Unsurprisingly, the primary underlying theme of Inspire 2020 was “Partnering through Pandemic,” as Gavriella Schuster phrased it in her opening Corenote. Stories about first-line heroes were interspersed throughout the Corenotes and in vignettes between sessions—very warm and heartfelt and a nice tip-of-the-hat to so many people making a difference during this challenging time.
As for the content, there were many product and priority announcements made during the week, which is typical of MS Inspire sessions in years past. The number of total sessions was down considerably, around 400 from at least twice that last year. Still, it was a ton of content.
Notably different (beyond the obvious digital-only versus mingling in a steamy, mid-summer Vegas) was the opportunity to network with partners. Indeed, there were hands-on sessions and opportunities to look up and connect with other registrants, but from our perspective, we were not unable to enjoy the formal and casual networking that typically abounds at MS Inspire. And no epic closing night, like last year’s celebration with Queen and Adam Levine! But, no surprise, either; some things in the real world are very difficult to replace in the virtual/remote world.
Being a company that is entirely and uniquely focused on Azure Marketplace (and all digital marketplaces), the Tackle.io team placed our emphasis on sessions that either involve updates to co-sell and partner programs or Azure Marketplace.
Even with this limited scope, we came away from Inspire chock full of new knowledge and insights, and ready to rock-and-roll into FY21 with Microsoft and it’s awesome partner ecosystem!
This is a summary of our key takeaways from Inspire, principally around Marketplace and what’s new in Azure. But stay tuned, we have more content coming around what we learned about best practices for selling through Azure as well as new rules for partnering and co-sell opportunities.
New program for Consumption Commitments & lower Marketplace fees
New benefit for customers with Azure consumption commitments
We’ve heard of this first benefit for some time and were very excited to see its formal release. The ability for customers with Azure consumption commitments to draw down their consumption commitment by 100% of the price paid for “eligible” software purchased in Azure Marketplace means that ISV partners with qualified offers can take advantage of existing budgets and vendor relationships.
This is HUGE for the ecosystem and can remove a ton of friction in the procurement process. Not only can the ISV seller tap into existing Azure budgets of their customers but the ISV seller can avoid the hassle of being set up as a new vendor. This will shorten sales cycles and possibly increase contract value. Since these transactions are processed through Azure Marketplace, ISV seller’s get the additional benefit of sales efficiencies, since Microsoft takes care of the billing, collections and will also calculate and pay sales tax in over 50 jurisdictions around the world (at least, in over 140 countries). Huge!
So, what does “eligible” mean? Jake Zborowski, Senior Director of Microsoft Commercial Marketplace, published a blog here that described the three new benefits. In it, he summarized “eligibility” generally as Azure IP Co-sell status for the offer and more specifically in this footnote:
He also pointed readers to the “FY21 Co-sell Playbook FINAL.pdf” document. In the image below, we’ve annotated the key areas that most of our ISV customers ask about in yellow. Notably, the last comment “built with >50% repeatable IP code on Azure” has been deep in the Certification Criteria document, but is now being pronounced in top-level messaging. We expect Microsoft to ask ISV’s more about the product architecture in FY21.
Net this all out, and the criteria basically come down to achieving IP “Incentive eligible” status:
- Consume $100K of Azure services in the prior 12 months, or
- Billed revenue of $100K through a transactable offer in Azure Marketplace (selfish plug – Tackle can help with that! Reach us at firstname.lastname@example.org)
Keep an eye out for more from us about co-sell solutions and partnership programs; there’s definitely a blog on this in your future.
Here’s what Snowflake’s CIO, Scott Schilling, said during this session with Gene Ferioli Microsoft PDM, and Ryan Storgaard, Senior Director, Microsoft Commercial Marketplace.
“Snowflake’s participation in the MACC program unlocked huge opportunities – we did one deal north of $40MM for a couple of years; this was mind-blowing and more than we expected”
Reduced fee for transactions
This second benefit greatly simplifies the fee structure by extending the 10% fee for IP-CoSell offers to a broader set of solutions. Previously, only IP Co-Sell ready/incentive partners’ Saas offers were able to receive the reduction from 20% to 10%.
For FY21, the price reduction is extended to (from Jake Zborowski’s blog referenced above):
Eligibility for reduced transaction fees and channel incentives: These benefits apply to solutions/offers that are Azure IP Co-sell eligible, those integrating with Microsoft Teams, or those that integrate with at least two Microsoft 365 products (Excel, PowerPoint, Word, Outlook, SharePoint)
This is another great benefit and brings Microsoft’s fee structure much more in line with the other mega public cloud vendors, AWS Marketplace and GCP.
Incentives for Cloud Solution Providers
Microsoft also (re)announced that transactions through the CSP channel will remain at 10% indefinitely for IP Co-sell, Teams apps, and Microsoft 365 solutions with two or more service integrations. And that 10% goes straight to the CSP (Direct Bill or Indirect Provider).
This benefit allows any CSP partner to earn a 10% incentive on the total billed sales of the solution for transacting an IP Co-sell solution using the CSP platform (portal or APIs). The ISV will fully pay this 10% fee, but that’s it – Microsoft earns no fees for CSP transactions.
Massive investments and progress with the Microsoft commercial marketplace
Lots of investment is generating some great returns in terms of year-over-year changes. One commonly referenced statistic was that Marketplace listings are up 56% year-over-year. That’s very significant.
Another statistic indicated that just over 2,000 listings are transactable, which means only 10% of total offers are transactable. In order to benefit from the commitment reduction program mentioned earlier, ISV publishers must have a transactable offer in Azure Marketplace. If you are one of those ISVs that have a Contact Me or a BYOL listing, then you should initiate a plan to change that to a transactable offer. (Another selfish plug: we can help!)
We observed over a dozen sessions and came away with a number of snippets that we felt were super relevant and helpful for the ecosystem to know.
Here’s a short list of the more meaningful comments:
- “Covid has brought the future forward.” — Simon Paris, CEO of Finastra | One of many comments about accelerating innovation caused by COVID.
- “Partner success is fundamental to Microsoft’s success” — Alysa Taylor, CVP of Industry Marketing | A theme we’ve heard from Microsoft leaders over the past couple of years. And improvements in partner programs and incentives backs this up.
- “Revenue potential for ISV’s over next 6 years is staggering- $100 B” — Tobey Bowers, CVP OCP | Enough said here! Huge TAM!
- “Partners have been treated more reactively in the past; going forward it will be proactive” — Casey McGee VP ISV | Casey also alluded to more incentives to come for Microsoft sellers to partner with ISVs.
- “Marketplace as your launchpad for GTM with Microsoft” — Christine Alford, Marketplace Best Practices | Great statement emphasizing how GTM and co-sell with Microsoft are more tightly coupled with Marketplace than ever.
- “Every $1 of Microsoft sales translates to $9.82 of partner revenue” — Satya Nadella | This is another example of the value in partnering with Microsoft.
- “This pandemic led to 2 years of innovation in 2 months” — Satya Nadella | Another example of accelerating innovation!
- “ISV’s are the connective tissue between the intelligent cloud and the intelligent edge” — Casey McGee | ISV’s are important to the success of Microsoft’s intelligent cloud.
- “Snowflake’s participation in the MACC program unlocked huge opportunities – we did one deal north of $40MM for a couple years; this was mind-blowing and more than we expected” — Scott Schilling, Snowflake | The commitment to consume program changes are exciting for ISVs, and a requirement is transacting through Azure Marketplace (and being CoSell ready).
- “Marketplace as your launchpad for GTM with Microsoft” — Christine Alford, Marketplace Best Practices | More and more frequently we hear that Marketplace transactability is foundational for co-sell wins. This sums it up well.
- “Publishing your listing is just the beginning” — Christine Alford | So true. ISV’s must treat the Marketplace listing as a new channel, and invest accordingly in marketing, sales enablement, commission alignment, etc.
Hopefully you found these top takeaways helpful. Within a week or two, we will publish another blog that focuses more on OCP and co-sell announcements that pertain most specifically to ISV publishers in Azure Marketplace.