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TORONTO—When it comes to competing in the age of the cloud, Microsoft has two strategic assets that no other entity can replicate easily. The first is the breath of its personal productivity applications, and the second is the reach of its channel partners.

In a keynote address on July 11 at the Microsoft Worldwide Partners Conference here, CEO Satya Nadella urged partners to drive digital business transformation across their customer bases as rapidly as possible using a spectrum of Microsoft cloud services.

The goal is to combine collaboration and communication services with business applications and social media services using microservices that enable organizations to transform how data is employed within the context of a larger workflow or business process, Nadella said.

In that context, Nadella positioned both Office 365 and Dynamics 365 as a core set of application services that when used in collaboration with other Microsoft services will transform the way work is accomplished. Instead of thinking in terms of monolithic suites of applications, Nadella told partners they need to better understand the role any individual plays within a larger organization.

Once that role is “graphed,” it then becomes possible to make use of “bots,” such as Cortana, to invoke a wide variety of intelligent cloud services. In fact, Nadella suggested that it’s only a matter of time before these “conversational interfaces” replace traditional user interfaces. The opportunity for partners, Nadella added, comes from being able to “customize the last mile” of those services.

Of course, not every Microsoft partner is close enough to the end customer to help customize a particular workflow or process. In effect, Nadella is telling partners they need to become more embedded within their customer’s operations if they want to add value. The good news is that the industry as whole is now in a “golden era” of application development that is making it easier for partners to add value, he said.

Nadella also noted that, via partnerships with GE, it’s now possible to deploy platforms within platforms to target in this case, for example, industrial Internet applications that are expected to create trillions of dollars of economic value. At the same time, technologies such as HoloLens are making it possible to create a whole range of applications that overlay digital artifacts on top of reality to create a new “mixed-reality” construct, he explained. Applications that take advantage of those capabilities are prime candidates to be included in a new App Store for business applications that Microsoft has created.

Microsoft is telling partners that those who focus on the Microsoft cloud are seeing 20 percent higher margins than they would see selling another cloud platform. Of course, whether those partners are making more money than when they sell an on-premise solution remains to be seen.

For now, at least, the cloud still only represents a little more than 10 percent of Microsoft’s revenues. It’s also no secret that Microsoft is impatient to accelerate the transition to the cloud.

However, Microsoft must accelerate a transition to the cloud at a rate that not all partners are equally comfortable with.

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