What Partners Say About Microsoft in the Cloud

cloud partners

What Partners Say About Microsoft in the Cloud

Microsoft’s partners are becoming more sophisticated at providing services that complement, and frequently compete with, the company’s cloud services.

Putting Microsoft Cloud in Perspective

The cloud represents only a little more than 10% of Microsoft’s revenue. While Microsoft claims there are 70 million active users of Microsoft Office 365, that still only represents 6% of the 1.2 billion Microsoft Office installed base.

Consumer vs. Commercial

In the third quarter of Microsoft’s fiscal year, the consumer segment of Microsoft cloud business saw 79% year-over-year growth, vs. 57% growth in the commercial sector. Microsoft Premium Protection services grew 35%.

Rate of Migration

95% of partners expect their customers to move some portion of their email and Office apps into the cloud. Additionally, 92% said they expect customers to make use of online meetings. Adoption of file sharing (93%) and Microsoft Skype for Business (91%) is also high. But only 51% say they expect customers to increase the use of Microsoft Office by more than 30% or more in the next 12 months.

Usage of Collaboration in the Cloud

82% of partners report that customers are already using Microsoft SharePoint as part of a hybrid cloud deployment. More than 60% of existing Microsoft SharePoint licenses are still running on-premise. Additionally, 40% of partners say their customers make no use of Office Groups, SharePoint News Groups or Microsoft Yammer.

Drivers of Microsoft Cloud Services Deployments

A full 70% of partners cited new revenue streams, followed by 60% specifically citing services running on top of Microsoft Office 365.

Cloud Migration Revenues for Microsoft Partners

The survey also finds that just over one-quarter of the respondents indicate that cloud migrations would account for more than half their business in 2017. A third of partners say their customers view setting up Microsoft Office 365 as being time- and labor-intensive.

The Cloud Management Opportunity

Just over half (55%) plan to add cloud management services to their portfolio in 2016. Partners expect these services to account for 15% of their revenue in 2017.

Hybrid Cloud Drivers

While 52% see Microsoft Office 365 driving the need for hybrid cloud services, 49% plan to add these services to their portfolios in 2016.

Making the Most of Mobile

Two-fifths (41%) see mobile computing as an opportunity, and 39% say they will add mobile services to their portfolios in 2016. Two-thirds of partners said 20% of their customer bases use mobile-device management.

The Governance Opportunity

56% say they plan to add compliance services, while 53% say they will focus on information records and governance. Nearly two-thirds (63%) noted that their customers have issues with the classification, storage and retrieval of emails.

Challenges to Cloud Adoption

A full 69% of partners cite security as the primary challenge to Microsoft Office 365 adoption, followed by cost, at 56%.

Primary Cloud Benefits for Customers

Partners say better access to the latest version of Microsoft apps (69%) and faster refreshes of applications (30%) are cited as the top two benefits by customers.

Top Partner Cloud Challenge

More than four in 10 (41%) of partners cited upgrading their skills as their major cloud challenge.

Partners as Consultants

A full 72% of partners say consulting offers them the greatest cloud revenue opportunity. Specifically, 24% cite improving the end-user experience as a major opportunity, and 31% are adding this type of service to their portfolio in 2016. A full 73% are relying on self-training to acquire these skills. Another 32% are trying to hire IT pros that are already trained.

Going Vertical

Just under a quarter (24%) see vertical solutions as a major opportunity, and 26% will be adding these types of solutions to their portfolio in 2016.

Microsoft as a Competitor

26% view Microsoft’s professional services organization as a competitor. Two-thirds of partners also note they will offer cloud services that compete with Microsoft in some areas, most notably file sync and storage (52%), content management and collaboration (48%), CRM (45%), customer service (45%), and backup, recovery and archiving (38%).