Microsoft has dropped planned policy changes that would have compelled Microsoft channel partners to pay for software they have been using under internal use rights licenses.
Amid considerable partner dissent, Microsoft on July 12 rolled back its plan to cut IUR licenses, a move that would have put partners on the hook for thousands of dollars in fees. The change in direction comes a few days after the new IUR policy surfaced and just before the upcoming Microsoft Inspire partner conference, which runs July 14 to 18 in Las Vegas. Microsoft revealed a number of investments in Microsoft channel partners ahead of the event.
Gavriella Schuster, corporate vice president, one commercial partner, Microsoft, discussed the company’s decision to rescind the planned policy changes in a blog post:
“Given your feedback, we have made the decision to roll back all planned changes related to internal use rights and competency timelines that were announced earlier this month. This means you will experience no material changes this coming fiscal year, and you will not be subject to reduced IUR licenses or increased costs related to those licenses next July as previously announced.”
The IUR change was to go into effect July 1, 2020.
In panning the software vendor’s proposed changes, Microsoft channel partners cited a combination of new licensing costs and a diminished ability to gain experience with products. Channel companies use vendor technology in-house to run their businesses and then deploy products for customers in a use-what-you-sell strategy.
In 1962, Ross Perot was an IBM mainframe salesman with a vision for providing technical expertise and services around the big machines.
He left IBM that year to launch Electronic Data Systems (EDS) in Dallas with an initial investment of $1,000. In the ensuing years, EDS helped pioneer what would become the IT services industry. EDS sold compute time on underutilized mainframes, built and managed computing centers for customers and created a network of data centers to run clients’ workloads remotely. Those services would eventually morph into IT outsourcing and, decades later, cloud computing.
Perot, who died July 9 at the age of 89, was ahead of his time at EDS and seemed to have a keen sense of repeating historical patterns. General Motors purchased EDS in 1984 and Perot transitioned from entrepreneur to GM board member. The shift proved unsuitable: Perot in short order became fed up with what he viewed as the car maker’s stifling bureaucracy and eventually departed GM-EDS through a $700 million buyout. In 1988, Perot was back in entrepreneurial mode, founding Perot Systems Corp. Perot’s investment company that launched the new venture was aptly called HWGA Partners, with the acronym standing for Here We Go Again.
EDS took Perot to court, claiming he had violated the terms of a non-compete agreement. Perot, however, asserted he was free to compete, provided he did so on a not-for-profit basis. The lawsuit played out in the Fairfax County (Va.) Circuit Court, where Perot amusingly told reporters no one could beat his prices, alluding to his non-profit status.
The judge sided with Perot on the question of competition, ruling that Perot was free to seek contracts provided those deals didn’t contemplate a profitable return. That restriction expired in late 1989 and Perot Systems was free to make money.
With the lawsuit out of the way, Perot Systems went on to capture projects with high-visibility clients and, in another example of circularity, advised Perot’s former employer, IBM, on the outsourcing business.
EDS and Perot Systems are gone now, with EDS finding its way via acquisition into DXC Technology and Perot Systems absorbed within NTT Data. But the industry Perot helped create continues to grow — Gartner forecasts global IT services spend of $1.065 trillion in 2020 — and evolve.
What do you get when you cross the CRISP DM model with Microsoft’s TDSP? Well, yes, another acronym. But Cognilytica, a market research firm in Washington, D.C., believes the pairing provides a methodology for AI project management.
CRISP DM stands for Cross-Industry Standard Process for Data Mining, a step-by-step approach for launching a data mining project. CRISP DM was created in the late 1990s, before the current surge in AI investment. TDSP, or Team Data Science Process, is a methodology for implementing data science initiatives. Microsoft introduced TDSP in 2016, with the aim of facilitating predictive analytics offerings and intelligent applications.
Cognilytica’s Cognitive Project Management for Artificial Intelligence (CPMAI) methodology combines CRISP DM, TDSP, Agile and its own thinking and research on best practices for AI project management. The company offers training and certification on CPMAI.
Building upon the CRISP DM model
Ron Schmelzer, managing partner and principal analyst at Cognilytica, said AI projects call for a different take on project management compared with traditional IT initiatives. Specifically, an approach for running an AI, machine learning (ML) or cognitive technology project must be “much more data centric,” he noted.
The CRISP DM gets an AI adopter partway there. The methodology starts with understanding a business’ data mining goals and works its way through phases such as data collection, preparation and modeling. CRISP DM, however, “is not AI-specific and is missing some AI details,” noted Kathleen Walch, managing partner and principal analyst at Cognilytica.
CPMAI takes the data centricity of the CRISP DM model and adds TDSP, which Microsoft describes as an “agile, iterative data science methodology.” The Team Data Science Process encompasses a data science lifecycle definition and a standardized project structure along with infrastructure, resources, tools and utilities.
Cognilytica, meanwhile, contributes components such as best practices from in-production AI implementations, ML model training approaches and ML model evaluation.
Broader AI discussion
Schmelzer and Walch discussed CPMAI during last months’ AI World Government conference in Washington, D.C. Other conference speakers outlined a three-step process for launching AI projects and discussed conversational AI’s potential in the public sector.
AI World will take a wider-angle view of the technology when the conference convenes Oct. 23-25 in Boston. The event will consider AI in manufacturing, healthcare, pharmaceuticals and financial services among other markets.
Dell Technologies continues to report strong channel growth and highlight the cross-selling opportunities inherent in its portfolio.
Looking back at its fiscal year 2020 first quarter, which ended May 3, Dell painted a healthy picture of sustained momentum in partner sales. According to Cheryl Cook, senior vice president of global marketing at Dell, channel sales grew 15% year on year in the first quarter, while distribution rose by 10%. Partner sales of Dell’s client products increased 9% year on year, servers by 18% and storage by 26%. Cook noted that Dell’s reporting of storage sales included the performance of its converged infrastructure products such as VXrail. Dell Technologies partners brought in 15,000 new customers in the first quarter.
“We think the strategy and the breadth of the portfolio are helping us be in a good position to win,” Cook said.
A focus on cross-selling
Since the early days of Dell’s merger with EMC, the company has relied on the breadth of its portfolio as a crucial differentiator in the market. The cross-selling potential of the portfolio was a theme at this year’s Dell Technologies World conference, which ran in conjunction its Global Partner Summit, from April 28 to May 2 in Las Vegas.
At the event, the vendor unveiled the Dell Technologies Partner Program, promising greater ease in engaging VMware, Pivotal, SecureWorks and other business units under the Dell Technologies umbrella. The program simplified partners’ tier requirements by counting sales revenue from Dell Technologies subsidiaries toward tier credits. Dell also consolidated its partner training and certification requirements.
Scott Winslow, president and founder of Winslow Technology Group, an IT solutions and consulting firm headquartered in Waltham, Mass., said the new partner program made several improvements to the Dell EMC Partner Program it replaced. He added that the vendor is doing more to enable cross-selling.
“I think the big change for us, and we see it as a positive, is doing more about getting [Dell’s] strategically aligned businesses working together,” Winslow said.
Winslow Technology Group has ramped up its cross-selling engagements as Dell builds tighter integrations between its business units. “We were doing some VMware business [before], but now we are doing a lot more VMware business,” Winslow said. The company is also doing more business with SecureWorks, Dell’s managed security services company.
“We see [Dell Technologies subsidiaries] sales teams working together a lot more closely than they have been in the past. … I would say we are doing more cross-selling, more collaboration … and coming up with solutions for customers that are more comprehensive,” he said.
More work to be done
Even as Dell takes bold steps to unify its various business units for partners, the company recognizes more work is needed. Cook said the vendor continues to focus on creating a simpler operating experience.
At the 2019 Global Partner Summit, Dell senior vice president of global partner strategy, programs and operations, Darren Sullivan, highlighted ways in which the vendor is streamlining channel businesses processes. Initiatives included new investments in automation as well as more integration between Dell’s business lines.
Winslow said he is optimistic that the vendor is moving in the right direction. He acknowledged that complexity remains.
“The nirvana would be one partner portal, one deal [registration] page, one partner program for all” Dell Technologies subsidiaries, Winslow said. “They’re not there yet, but they are taking steps toward unifying these … disparate strategically aligned businesses to be more ‘the power of one.’ “
Startup Armorblox is looking to carve out a space in the email security software market with the help of channel partners.
The company, based in Cupertino, Calif., touts its platform’s use of natural language understanding (NLU) as its key differentiator among competitors. Armorblox formalized its inaugural partner program last week, overseen by senior vice president of sales and channel Brian Harmon, who joined Armorblox in March. Harmon said the platform’s NLU capabilities have sparked the interest of managed security service providers (MSSPs).
“Many of [the MSSPs] want to understand how they can support multiple customers and … manage their email security and data security as well as document management platforms,” Harmon said.
Natural language understanding in email security software
While Armorblox follows the same metadata-driven approach of its competitors, Harmon said the platform’s natural language processing and deep learning capabilities go beyond email security at the contextual level. The technology drills into communications to determine “what messages are intended for, what their content is all about — the who, what, when, where and why.”
“The NLU component is absolutely the game-changing technology we are bringing to the market. That is the core of what we do,” he said.
One way Armorblox detects threats is by building profiles of employees’ writing styles. If the platform sees a suspicious aberration in how an employee typically composes emails, Armorblox can trigger an alert. The alerts can be configured to go to security operations centers or users for verification. The platform can also quarantine messages for further examination, Harmon said.
In addition to email, Armorblox has created integrations with Slack, Office 365 and other messaging platforms, as well as document management systems. “We are taking a look at other messaging and human-to-human communication … as a threat vector for attackers to go after,” he said.
Commitment to channel sales
In addition to MSSPs, the Armorblox partner program targets value-added resellers and distributors. The program features two tiers, Preferred and Premier, and provides partners with support, training and preferred pricing.
Although Armorblox has a direct sales force, Harmon said he and his reps have been firmly committed to the channel model from the start. “We will never compete with a partner and take a deal direct,” he said, adding that Armorblox will reward partners who register the most opportunities.
The company is currently working with about 12 partners in the U.S. “On the [partner] recruitment side, I am not looking to create a huge … ecosystem. I want very specific targeted partners in each region that are specialists in their area [and] are bringing innovation into their market,” he said.
Harmon said Armorblox will expand its partnering efforts outside the U.S. on an opportunistic basis.
“As we expand and grow … I will expand the program to match that,” he said.
Titus, a data classification software vendor based in Ottawa, today launched a new partner program and moved to a 100% channel model to fuel the company’s growth.
Integration with other security products is an important part of the Titus strategy. The company’s products use machine learning algorithms to automate the identification and classification of data. This task comes at the front end of broader security engagements, which makes Titus software “the tip of the spear” for other security offerings such as cloud access security brokers (CASBs), data loss prevention (DLP) systems and next-generation firewalls, according to Mike Kuehn, chief revenue officer at Titus.
Specifically, Titus data classification products integrate with Netskope’s CASB offering, Forcepoint’s DLP suite and Palo Alto Networks firewalls among other solutions. Titus aims to work with its technology allies’ channels as well as their products.
“Palo Alto Networks only sells through partners,” Kuehn noted. “By injecting our technology into that partner community, they can provide an enhanced solution for their sales and existing customers.”
Titus data classification and the channel
Although Titus previously worked with channel firms, the data classification software company’s approach was more opportunistic and lacked a focus on partner enablement, Kuehn said. The new channel initiative, however, provides self-paced certification programs with sales and technical modules, a partner portal and 30 points of margin protection for Elite-level partners that register Titus data classification opportunities. The vendor is also putting more pre-sales engineering resources in the field to support partners.
The 100% channel approach goes beyond the go-to-market strategy to include other facets of the company, from product engineering to support, Kuehn said.
“If you’re not all in on working with the channel … as an organization, it is really difficult to build an effective program in the field.”
Kuehn said Titus works with value-added resellers (VARs) that sell security offerings, VARs with cloud practices that need to protect customer data migrating to the cloud, managed service providers and global systems integrators. The latter, Kuehn said, help customers architected broader data protection strategies that begin with a data identification and classification phase.
As a Blackstone Group portfolio company, Titus’ goal is to self-fund growth to the tune of 30%-plus per year. The company’s channel partner focus is “our means to accelerate growth,” Kuehn said.
Sensu Inc. is finding an audience for its multi-cloud monitoring tool among managed service providers, which are integrating the product with their ticketing, configuration management database and event logging systems.
The Portland, Ore., company’s offering lets organizations monitor public clouds such as AWS, Google Cloud Platform (GCP) and Microsoft Azure and private clouds built on OpenStack, VMware and Xen. Sensu earlier this month launched a redesigned tool that offers multi-tenancy and support for container and Kubernetes workloads.
“We are seeing an uptick in popularity among MSPs,” noted Sean Porter, CTO at Sensu. “We know MSPs are dealing with a very wide breadth of technologies and we want to make sure we service that.”
Multi-cloud monitoring attracts MSP
8K Miles Software Services, an MSP and cloud consultancy based in Pleasanton, Calif., has been using Sensu for nearly two years. Sudish Mogli, the company’s CTO, said Sensu’s multi-cloud monitoring capabilities are a major attraction. 8K Miles focuses on healthcare and pharmaceutical companies that often inhabit more than one cloud.
Prior to selecting Sensu’s cloud-monitoring tool, 8K Miles said many of the tools the company evaluated were specific to a particular cloud. “We were looking for something that we could spin up in any cloud environment,” Mogli said. “Sensu met our requirement.”
Container support is another plus in Sensu’s favor, Mogli added. “We also have to look at the future in terms of how applications are being containerized” and designed for serverless architectures, he said.
Cloud monitoring tool integration
Sensu has become 8K Miles’ go-to public cloud and hybrid cloud monitoring tool, but it doesn’t exist in a vacuum. The company has built an automation that lets it take Sensu-generated alerts and automatically open tickets in service management tools such as ServiceNow, Mogli said. Other MSPs have also taken the approach of integrating cloud monitoring tools and service management systems.
Porter said that type of integration is prevalent among customers using Sensu’s multi-cloud monitoring tool. He said MSPs integrate Sensu into ticketing applications, CMDBs and event logging systems such as Splunk. Sensu can serve as a backbone and interconnection between an organization’s systems and data formats, he added.
8K Miles, meanwhile, plans to continue its association with Sensu’s multi-cloud monitoring tool. Mogli said other vendors’ monitoring products have come and gone over the past few years, but the company has been able to stay with Sensu because of the range of technologies it covers. “At the moment, I don’t see a gap,” he noted.
Managed public cloud services have seen a surge of investment among partners, with businesses fueled through organic growth or acquisition.
Companies selling such services provide a range of offerings including account configuration, security consulting, cost optimization and ongoing monitoring to name a few. Managed public cloud practices are proliferating around AWS, Google Cloud Platform and Microsoft Azure.
A report from Accenture, which offers managed public cloud services, suggests the industry’s investment stands to pay off. About 87% of the respondents to the professional service firm’s survey said they would consider the use of managed cloud services. Accenture polled 200 senior IT professionals worldwide. The resulting study, Perspectives on Cloud Outcomes: Expectations vs. Reality, revealed a paucity of cloud expertise among organizations drives customer interest in managed cloud.
Augmenting cloud skills
Indeed, “access to the right skills” was the top benefit respondents cited with regard to managed cloud services, according to Accenture.
Siki Giunta, managing director and cloud strategy lead, journey to cloud, at Accenture, suggested the skills gap stems from organizations compelled to build a cloud center of excellence and institute DevOps at the same time they are dealing with legacy applications.
“They don’t have the spectrum of skills” to span those initiatives, she said.
A managed public cloud provider can augment an enterprise’s skills. That could mean maintaining cloud-based applications, helping clients create a cloud operating model or providing security advice. A managed services provider (MSP) or systems integrator, for example, could take over the maintenance of legacy applications bound for the cloud, while the customer focuses on building the skills it needs to develop cloud-native applications, Giunta said.
Accenture, she added, is placing a particular emphasis on helping customers secure applications running in the cloud. In that capacity, the company serves as a “guide and watchdog,” making sure the client deploys the appropriate security controls.
Meeting cloud expectations
The prospects for managed services look upbeat, but not every cloud has a silver lining. MSPs should be prepared to work with customers that are somewhat dissatisfied with their cloud experiences. A bit more than a third of Accenture’s respondents said the cloud had completely met their expectations with regard to cost (34%), speed (36%), business enablement (35%) and service levels categories (34%), Accenture reported. The task ahead for service providers is dealing with the two-thirds of organizations yet to fully benefit from their cloud moves.
The unrealized promise of cost savings is one area of cloud disappointment.
Giunta said organizations thought they could move an application to the cloud and dollars would drop from their balance sheets. That benefit hasn’t always materialized, however.
The problem stems from enterprises treating the cloud as a technology transformation rather than a business transformation, noted Kishore Durg, cloud lead, growth and strategy, at Accenture. Getting business value out of the cloud requires decisive moves that yield significant cost savings — the ability to close an in-house data center, for instance. A less aggressive approach to cloud adoption leaves an organization with the expense of traditional IT while it invests in the cloud operating model.
Enterprises face the choice of either jumping into the cloud and getting all of the benefits or having a clear strategy for maintaining innovation, speed and a competitive edge while running dual operating and cost models, Giunta said.
Just migrating a couple of applications to the cloud won’t deliver the anticipated benefits, Durg suggested.
“If you do [cloud migration] piecemeal — application by application — you are not transforming how your business runs,” he said. “To really see the value, you need to have a business-value journey, not an app-to-the-cloud journey.”
Accenture’s research contains some implicit advice for other managed public cloud services firms: Encourage clients to think about the big picture rather than the migration of individual apps to the cloud.
Early-stage companies are finding IT consulting firms can serve as a customer base and a sales conduit for their offerings.
A few of the startups selected for MIT Sloan CIO Symposium’s Innovation Showcase, held May 22 in Cambridge, Mass., are cultivating partnerships with well-established technology advisors. The annual Innovation Showcase highlights 10 companies deemed to represent the cream of the innovation crop for enterprise customers.
Project management firm finds consulting niche
Clubhouse, an Innovation Showcase finalist based in New York, offers a project management platform geared toward software development teams. Deloitte is among the startup’s customers.
“We find that IT consulting firms are a key and growing market segment for Clubhouse,” said Mitch Wainer, CMO at Clubhouse. “Forward-thinking IT consultants or agencies such as Deloitte use Clubhouse as their go-to project management tool for software development.”
Consultants using the project management product in-house may open sales opportunities with their clients.
“They will use Clubhouse for their clients’ projects as well as recommend it to their clients as a tool to adopt post project completion,” Wainer said.
Secure coding startup teams with consultants
Secure Code Warrior, a Boston company and showcase finalist, has also established alliances with consulting partners. The company, which offers a suite of educational secure coding tools, works with Accenture and Optiv, for example.
“We see them as strategic partners that can take our solution to a broader market,” said Matias Madou, co-founder and CTO at Secure Code Warrior.
The startup initially pursued direct sales. But Secure Code Warrior, having optimized its sales process over the last three years, is looking to partners for a boost.
“Now we feel that we can scale our sales by engaging with the strategic partners,” Madou said.
Enterprise AI company eyes channel partners
NLP Logix, a finalist based in Jacksonville, Fla., is taking a similar path. The company sells directly to customers due to the highly customized nature of the machine learning and intelligent automation solutions it provides for enterprise customers. The company, however, has developed a set of products in addition to its customized offerings.
“We are beginning to develop channel partners to distribute them,” said Samantha Hartman, director of marketing at NLP Logix.
Those products are Scribe Fusion, an AI-based OCR/ICR offering; PayPensity, a product for accounts receivable management, credit and debt recovery organizations; and Matchpoint, which automates workflow for recruiting teams.
Early-stage companies, in general, may first focus on direct sales to learn more about customer needs and buying patterns before turning over sales to channel partners. That said, some startups develop channel marketing strategies from the onset.
The rest of the field
Other startups featured in MIT Sloan’s top 10 include AllyO, a maker of AI-based recruiting software; Big Panda, an autonomous operations platform vendor; DeepBench, an expert sourcing platform; Elisify, an on-demand marketplace for financial data; Gradle, a build automation tool developer; Posh, a conversational AI platform; and Topos Labs, a text-mining software vendor.
This year’s Innovation Showcase focused on early-stage companies with 2018 revenue of less than $10 million. Other selection criteria included the availability of an enterprise IT product in the market, a sales motion targeting CIOs or corporate IT departments, the ability to demonstrate innovation, and the potential to improve a customer’s top and/or bottom lines.
An IBM lead-sharing tool highlights how AI is making inroads in systems that facilitate partner engagement.
Launched in 2018, Smarter Cognitive Opportunity Recommendation Engine (SCORE) uses IBM cognitive computing to guide and expedite the lead-sharing process. So far, IBM’s software organizations have adopted SCORE. The system is expanding to IBM’s hardware business units, the company said. SCORE follows on the heels of IBM Business Partner Connect, a tool that uses Watson to help partners team up for customer opportunities.
“What [we are] trying to do … is make cognitive the epicenter of all our transformation initiatives, and we are starting here with SCORE,” said Mike Fino, COO of IBM Partner Ecosystem.
IBM had been focused on automating its lead-sharing engine for about two years, Fino said. “Up until we started with the SCORE effort, writing static programs or static algorithms didn’t lend themselves well to the lead-[sharing] environment, because it is such a fluid space,” he said. In late 2017, executives considered tapping into IBM cognitive technology, and, in doing so, improve the speed and quality of lead sharing.
Fino said IBM’s AI technology gives SCORE a powerful edge over traditional lead-sharing engines. “That is really the secret of what SCORE gives us, which is the ability to learn from every positive and negative decision or recommendation that we make, factor that [knowledge] into the next one, and have that be the living engine that we use to engage with our partners,” he said.
How SCORE makes recommendations
SCORE’s top priority was to establish a system that would “pass the right opportunities — in other words, the opportunities our business partners are most likely to win — to the right business partner … in a timely fashion,” said Alan Zwiren, cognitive and AI transformation manager, IBM partner ecosystem.
To determine the right IBM business partners, SCORE assesses partner firms against an array of attributes. Attributes can include the partner’s win rate, experience, geographical proximity to the prospect and competencies. Much of the information that SCORE uses is based on partners’ historical performance data but is extending to other data sources as well, Zwiren said. When SCORE generates a recommendation, it also gives users an explanation for how it came to its conclusions.
“We tried to provide explanations to show end users which key features of specific business partners are influencing the recommendation,” noted Oznur Alkan, research scientist at IBM Research.
A feedback loop, which collects feedback from IBM sales, business partners and other sources, lets SCORE continuously learn and improve its recommendations.
Zirwin added that SCORE evaluates the attributes used to rank partners on a monthly basis. “We look at many different dimensions … and each of these dimensions are weighed once a month automatically by SCORE to say, ‘Which is the most predictive [dimension] of a won deal?’ ” he said.
‘A North Star’ for IBM business partners
SCORE has proven valuable in two fundamental respects, Fino said. The first is for its assistance in getting IBM’s leads into the right partner hands. The second benefit is that it has helped incentivize certain behaviors among IBM business partners. Those behaviors can help partners improve their ranking within the engine.
“[We] are starting to see our partners focusing on the same things that we believe are important to not only help them improve their status, but … we are seeing more and more partners use [SCORE] as a bit of a North Star to drive their enablement efforts,” Fino said.
More partner tools that use IBM cognitive computing are on the horizon. In addition to SCORE and IBM Business Partner Connect, Fino said his team is developing a tool that uses AI to help partners with cross-selling by recommending adjacent offerings.
“I think this is really just the beginning,” he said.