Latest / Partnerships Unraveled / 067 - Vince Menzione of Ultimate Partner - Building success through SMB, AI and Cloud Marketplaces in Partnerships

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067 - Vince Menzione of Ultimate Partner - Building success through SMB, AI and Cloud Marketplaces in Partnerships · Partnerships Unraveled

• 0:07
  Speaker 2: Welcome back to partnerships unraveled, the podcast where we unravel the mysteries of partnerships, and channel on a weekly basis.
• 0:15
  Speaker 2: My name is Rick van de Bosch and I'm the CEO and founder of Chennext.
• 0:19
  Speaker 2: I'm excited to announce our guest of today, vince Menzione, ceo of Ultimate Partner and host of the Ultimate Guide to Partnering.
• 0:27
  Speaker 2: Vince, how are you doing today?
• 0:29
  Speaker 1: Rick, it is such a pleasure and an honor to be here with you today.
• 0:33
  Speaker 1: Thank you so much for hosting me.
• 0:35
  Speaker 2: Likewise, we actually recorded the podcast earlier together, but then it was on Ultimate Guide to Partnering.
• 0:40
  Speaker 2: So I'm very excited to continue the conversation today and dive even further in the world of ecosystems and channel today.
• 0:51
  Speaker 1: You know I love unraveled because I think it's a great way to decode and talk about what we're experiencing in our world and our lives today.
• 0:58
  Speaker 1: So excited for this conversation.
• 1:01
  Speaker 2: Likewise, I'm super curious also for listeners, vince, who might not know you yet Could you elaborate a bit more on how you got acquainted with partnerships, and you've had an impressive career there, so I think it's definitely interesting to learn a bit more there.
• 1:17
  Speaker 1: So, rick, as you mentioned, I'm the CEO of Ultimate Partner and the host of the Ultimate Guide to Partnering podcast over 200 episodes now.
• 1:24
  Speaker 1: We're in the 200 range now, which is kind of crazy.
• 1:27
  Speaker 1: I started my career in the early days of wireless computing.
• 1:30
  Speaker 1: I've described this career as four successful business transformations.
• 1:33
  Speaker 1: I'm on number five now and I started off carrying a bag as a salesperson company.
• 1:40
  Speaker 1: That was in the early days of wireless computing, before Wi-Fi.
• 1:43
  Speaker 1: We were pioneers in that technology.
• 1:46
  Speaker 1: I used partners to build an influence strategy to help us grow our market share.
• 1:51
  Speaker 1: We went public on the Toronto exchange.
• 1:53
  Speaker 1: We had a successful exit.
• 1:55
  Speaker 1: The company is now Zebra Technologies.
• 1:58
  Speaker 1: I followed one of the leaders to go do a turnaround.
• 2:00
  Speaker 1: Company that was at the brink of bankruptcy and Golden Gate Capital had spun us out and I built a new business and that's where I started into the partnership world really fully.
• 2:10
  Speaker 1: I was asked to build a government business.
• 2:13
  Speaker 1: We were Panasonic's largest competitor.
• 2:14
  Speaker 1: Panasonic was the market leader in selling into public safety and military and we had a product that was equally as good.
• 2:23
  Speaker 1: I built a channel strategy.
• 2:25
  Speaker 1: I went down to Washington DC.
• 2:26
  Speaker 1: I aligned with several of the largest technology partnership organizations and I built that business incrementally.
• 2:36
  Speaker 1: We had tremendous success.
• 2:39
  Speaker 1: I was the growth engine.
• 2:42
  Speaker 1: We sold the company to another company, general Dynamics, a large defense contractor.
• 2:48
  Speaker 1: It was at that point that Microsoft recruited me and for almost a decade we didn't call it ecosystem at the time yet, we called it partner strategy.
• 2:56
  Speaker 1: But I ran the ecosystem for a $4.6 billion business within Microsoft for almost 10 years and I learned quite a bit about partnering and ecosystems and all the different types of partnerships and what that meant to building a successful strategy for a large tech giant like Microsoft.
• 3:14
  Speaker 1: I left at the end of 2016.
• 3:15
  Speaker 1: And I was convicted more than ever that organizations struggled.
• 3:19
  Speaker 1: I saw the partners that got it right.
• 3:21
  Speaker 1: I realized a lot of organizations still struggled to the 400,000 Microsoft partners in that ecosystem, which is the same ecosystem that all the big tech giants really care about.
• 3:30
  Speaker 1: It's really one ecosystem and I started this podcast, ultimate Guide to Partnering.
• 3:35
  Speaker 1: I started doing consulting work for those organizations.
• 3:39
  Speaker 1: I went back inside for two years to the largest software company in nonprofit and I recognized that the C-suite level there was still a lack of understanding and alignment around partnerships, and so when I left during COVID, I was convicted more than ever that we needed to solve for this, and so I've made it my mission now to help organizations achieve their greatest results through successful partnering individuals and organizations.
• 4:04
  Speaker 1: I want to empower the world of partnering and I'm on a 10-year journey, a 10-year mission, to help solve for that.
• 4:11
  Speaker 1: With Ultimate Partnering, we've expanded now from just being a podcast to doing digital and live events.
• 4:17
  Speaker 1: We're going to be building a collective of organizations.
• 4:22
  Speaker 1: We want to invite everybody that cares about the hyperscalar ecosystem to be part of that collective, because we feel that they need to have a stronger voice working with the big hyperscalars.
• 4:34
  Speaker 1: So that's where I'm a mission to help solve.
• 4:36
  Speaker 1: I won't stop until the Chief Partner Officer is at equal footing with the CRO, the CFO and the CMO in the organization at the C-suite, and that's where we hope to get to.
• 4:49
  Speaker 2: I love that and that's a super impressive career in partnerships indeed.
• 4:52
  Speaker 2: I'm very curious what I think I can totally imagine in the back in the days already at Microsoft.
• 4:58
  Speaker 2: Probably it wasn't called ecosystem yet, but I can imagine Microsoft is always the front runner in everything partner related.
• 5:04
  Speaker 2: There probably were a lot of things that were actually already ecosystem, even though we weren't mentioning it like that yet.
• 5:12
  Speaker 2: Could you maybe give some examples what you see right now, what are very hot topics in the market which actually maybe Microsoft was already starting to work or really laid the foundations for at that time?
• 5:24
  Speaker 1: Yeah, in fact we called it network back then.
• 5:26
  Speaker 1: But I'm gonna back.
• 5:27
  Speaker 1: I'm gonna back up Because I feel like Microsoft created it at the very beginning.
• 5:32
  Speaker 1: We might you and I talked about this once before, but when Bill Gates came down here to Florida, to Boko Raton, to meet with IBM, when they created the PC and they were gonna buy his operating system, he said I'm not gonna sell it to you, I'm gonna license it to you.
• 5:46
  Speaker 1: And they also agreed to license the hardware components.
• 5:50
  Speaker 1: That sparked an ecosystem that created trillions and trillions of dollars of new incremental revenue in our industry and it created Michael Dell started building PCs in his dorm room and compact computer got started and organization large reseller organizations in the United States, cdw and some of these others started marketing, started delivering magazines and doing direct marketing to sell you PCs and networking Vars were created.
• 6:19
  Speaker 1: The whole ecosystem was really spawned from that moment in time back in like 1981.
• 6:23
  Speaker 1: Microsoft recognized that and they nurtured that.
• 6:27
  Speaker 1: They realized they couldn't sell direct.
• 6:28
  Speaker 1: They realized there were, their strengths were and they didn't want to have a hundred thousand salespeople out there.
• 6:34
  Speaker 1: They realized the leverage and the value of the partner network that they called it back in the day and they also started to divide and conquer, like, okay, these part they, they, they bucketize partners into specializations.
• 6:47
  Speaker 1: They recognize that there were MSPs and SIs and ISVs and GSIs and and so on and learning partners and all the like, and they started nurturing and building a whole partner organization around it.
• 7:00
  Speaker 1: And they've done a better job than anybody at aligning that and aligning salespeople to the success of the partner ecosystem rather than dividing it up and siloing it.
• 7:11
  Speaker 1: And Microsoft is probably the most I think it's either Gartner or Mackenzie that says Microsoft's the most complex hybrid organization in the world but they they figured out a way to make this all work and integrate it so that people a salesperson cares about selling a partner, there's partner people supporting it, there's partner development managers and they have a divisional labor than the organization.
• 7:36
  Speaker 1: I think is very unique in supporting that ecosystem.
• 7:39
  Speaker 1: And then the Microsoft Inspire conference, which used to be the worldwide partner conference, was the, the seminal event that everybody went to every year.
• 7:47
  Speaker 1: You know, I know that, I know that you have some family members that participated in that.
• 7:52
  Speaker 1: I know they came, they came over to the US to go to that conference.
• 7:55
  Speaker 1: Every year it was, it was the happening.
• 7:57
  Speaker 1: And then COVID changed all this right now.
• 8:01
  Speaker 1: We went virtual, we went digital and it's a shame in some respects that that ecosystem hasn't gotten the nurturing and love that it needed before, which is where we came in.
• 8:12
  Speaker 1: We came in and helped support that.
• 8:14
  Speaker 1: We just hosted a live event in person.
• 8:17
  Speaker 1: We called it ultimate partner.
• 8:19
  Speaker 1: Live sparked the ecosystem because we felt like that nurturing needed to happen and it was an overwhelming success.
• 8:25
  Speaker 1: I mean, I'm still getting people reaching out to me tell me how amazing they thought the event was yeah, absolutely like.
• 8:32
  Speaker 2: I can only tell from my perspective, but everyone who is interested in Microsoft in my network knew about the event and I also saw it everywhere throughout LinkedIn, and I'm actually super curious and I think that's actually so interesting to share with our listeners as well.
• 8:47
  Speaker 2: I just said it already, but Microsoft is always the frontrunner.
• 8:51
  Speaker 2: When you're in channel, when you're in partner ecosystem, we are always looking at how is Microsoft doing it, because we know that they have already tried and tested so many things and if they launch it to the big public, then that's also where they are all in and moving forward there, and I was super curious about it.
• 9:09
  Speaker 2: Vince, would you like to share a bit more about the event, both in terms of how it was, but also definitely, what are the top priorities right now of Microsoft leadership, because I think we can learn a lot from that in when we're building a channel or partner ecosystem.
• 9:24
  Speaker 1: Yeah, I am so happy to share.
• 9:26
  Speaker 1: You know I've described this time we've been living through.
• 9:29
  Speaker 1: Is the tectonic shifts right?
• 9:31
  Speaker 1: We've been seeing in our world, our lives, geopolitically, all the things have been going on.
• 9:34
  Speaker 1: Covid accelerated transformation, organizations invested heavy, but then we had the economic headwinds and they backed off.
• 9:42
  Speaker 1: We've seen, you know, tremendous layoffs in the last 18 months or so in the tech sector, which also has precipitated doing more with less.
• 9:49
  Speaker 1: So I now do the job of three people.
• 9:52
  Speaker 1: Microsoft did that too, by the way.
• 9:53
  Speaker 1: They said, like well, we need to do this.
• 9:55
  Speaker 1: So we came in and we said you know what you're not doing?
• 9:58
  Speaker 1: A live event.
• 9:59
  Speaker 1: I had reached out, one of the.
• 10:00
  Speaker 1: I've been blessed to have some, several leaders from Microsoft participate in Ultimate Guide to Partnering.
• 10:05
  Speaker 1: We've been privileged to have some of Microsoft's top partner executives come, use our platform as the place to tell the story, announce the new programs and things like that.
• 10:16
  Speaker 1: So I was able to get some of those leaders in a room and it was.
• 10:19
  Speaker 1: It was two days, 30 speakers, 16 sessions, both you know both keynotes, fireside chats and panel discussions, workshop type discussions where we took an align to the three major priorities Microsoft announced at their Inspire conference.
• 10:37
  Speaker 1: Of course, ai was priority number one, right?
• 10:40
  Speaker 1: I mean Microsoft's investments in open AI and what they're doing with chat, with chat, gbt and co-pilot.
• 10:46
  Speaker 1: I mean they're.
• 10:47
  Speaker 1: They're leading the way.
• 10:48
  Speaker 1: Satya has been visionary in this respect and he they really it's.
• 10:52
  Speaker 1: It's making a difference.
• 10:53
  Speaker 1: You just see in the stock price these days.
• 10:55
  Speaker 1: The other big announcement they made, I mean AI is going to infuse into every product and every technology and they want everybody to build with them.
• 11:02
  Speaker 1: The second one was around marketplaces and we've been talking about this year is sort of the marketplace moment.
• 11:07
  Speaker 1: Aws was out of the gate a little bit early, investing in marketplace selling, of course, coming from their retail background, and Microsoft is playing fast catch up and this year they made announcements and said if you want to do co-selling with us, by the way, microsoft, between Microsoft, google and Amazon, there are about 300 billion dollars in durable cloud budgets.
• 11:28
  Speaker 1: That means that those three hyperscalers have went to go into the enterprise customers and mid-market customers and said buy these agreements for our cloud, and so they own those budgets and they allow those clients to burn down those agreements by buying software from their marketplaces.
• 11:45
  Speaker 1: So they've created a new channel.
• 11:47
  Speaker 1: This channel with marketplaces is a new way for ISV's and SI's to sell their solutions to Microsoft, google and Amazon customers.
• 11:56
  Speaker 1: So we we focused in on that marketplace moment.
• 12:00
  Speaker 1: We had the leader of the marketplace organization, anthony Joseph Joseph, in the room and we did a fireside chat talking about the benefits of marketplace.
• 12:10
  Speaker 1: So organizations are really it's still new for a lot of them.
• 12:14
  Speaker 1: I feel like it was where we were 10 or 12 years ago with the cloud.
• 12:18
  Speaker 1: People were kind of resisting the change.
• 12:19
  Speaker 1: But the change is happening and in fact Canalis did a study.
• 12:24
  Speaker 1: Our friend Jay McBain was part of that organization.
• 12:27
  Speaker 1: They said 45 billion dollars will flow through marketplaces by the end of 2025.
• 12:32
  Speaker 1: They under called it.
• 12:34
  Speaker 1: Jay said they under called it.
• 12:35
  Speaker 1: It's going to be more like 50.
• 12:36
  Speaker 1: And then Tackle IO, which is one of the big marketplace software companies, is predicting by the end of 2026 we will see 100 billion dollars in sales and transactions flow through these marketplaces between the big three.
• 12:50
  Speaker 1: So we need to get on the bus or get on the train because it's taking off and we have to embrace that.
• 12:59
  Speaker 1: That's the agility component of great partnerships and organizations.
• 13:03
  Speaker 1: Then the third area of focus is really around the mid-market.
• 13:06
  Speaker 1: I was privileged that the president of Microsoft's small, medium and corporate accounts, which is essentially its mid-market and SMB business.
• 13:16
  Speaker 1: He was my keynote.
• 13:19
  Speaker 1: He came in in a big way and supported the event and really sparked the conversations.
• 13:25
  Speaker 1: That mid-market opportunity is huge.
• 13:28
  Speaker 1: I know our friend Jay we talked about Jay again but our friend Jay and Canalis did some studies on the mid-market opportunity.
• 13:36
  Speaker 1: It's in the trillions of dollars.
• 13:37
  Speaker 1: Microsoft alone they do about $75 billion a year in that mid-market and it's only 40% penetrated for partners.
• 13:48
  Speaker 1: I'm calling it the acre of diamonds.
• 13:51
  Speaker 1: We know this.
• 13:54
  Speaker 1: A lot of organizations only want to focus on the very big organizations.
• 13:57
  Speaker 1: Those organizations get saturated at some point.
• 14:01
  Speaker 1: Everybody's calling on them.
• 14:02
  Speaker 1: This mid-market opportunity is huge.
• 14:04
  Speaker 1: It's a third pillar for Microsoft this year and we brought in the leadership to speak to partners about how to be more successful selling into that market.
• 14:12
  Speaker 1: We covered all the sessions revolved around those three pillars with Microsoft.
• 14:18
  Speaker 2: I think that's super interesting.
• 14:19
  Speaker 2: Else are very similar to conversations I hear from a lot of vendors that we speak to regularly.
• 14:25
  Speaker 2: In terms of what everyone is talking about, then we know we need to do something with it.
• 14:29
  Speaker 2: That's why I would love to dive a bit deeper into the specific three key points.
• 14:34
  Speaker 2: I'm actually going backwards from the one you ended with.
• 14:37
  Speaker 2: I think that's so interesting right now.
• 14:39
  Speaker 2: Maybe first question some clarification on mid-market.
• 14:43
  Speaker 2: So do they call it mid-market, but is it a combination of SMB and mid-market end user companies together?
• 14:50
  Speaker 2: And secondly, why do you think that area of SMB is so important than why some company like Microsoft is so heavily investing in that area?
• 15:00
  Speaker 1: Well, like I, said, the top of the pyramid, the enterprise organizations, which represents about 11,000 top organizations, the big tech, the big organizations, the Coca-Cola's of the world, the General Motors, all those big organizations.
• 15:15
  Speaker 1: Like I said, they're dominated by big GSI's, global Systems Integrators, big projects, long-sale cycles.
• 15:24
  Speaker 1: It's hard to move through those, hard to navigate and it's crowded.
• 15:29
  Speaker 1: It's crowded at the top In this mid-market segment.
• 15:32
  Speaker 1: I'll use Microsoft's numbers here.
• 15:34
  Speaker 1: They have about 38,000, I'll round it up 38,000 accounts.
• 15:39
  Speaker 1: That's a bigger chunk and they haven't been good before at being focused in this area.
• 15:48
  Speaker 1: Microsoft I'll use Microsoft as the example.
• 15:50
  Speaker 1: I think everybody's the same in terms of tech giants.
• 15:53
  Speaker 1: They had a different operating model for each of the what they call operating units.
• 16:00
  Speaker 1: So if you went to the LATAM region or you went to APAC or you came over to EMEA, where you are, you find a different engagement model.
• 16:08
  Speaker 1: There wasn't any universitality.
• 16:11
  Speaker 1: It was hard to navigate and it was hard to work with the teams and those teams were not as partner-centric.
• 16:18
  Speaker 1: They were just worried about selling licenses and selling what they had in their bag.
• 16:23
  Speaker 1: Where Enterprise knew that they had to work with partners.
• 16:27
  Speaker 1: They have changed the model now.
• 16:28
  Speaker 1: They've centralized all the resources.
• 16:30
  Speaker 1: So in the Microsoft world.
• 16:31
  Speaker 1: They've taken the 6,000 employees across every industry and every geography at Microsoft healthcare, name all the industries and name all the geographies.
• 16:41
  Speaker 1: And now they report directly into this one individual, kevin Pesker.
• 16:44
  Speaker 1: And they have a regional model.
• 16:46
  Speaker 1: They have three regions the Americas, emea and the APAC region.
• 16:53
  Speaker 1: And those three models.
• 16:55
  Speaker 1: They also have a corporate vice president structured, but they're centralizing, they're creating a methodology across and they're also welcoming in partners more and they recognize that they had a gap here and so they're investing heavily.
• 17:09
  Speaker 1: In fact, microsoft, 75% of all the channel incentives for Microsoft this year are going into that business 75%.
• 17:19
  Speaker 1: So it tells you they've made a huge commitment here and, like I said, there's 38,000.
• 17:25
  Speaker 1: And then at the SMB level, there's 150 million customers at the SMB level worldwide.
• 17:33
  Speaker 1: So huge opportunity for growth and Microsoft's not going to touch those SMB customers at all directly.
• 17:40
  Speaker 1: So the huge opportunity for the channel to go again, this acre of diamonds and great opportunities for growth.
• 17:48
  Speaker 1: Think about taking an organization, any organization in any size, and implementing AI or all of these other rich technologies, helping ISVs and other SaaS software companies get to reach to those customers and stitching it all together Like we like to talk about the fact that customer doesn't just buy one vendor.
• 18:09
  Speaker 1: They put together a solution.
• 18:11
  Speaker 1: They're solving a business problem and it requires multiple organizations to come together to do that.
• 18:16
  Speaker 1: So there's this huge opportunity in the work that you and I do to help solve for that.
• 18:21
  Speaker 1: I think it's such a great opportunity for growth for all of us.
• 18:26
  Speaker 1: Rick.
• 18:27
  Speaker 2: Yeah, 100%, and I think very impressive in terms of putting your money where your mouth is, like aligning 75% of your incentives to that Part of the market.
• 18:36
  Speaker 2: I think that that's a really big move and something that we all in partnership should be aware of, because Microsoft, like such a, in my opinion, is the most brilliant strategic mind out there, so he won't be doing that without some very rough thought behind making such a move like.
• 18:52
  Speaker 2: I'm interested in the piece there like so we have mid-market and SMB and then I can imagine mid-market is Probably large enough that some of the direct sales of mark Microsoft can work on it, but they'll do a partner assist play.
• 19:05
  Speaker 2: But from what I understand, smb will be a pure channel play.
• 19:08
  Speaker 2: So both the selling and the implementation and everything needs to be done by the channel.
• 19:14
  Speaker 1: What they've done in the mid-market is they call corporate accounts.
• 19:17
  Speaker 1: So these corporate accounts, these 38,000 customers, they have a, they have a one-to-many, so they have a direct sales rep.
• 19:24
  Speaker 1: They have a swarm.
• 19:26
  Speaker 1: Basically, they've created a pod around those customers.
• 19:29
  Speaker 1: So there's technical resources they're selling resources and there's partnering resources supporting a group of customers and the ratio when in enterprise it's maybe like one to five, one to seven, you know one, one rep for seven customers.
• 19:44
  Speaker 1: It's more like a one to 25 or one to 50 model, depending on the market and the specificity of the customer.
• 19:50
  Speaker 1: So they are directly supported.
• 19:54
  Speaker 1: But again, if you're, if you're calling on 50 accounts and In the course of a year and you have a big book of business to drive, you're not going to do that yourself.
• 20:01
  Speaker 1: You need transactional partners that are going to help sell the software and the licenses.
• 20:07
  Speaker 1: You're going to need systems integrators to help implement, support, project manager, do all those things, and you're going to need ISV's that are going to bring now, they're going to bring their marketplace Transactable offers.
• 20:19
  Speaker 1: So think about all of the SaaS software companies.
• 20:23
  Speaker 1: You want to get into that marketplace because you want these sellers over here to say oh, you have a backup and recovery solution.
• 20:30
  Speaker 1: This is the one you should use, and they are, by the way, they're starting to use AI internally to be able to track the vendors and who's being the most successful and who has the best customer SaaS scores and the like.
• 20:42
  Speaker 1: So I, as a seller, now have at my disposal a whole Tool kit and also, you know, a pane of glass that tells me who I need to bring in and who can best support me on those sales.
• 20:55
  Speaker 1: So, again, this whole partnering strategy is just critical to success.
• 21:00
  Speaker 2: Yeah, it's all super connected to each other, I think.
• 21:02
  Speaker 2: Well, also in the tying it a bit more to the marketplace point, which is also very interesting, one of the words that struck me was like a little bit of reluctancy, which I also really notice in the channel, because we're all a Bit scared because what Amazon, of course, did in the retail sector was cut off the middleman and go direct to customer.
• 21:20
  Speaker 2: Yes, so I can imagine some of the reluctancy is coming from that angle, from specifically the channel.
• 21:25
  Speaker 2: But what, how do you see that the channel is being?
• 21:28
  Speaker 2: Because from an ISV perspective it makes a lot of sense immediately marketplace, like you can bundle it, it's easier to buy from a customer perspective with how do you see them tying in the channel?
• 21:39
  Speaker 2: And and also, what do you think like for companies looking at that and also trying to get their channel and Involved there as an ISV to skill operations?
• 21:47
  Speaker 2: What, like?
• 21:49
  Speaker 2: What are a bit of the arguments why it's also very relevant for the channel actually to To collaborate there?
• 21:55
  Speaker 1: Yeah, well, you know the channels.
• 21:57
  Speaker 1: I mean, we talked about the, the Bogartone moment.
• 22:00
  Speaker 1: The channel has had to evolve, right, because if you're following the big tech giant, you know your models have changed.
• 22:06
  Speaker 1: Right.
• 22:06
  Speaker 1: You, there used to be all of the incentives.
• 22:09
  Speaker 1: I was very close to Microsoft's channel incentives program, so I know the numbers about what we spend every year, and it was in the trillions of dollars.
• 22:18
  Speaker 1: It was, it was, it was the, it was the.
• 22:21
  Speaker 1: I'm sorry it was in the billions of dollars, not the trillions of dollars it was.
• 22:25
  Speaker 1: It was the one of the largest line items, in fact, in terms of channel incentives and that that shifted though it's still there, but it shifted.
• 22:35
  Speaker 1: It shifted to driving the right behaviors and Microsoft will continue to do that right, this as we talked about with these channel incentives marketplace.
• 22:44
  Speaker 1: If you're in the channel and you're used to a model that was different and you're making more money doing something else, and all of a sudden Microsoft or someone else impose is this new thing?
• 22:54
  Speaker 1: You're a little bit reluctant, right, but there's other opportunities for growth, right?
• 22:59
  Speaker 1: So you have to look at and say I might make a little bit less here, but I can make more here, and you're starting to see this evolution of the channel.
• 23:07
  Speaker 1: Some of them, one of them here in the United States insight Is, you know?
• 23:13
  Speaker 1: I would say they're on the their forward, leaning in terms of what they've been doing.
• 23:18
  Speaker 1: They've been evolving their business To compete.
• 23:20
  Speaker 1: They'll do the transaction work, they'll provide all the other services and resale and everything, but they are leaning more into the excentures and GSI world a little bit more.
• 23:31
  Speaker 1: In fact, they made a major purchase just recently of Google's largest reseller and system integrator partner, sada systems.
• 23:40
  Speaker 1: So you see that you see that world evolving to write their morphing, their business models and they're embracing marketplace.
• 23:47
  Speaker 1: Some of these organizations again you mentioned the reluctance working with Amazon, looking saying, hey, you know, we know how Amazon operates in the retail world are they going to do the same thing here?
• 23:58
  Speaker 1: And I would say, proceed with caution.
• 24:00
  Speaker 1: I would say Microsoft will continue to be the Microsoft of old in terms of embracing their partners, but they are creating this value chain that says we are creating.
• 24:12
  Speaker 1: We're creating value here because we have signed up these customers already.
• 24:16
  Speaker 1: We're working at the C-suite level.
• 24:18
  Speaker 1: By the way, those Mac agreements and cloud agreements that they three hold, those are negotiated.
• 24:25
  Speaker 1: The CFO level, these organizations.
• 24:27
  Speaker 1: They're not in the line of business, but it makes it easier.
• 24:30
  Speaker 1: Now.
• 24:30
  Speaker 1: It's like it removes a lot of the friction from the process so you don't have to go find budget To go buy your software.
• 24:36
  Speaker 1: You just have to find a customer that likes your software and has access to a Mac agreement to changes the whole model up and hopefully will drive.
• 24:45
  Speaker 1: It'll drive better behavior and the channel organizations are going to evolve accordingly.
• 24:50
  Speaker 1: The same way, the same way the world evolved 12 years ago with the cloud right.
• 24:54
  Speaker 1: Everybody was selling Dell computers and targets bags back in those days, and they still do, but nobody was selling cloud.
• 25:01
  Speaker 1: They're like what is this cloud thing?
• 25:02
  Speaker 1: And it looks like it's a direct, a direct model and you're going to buy directly from the hyperscaler.
• 25:07
  Speaker 1: That's changed as well.
• 25:09
  Speaker 1: We've all recognized that that's created more value for these organizations to not only sell the cloud but also wrap around services around that, and I think we'll see the same thing with marketplace.
• 25:20
  Speaker 2: Yeah, 100%.
• 25:21
  Speaker 2: I think we could do a full extra episode on the consumption based model and indeed how it works with that.
• 25:26
  Speaker 2: Actually, the hyperscalers getting in at the sea level having huge contracts where you can highly benefit as an ISV, because, yeah, it's almost like Microsoft or Amazon is going to pay you for the contract but it's with credits that the customer builds up, etc.
• 25:39
  Speaker 2: It's super, super interesting right and it won't.
• 25:43
  Speaker 1: yeah, and I want to just note here too, because we talk about the channel right, it's not going to replace the channel, the model today, at least not in the near term.
• 25:52
  Speaker 1: It becomes another channel, right, it becomes another channel to the customer and the customer by various ways, and you just have to be agile enough To recognize that.
• 26:03
  Speaker 2: Yeah, absolutely, I think.
• 26:04
  Speaker 2: One last question around the marketplaces, like the examples, indeed, of of inside, for example, like joining the marketplace and working more around, those are almost what I would call like the GSI are the really big far or the DMR, almost Direct market resellers, but for the SMB channel partner.
• 26:24
  Speaker 2: Do you also see a role there for the marketplace or less so?
• 26:28
  Speaker 1: No, just as much.
• 26:29
  Speaker 1: So I mean maybe at a smaller scale, but these organizations are going to provide professional services and support customers uniquely and more locally.
• 26:42
  Speaker 1: Right, and there's still that need like, if I may, a company in a certain geography.
• 26:50
  Speaker 1: I have local relationships and you know, I like to go back to the five or seven seats at the table to say who is influencing my decision process, and it may not be one of the big DMR is that we talked about.
• 27:02
  Speaker 1: It might be a local systems integrator that you're comfortable working with.
• 27:05
  Speaker 1: They now have the ability To bring to you everything you need, right, so it's enabling them more, in fact, to go do this through marketplaces, because now they have they have the full access to that marketplace and customers are going to do this by themselves.
• 27:20
  Speaker 1: We know that, right, this is technology.
• 27:22
  Speaker 1: Especially smaller organizations are more challenge.
• 27:25
  Speaker 1: They don't have the IT staff to go do it themselves, so I'm going to rely on my local entrusted vendor to support me in doing that.
• 27:33
  Speaker 2: Yeah, absolutely, and I think it is a SMB channel partner.
• 27:36
  Speaker 2: You might lose a little bit of margin when doing it in such a way, but you win it back as well because everything is in one invoice.
• 27:42
  Speaker 2: It's very easy to manage, like everything you would use to do with the distributor in the past.
• 27:46
  Speaker 2: Now is can be managed with the marketplace or hyperscaler as well.
• 27:50
  Speaker 2: That's right.
• 27:50
  Speaker 2: That's right, very good point.
• 27:52
  Speaker 2: I love that.
• 27:54
  Speaker 2: Then then we get to the final point of AI, of course, and first of all I want to say, like Microsoft all in on AI, big investment.
• 28:03
  Speaker 2: They had some two milch was weeks.
• 28:05
  Speaker 2: But I want to do a shout out to such a because that is true partnership, some Elton back at the range of open AI definitely not what I expected after it just happened.
• 28:15
  Speaker 2: But then you can see, like, if you have a very strong partner and they have your back, what an effect that can have and I think it's the best decision for open AI and for the AI continuation of innovation and progress there in general.
• 28:29
  Speaker 2: So big shout out there.
• 28:31
  Speaker 2: But I'm also super curious to learn, indeed, like, what do you see there in terms of the AI?
• 28:38
  Speaker 2: Like, of course, we know why AI so important, but I'm also super curious what role does Microsoft see there for their partners in terms of bringing that AI to the next?
• 28:48
  Speaker 2: They've done the big investments.
• 28:50
  Speaker 2: They've worked insanely hard.
• 28:52
  Speaker 2: I'm super impressed in integrating AI in all their products and in being in office in teams in everywhere in Azure.
• 29:00
  Speaker 2: Like, but what then?
• 29:02
  Speaker 2: Now it's, I think, up to the channel to bring it to market.
• 29:04
  Speaker 2: What's their strategy there and what do you think that are the some of the roadblocks they might see there?
• 29:11
  Speaker 1: Well, first of all, to call out the satya there right, that was a master class and strategy, like what he did with with sam First.
• 29:22
  Speaker 1: First of all, he was blindsided, right that.
• 29:25
  Speaker 1: I mean the board didn't even let him know until minutes before they announced it, which is crazy.
• 29:30
  Speaker 1: And then he took the.
• 29:31
  Speaker 1: He took the high road and he said how do I best support this?
• 29:34
  Speaker 1: I want to support sam.
• 29:36
  Speaker 1: I want to support open a I.
• 29:37
  Speaker 1: He brings sam on board on a sunday, right, sam?
• 29:41
  Speaker 1: He sets up a new business unit.
• 29:42
  Speaker 1: By the way, almost all the employees said they were gonna leave, so he knew that, like, if open a is not going to do it, they're all gonna be microsoft employees.
• 29:49
  Speaker 1: And then he positions it so sam can run back into the cd or get back into the cd slot.
• 29:55
  Speaker 1: Which is this incredible?
• 29:57
  Speaker 1: Now, on the product side, what you're seeing me, microsoft has been the productivity suite, right, and we go back.
• 30:03
  Speaker 1: I mean, let's, let's look at offices is a crowning example and 365 now, and all of your productivity offerings.
• 30:12
  Speaker 1: And sweet, everything is infuse now with a, is getting infuse with a I.
• 30:16
  Speaker 1: It's the big announcements and releases in early november.
• 30:19
  Speaker 1: We're continuing to see things.
• 30:21
  Speaker 1: They had their big ignite conference, the ability to infuse all this technology.
• 30:26
  Speaker 1: The role the partner stays pretty much the same in that regard.
• 30:30
  Speaker 1: Right, because these are same.
• 30:31
  Speaker 1: These are organizations that are need to embrace and deploy these technologies.
• 30:38
  Speaker 1: They will do that.
• 30:39
  Speaker 1: The role there will be additional there, additional roles for gs is and s is of any size and shape To take advantage of the tool kits that are available in azure I and you go on with the list of microsoft acronyms and names but being able to take that technology and deploy it locally.
• 30:57
  Speaker 1: People want secure gbt's, want the ability to do their own and not be in the public domain.
• 31:05
  Speaker 1: So the ability to implement those is going to be huge opportunity In the isv and sass world community.
• 31:11
  Speaker 1: Well, I mean, I want to infuse this technology into my, my offerings, right, so there's the opportunity for those partners to go do that and then to implement that.
• 31:19
  Speaker 1: So it's creating more opportunity for partners of all types to take and infuse that.
• 31:24
  Speaker 1: That stack Into into organizations.
• 31:27
  Speaker 1: Right, and it's and we're just at the beginning, so I can't even predict where it's going to go.
• 31:31
  Speaker 1: But we are people are talking about this as even probably the biggest thing that's happened in the last 40 years, right since the maybe 50 years since the chip, we went through the pc error, we went to the client server, went to the internet error.
• 31:47
  Speaker 1: We got the mobile computing, we got the cloud and now we're in a I and it's going to be.
• 31:54
  Speaker 1: It's going to be a wild ride these next 10 years.
• 31:57
  Speaker 2: Yes, incredible, really need like the pace at which everything is progressing.
• 32:02
  Speaker 2: I'm very curious to see where that's where that's going.
• 32:05
  Speaker 2: And a question that comes to mind immediately with me it's such a new technology, like we need to that but also it's progressing so quickly and that will keep the same pace probably, or only grow exponentially from an innovation side.
• 32:20
  Speaker 2: What strategy does Microsoft have in place to actually make sure that their partners, both the isv's and the channel, can actually easily message that and take that message of a I but also the implementation etc, to the market that?
• 32:34
  Speaker 2: Do you see any potential Blockers?
• 32:36
  Speaker 2: There are challenges for Microsoft.
• 32:40
  Speaker 1: What my microsoft is putting out a lot, in fact, once we have the content live I'd love people to come see, like the videos and some of the things that Microsoft showed at our event, but I mean they want the partner world to embrace it.
• 32:51
  Speaker 1: What I would say in terms of blocker?
• 32:54
  Speaker 1: I would say one thing I will say about Microsoft.
• 32:57
  Speaker 1: Even as a former employee, I'm still People like brad smith, who's president of Microsoft.
• 33:05
  Speaker 1: There's an ethical level within Microsoft that you don't see in most, if not any other technology company that they will do the right thing.
• 33:13
  Speaker 1: They will do a.
• 33:14
  Speaker 1: They've always profess the cloud for good.
• 33:16
  Speaker 1: People like brad.
• 33:19
  Speaker 1: Brad wrote a book called tools and weapons and he sits at the forefront of Microsoft's aim to ensure that we Do this in the right way, right and Microsoft again being a partner led partner.
• 33:31
  Speaker 1: You know they took the word I.
• 33:32
  Speaker 1: If you know this, they change the name of the partner program.
• 33:35
  Speaker 1: In July, in fact, we had Julie Smith, julie sanford, come on to the podcast and talk about this.
• 33:41
  Speaker 1: They change the name of the program from the Microsoft cloud partner program to the Microsoft cloud partner program.
• 33:47
  Speaker 1: So they've infused a I into everything, including the name of the partner program for the 400,000 partners, which tells me and the channel incentives and everything that they're doing that they're leaning in, have more heavily they are.
• 34:02
  Speaker 1: I know for a fact that they are quintupling the size of the technology groups supporting a I.
• 34:09
  Speaker 1: They had a team of black belts as an example here in the United States.
• 34:14
  Speaker 1: That was a fairly small rag tag team, maybe 20 people they have.
• 34:19
  Speaker 1: They are going five times the size of that organization just to support customers here and they're doing the same things around the part they.
• 34:27
  Speaker 1: You know Microsoft's view is we bring, we bring the technology and we bring the partner and the customer together and we go south for together, which has been always been their approach.
• 34:37
  Speaker 2: I love this, yeah it just.
• 34:39
  Speaker 2: You can really see that Microsoft is always one step ahead of where they shoot, or multiple steps ahead, let's say it like that, of where they want to go and where they are Going, and that's what you can clearly see with this as well, and again also with things like that.
• 34:52
  Speaker 2: I can also highly advise that to our Listeners.
• 34:55
  Speaker 2: Like, if you launch something, launch it big.
• 34:57
  Speaker 2: Like look at Microsoft, such an enormous company.
• 35:00
  Speaker 2: But when they launch a I, they implemented everywhere, so everyone will know In their ecosystem how important that's gonna be for the upcoming Five to ten years, and there in this case, and even their executives.
• 35:13
  Speaker 1: Kevin P, when he spoke at our event, says I spent at least a half hour every morning studying what's what we're doing on a I, practicing it, implementing it, getting to know the product better.
• 35:24
  Speaker 1: This is the president of a seventy five billion dollar division of Microsoft.
• 35:29
  Speaker 1: He spending time there, which tells you the whole company is focused on this.
• 35:32
  Speaker 1: And to your point to, I think they caught a lot of others were caught flat footed.
• 35:36
  Speaker 1: I think that there was a lot of people in other places, in silicon valley particular, that we're going, getting into the rooms and going what do we do now?
• 35:47
  Speaker 1: What's our strategy gonna look like?
• 35:48
  Speaker 1: What you know?
• 35:49
  Speaker 1: They were just so caught off guard by Microsoft's announcements.
• 35:53
  Speaker 1: It's amazing.
• 35:55
  Speaker 2: Yeah, absolutely awesome things.
• 35:58
  Speaker 2: I think this really was a pure masterclass.
• 36:00
  Speaker 2: Or where the park ecosystem and channel is going.
• 36:03
  Speaker 2: We've spoken about how important as a mid market is gonna be If you want to keep your growth rates that you had in the process attack company, because the enterprise market is getting saturated, so you need to really get that opportunity.
• 36:16
  Speaker 2: We talked about how to really Work together with hyperscalers and the opportunity with marketplaces and a I.
• 36:23
  Speaker 2: How can you best implemented?
• 36:24
  Speaker 2: How can you leverage the a I that Microsoft is working with?
• 36:27
  Speaker 2: I think it was super valuable.
• 36:29
  Speaker 2: I definitely want to get you back later, fans, and thank you so much for sharing this with our listeners and to our listeners see you next week.