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It’s the “other IP.” Not internetworking protocol, rather intellectual property (IP). While it’s always been important to have a deep knowledge of the first, it’s now becoming more and more important to focus on the other.

female employee writing on whiteboard with male employee conference room

The journey from infrastructure to intellectual property: An evolution of “solution”

Ten years ago, in 2011, two now-former Microsoft visionaries shared observations with me that painted a clear picture of the future that would indeed eventually emerge.

Phil Sorgen, then global channel chief and corporate VP of the Microsoft Partner Program told me, “Microsoft only has one job: to provide the platform that partners can be successful running their solutions on.” Sorgen is today the chief revenue officer at RingCentral.

My issue with what he said was that it pre-supposed that channel partners had their own solutions.

I posed that question to Bill Patterson, who was at that time the product manager for Microsoft Dynamics CRM and is today executive VP and general manager of CRM Applications at Salesforce. At that time, Patterson had just done something historic, introducing Dynamics CRM 2011 online as software as a service (SaaS) from the cloud before releasing it as packaged software. That was one of the first for any software product.

Patterson suggested that when a solution provider describes their “solution,” it comes out sounding a lot like infrastructure, nothing more. He then suggested that we will experience an “evolution of solution” with channel partners having to step up to deliver far more business-relevant, outcome-oriented solutions.

Then cloud killed the infrastructure business

As everyone gradually migrated their workloads from on-premises servers and storage to the cloud, the need for channel partners to service their on-premises infrastructure disappeared along with the equipment. Other than network communications infrastructure, the server and storage infrastructure business went away. 

So now what?

There’s a reason ISVs are the favored class today

Infrastructure partners have been replaced, by and large, by independent software vendors (ISV) as the favored class among the cloud platform providers, including Microsoft, Google and Amazon. Why? In a consumption-based-billing world, it isn’t enough to gain many new subscribers. The cloud revenue doesn’t start flowing until those subscribers start consuming services. The more consumption, the happier the cloud providers. 

ISVs, which develop the business-relevant, outcome-oriented solutions Patterson spoke of, drive consumption with their application software, the product of their own intellectual property. 

Solution providers that wish to remain viable in this new evolution of solution must make the journey from infrastructure support to intellectual property developer. 

A pioneer provides a model to follow

CFO Eric Johnson points out that Nintex has already taken this journey from being a systems integrator (SI) to being a provider of its own developed products. “That’s what happened to our business in the mid-2000s,” he says. “We were a classic SI, very focused in the market doing SharePoint consulting. In order to make the process more efficient for ourselves, we had built an initial workflow tool, which was part of our platform.”  

Johnson explains that many partners will custom build things specifically for a given customer, but what Nintex built were things that many partners would want to use to build into their own practice.

Describing how the market told him they had their own salable products, Johnson continues, “We had customers and ultimately partners who said ‘Jeez, we’d like to use that! We want to pay for it.’ That was market validation that we had gone beyond just a little extension of the Microsoft SharePoint platform into something that had real meaning and value. 

“Part of the reason we’re unique is because we have a great appreciation and respect for what it is to be an SI or a VAR. That’s where we started and then when we built our IP, it was very valuable to other partners. We had that heritage as an SI, and we were very focused on the partner-to-partner relationship.”

Build around your domain of expertise

Johnson’s first advice to channel partners trying to figure out where to focus the IP they create is, “Build solutions around where you already have domain expertise. What is in your partner DNA? Align the apps you create to that. Focus on your domain. Nail your domain!”

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Webopedia: Intellectual property definition and meaning