Life inside the Microsoft rocket

It has been an excellent year for Microsoft, particularly for its Azure cloud business, which showed revenue growth of around 51% when it reported its results for the quarter at the end of July. Office Commercial products and cloud services revenue jumped 20%, led by Office 365 Commercial revenue growth of 25%. Office Consumer products and cloud services saw growth of 18% and it reported there were now 51.9 million Microsoft 365 consumer subscribers. There is clearly no stopping the juggernaut, but it can’t do it all by itself, which is why its partner ecosystem is so important to sustaining growth.

Lionel Moyal, the commercial partners lead at Microsoft South Africa, is wearing a thick jacket when our Zoom, sorry, Teams call takes place in the dead of winter, and says his study is too cold, and so he moves around his house, following the sun.

I last saw Moyal in the flesh when he handed out the trophies at the company’s last partner awards to be held in person in 2019, at the Houghton Hotel. At the time of our interview, he says he and his team are busy finalising the criteria for this year’s awards ceremony, which he thinks is probably going to be held online again.

Moyal has been at Microsoft for five years. Before that, he was one of the founders of a company called Intervate, a Microsoft partner, at which he spent 17 years.

He says the company has a large and diverse partner channel, and he wants to speak about its managed partners and how it helps them grow by building skills, products and services, and then helping them to take those to market. These are encapsulated in its ‘Build With’, ‘Market With’, and ‘Sell With’ programmes.

The first of these will see Microsoft help a partner build a practice and provide the training so they can build its competencies, or, if the partner already has a practice, assist them in packaging that product, service or offering, and taking it to market.

Virtually every business in South Africa is, in some shape or form, a Microsoft customer. There’s a diverse range, and they’re sorted by revenue, or seen as strategic accounts, or, for instance, are large consumers of Azure. These are also enterprise managed accounts, with dedicated sales teams looking after the top 120 customers in the country, as well as a corporate segment of about 450 customers.

“We very specifically look at what we can sell to those customers that will drive revenue for Microsoft and our partners. Microsoft is a platform company, but the end-solutions are most often delivered by partners. It’s not just about our products, it’s how we drive – especially in the world of cloud – a consumption economy that is creating opportunities for our partners to create solutions for customers,” he says.

“We help our partners sell into those accounts by connecting the dots between what our customers’ needs and demands are, and what our partners can offer and provide as products or services.”

Microsoft builds a growth and business plan with managed partners, and will ask questions about its strategy, the solution it’s taking to market, and what sets it apart from its competitors. The partner may, for instance, be interested in providing AI solutions, or business applications, or infrastructure, or modern workplace communications.

The partners can also benefit from Microsoft’s research, which it uses to predict growth areas in the market.

“We’ll create a go-to-market that combines your skills, knowledge and IP, and we’ll create something that we can package and take to market together. So we’ll work with them one-on-one on a particular account where we see an opportunity, but, more importantly, we’ll also get involved with programmatic customer acquisition drives. If a partner is very strong in an industry, like financial services, and they’ve got a good offering around data analytics, then we’ll profile our customers, such as the top customers in financial services that may have this requirement. Then we’ll come up with a list, and we’ll go and target those customers."

He says it can’t just be a transactional business, ‘and hope your partners will do all the work for you’.

“We are actively creating demand with them, for them, and being very deliberate in helping them grow. If they succeed, we succeed.”

Its partner programme is known as the Microsoft Partner Network, and there are silver and gold tiers, as well as a whole lot of competency areas for different workloads. There is also what it calls ‘advanced specialisations’ in, for example, AI solutions, and it’s these specialisations that are the keys to success for a partner.

“What we’re finding is that as we get deeper with the technologies, and we get more complex solutions with customers, it’s not good enough to just be gold, and have a competency. You really want to be an expert partner, so we drive these kinds of advanced specialisations, which are very niche and focussed.”

There is also a uniquely South African emerging partner programme, now in its third year, for black-owned businesses.

Moyal says this was launched because it was thought to be important for the country; it’s an accelerated path to get emerging partners to the gold tier. There’s a particular focus on SMMEs, which have to be 100% black-owned. “We accelerate and handhold them to give them an easier, more guided path.”

The programme has grown from about 40 to around 100 emerging partners, and it’s now getting two or three inquiries a day. The local office is working with Redmond, known as ‘Corp’, for the launch of its African- American partner programme, which has a similar offering.

Emerging partners looking to enter the programme need to have a BEE and SARS tax clearance certificate, both of which will be checked by Microsoft.

Moyal says it’s by no means an easy journey or a handout for the emerging partner, and there’s a lot of work they need to do to become a sustainable company.

“Many of them are already doing business; they’re not startups. Through the process, you’ll find some will reach silver, and some gold, and then it’s easier for us to work with them at that level. Until they’re at least silver, there’s not a lot we can do with them other than provide training and certification. We can’t introduce them to a customer until they have proven competencies and certifications. It’s too risky for the customer and it’s too risky for us. The onus is on them, and we don’t have to do too much to weed out (some partners). It’s up to them to choose their own pace. If they don’t do anything and don’t achieve silver in a year, then we can say they’re not really moving.”

With the first cohort, about 12 (from 40) have emerged with silver and gold certifications, and some of those are now on the company’s managed partner list. The rest are still in the programme and are working through the process, but he thinks as the initiative gathers momentum, the company may need to be more discerning about who it chooses in future.

Microsoft provides virtual classroombased training, but it’s largely self-learning. There’s also material available, for free, on the Microsoft Learn portal.

For the silver tier, partners need at least one customer reference, depending on the competency, and a certain number of certified people.

“Now we can see they’ve built up some experience, and it becomes safer for us to add these partners to a list. And when our customers ask – and they are asking – for SMME partners to engage with, we have a list of partners we can suggest they engage with.”

So what’s it like working at Microsoft, and how does the local office communicate with Corp?

He says that with it being such a large company, ‘it has to develop engines that work everywhere in the world’, and, with that, ‘you have to expect that a lot of it is predefined’.

“There’s an operating model that lands everywhere in the world. However, you do have some autonomy in the regions as well. We have pockets of investments that we can do and we can localise a lot of the programmes. You have flexibility,” he says, mentioning the emerging partner programme as an example.

But as much as there is some flexibility, he says it’s not always easy. The global Microsoft engines sometimes don’t lend themselves to localised initiatives.

“For example, you don’t get a lot of support initially, or structurally, from Corp, because it’s not designed for some of these things, but you do have some flexibility on the ground. It’s difficult to change a big corporation,” he says.

That said, he says Microsoft is a very agile organisation and that the pace of work is fierce and energising. It also has a lot of internal programmes on how to maintain a healthy work/life balance.

”There’s so much going on. It’s like being a rocket in space. There’s very little friction. The more you accelerate, the faster you go and you can just keep going,” he says. “We are very fortunate, and we’re very privileged that we’re in a sweet spot of transformation. We have technology that is very much in demand and very pertinent to what is happening in the world.

“Literally anything you can imagine, you can probably make it happen. It’s up to you how you prioritise your time. Obviously, we are very driven and there are metrics in terms of what the organisation wants you to achieve. But you still have capacity to say, ‘How are we going to localise this and make an impact?’ And you’re surrounded by great people and you can leverage some incredible minds and I guess it’s up to you to manage how much you want to do and how much you can do.”

With a massive organisation, there’s obviously going to be missteps, and some things don’t work out as you think they might. “We learn and adjust,” he says.

“We understand that what we’re doing hasn’t been done before. The technologies we’re launching and the transformation we’re doing with customers is all new. We try different things, and not everything is going to succeed, like any other business. But certainly, we’re very outcomes-driven, very data-driven, and so we measure the outcome of what we invest in. We stay close to what we do, and you have to be able to fail fast. That’s what’s interesting about Microsoft. Yes, it’s a giant, a huge corporate, but it’s by no means slow in adapting and adjusting.”

Turning to cloud, Moyal says it’s a very competitive area and one that is growing very quickly.

“It’s incredible. Even the competition, I presume, is growing at a massive rate. It’s good to have competition because it keeps you on your toes, and it keeps you innovating. That’s good for the market and the customers.”

Moyal says the majority of its customers have moved to Azure, and between the time it was announced and the time it landed in March 2019, it saw 1 200 partners signing up. Since then, another 1 900 partners have signed.

“It’s not just driven customer demand; the entire ecosystem got a boost. The amount of partners and companies getting created to provide services and meet that demand has increased. It’s been an incredible boost to the economy,” he says, quoting stats from IDC, which showed the local cloud market was worth $600 million in 2019, and was estimated to grow to $1.7 billion by 2023 at a CAGR of 30%. IDC also predicts infrastructure workloads in Azure to grow by 40% to 50% next year, and, in the productivity area, growth of between 30% to 40%.

What kind of cloud services are the SMBs looking for?

There’s a big drive around productivity – probably due to Covid – and growth in the uptake of Office 365 and Teams, OneDrive, as well as big acceleration with security and privacy products as SMBs get their PoPI houses in order.

In the infrastructure area, there is an uptake in general hosting, virtualisation and backup and disaster recovery by SMBs.

A similar picture emerges from the public sector, where there is also a focus on Microsoft 365 productivity, collaboration and infrastructure. He says there are many ageing environments in the public sector, and thus moving workloads to the cloud is important, bringing cost-efficiencies.

“Windows is the stuff that makes your computer run; Azure is what makes the cloud run. Azure is the new Windows; it’s the cloud operating system and the new platform on which to build. Our partners run in Azure and the good thing is that our ecosystem is able to operate, and leverage a greater access to customers through the cloud. With Covid, more people are working remotely, which means our partners can service their customers remotely; borders are becoming even less important than they were a couple of years ago. This means expansion capabilities, and competition, and the opening up of opportunities. Because we have a strong Microsoft skills base in South Africa, we can service customers elsewhere in the world and become a hub for strong technical skills. It’s good for our channel.”