Mike Vizard has been covering IT issues in the enterprise for 25 years as an editor and columnist for publications such as InfoWorld, eWeek, Baseline, CRN, ComputerWorld and Digital Review.
 
 
 
 
 
 

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