Microsoft backtracks on Partner Network changes that sparked uproar
blogs.partner.microsoft.com
blogs.partner.microsoft.com
"We can't afford to run every single partner's organisation for free anymore, because it's not free"
"Put it this way, when customers are paying for services they turn them off very quickly. When we give it away for free the partners leave these services on. While my budget has to pay internally for this."
"We have given partners a year to figure this out. I just can't make it free anymore."
"If we hadn't had such an influx of new partners and everyone's usage hadn't been this high, then we may not have been in this situation"
The article, where these quotes are from, talks of 7000 new partners each month [1]. So, on one hand, Microsoft clearly has a communication problem. The proposed changes slipped in without a clear, official statement and wasn't the backlash obvious? Why didn't anyone stop Schuster from doing this? On the other hand, how can they continue like this? They lose huge amounts of money because partners get a ton of licenses for free. So what's their plan? Unfortunately the announcement is as shallow as possible. Hard to regain trust this way.
But many development shops, as the one I'm in, are so dependent on Microsoft and the partner program, that switching is nearly impossible...
[1] https://www.dailytimes.live/business/microsoft-cuts-partner-...
Some features or solutions we’ve developed for our customers are reliant on our exposure to Microsoft products we would not be able to justify or afford outside the partner program. If the partner program had not been available those solutions would have been based off alternative products, most likely open source.
The most likely jump we would have made already is from SQL Server to Postgres. In that instance alone, the SQL Server licenses our product/solution has led our customers to make far exceeds our IUR usage.
I can’t imagine we’re alone in the scenario. There is no way our small company could justify purchasing the enterprise licenses we routinely suggest our customers purchase.
Just a question- what exactly are you developing within the Microsoft ecosphere that's so expensive? Prototyping new solutions with Azure these days is definitely pretty cheap, even without being an MSFT Partner.
One example is any solution utilizing encryption at rest, a feature that was previously only available in enterprise level SQL Server. That feature is now available in lower license levels and Azure.
This is probably the norm for smaller partners. You could use Open Source alternatives, or other cloud providers, so Microsoft have to offer a better or a more convenient package.
The manager/bizdev/MBA on the team sees a loss to their budget. To CYA they want to fix that budget issue, but they are only looking at the short term cost not the long term. The "I just can't make it free anymore." statement shows this with the "I" word, only thinking of their short term focused budget.
But the long term point is this:
> But many development shops, as the one I'm in, are so dependent on Microsoft and the partner program, that switching is nearly impossible...
Most Microsoft partners have high switching costs, higher because they get lots of it free, so developers/network/technology teams are locked into Microsoft due to this. These policies helped build the Microsoft product adoption.
Just as anything that is free, some of those free licenses led to pay licenses, and some wouldn't be used at all without free licenses. I have seen this with many Microsoft products and it is really how products like Windows and Photoshop came to such widespread use, people got it free or pirated it and eventually the purchases came.
It appears this manger/product lead is more focused on the business metrics of short term and right now rather than historical policies that locked lots of teams/partners to Microsoft.
This plays out over and over at organizations:
- If the engineers/designers/developers/product people win, they keep the long term programs and research and development going that builds better products to bring people in making marketing and business multipliers easier.
- If bizdev/managers/MBAs win, they cut all that out because short term it looks better to them. To them the 'open' mode [2] and research and development or free programs hit the immediate bottom line but it may not be clear how much they are responsible for the products that are marketable. Much of that is customer adoption due to good policies around engineering/product/design that these types start to strip away because they don't have a clear ROI but may in fact be a big reason for success.
A bit of the Ballmer era tried to come back from the dead, they put it under the lake like Jason Voorhees from Friday the 13th for a while again.
This is the age old battle in innovative/technology/product companies. Looks like the engineers/product/developer side won this round which is a good sign for Microsoft.
Bizdev/MBA/manager/marketing/metric focused companies kill the long term product lifeline and the 'open' mode every single time [2][3]
This is also mentioned in 'How Software Companies Die' which is almost law now:
> "The environment that nurtures creative programmers kills management and marketing types - and vice versa." [1]
I wonder when this knowledge will make it back to HBS MBA business school, there are plenty of examples in the market.
Business and marketing should be the multiplier of your value, they are not the value creators. The product / engineering / creative / research / development / design departments and the people you have are the value creators and customers are also a stakeholder that must be considered long term not just short term.
Product development has two sides, value creation (engineering/design/product) and value extraction (MBA/bizdev/marketing). It is a balance, when one side has too much power, it kills the product but much faster on the value extraction side. In most cases, lack of power in the value creation side ends the company or leads to stagnation because all the value and grace is extracted.
[1] http://www.call-with-current-continuation.org/rants/how-comp...
[2] https://genius.com/John-cleese-lecture-on-creativity-annotat...
It has, but there's a fundamental incentive problem that I have to wonder might be a byproduct of how younger people are switching jobs so often. You can get a lecture about long-term growth and read 100 case studies about this, but at the end of the day in order to get promoted in your bizdev/MBA role you have to show some accomplishment that you can quantify and put on your resume. You could probably ask these people if they thought this particular change in this particular manner at this particular time was the best long term strategy for the business, and I'd be willing to bet that a lot would have said "no, but we have to do it anyway."
I have no doubt Gavriella Schuster figured it would help her budgets and maybe provide growth through some converted customers. But that is short term as really the licensing model of many systems are dying and no one would ever recommend SharePoint if they couldn't use it for free to develop on and use internally. Some products would die faster without the partner program and the licensing model is ancient due to the cloud in favor of per-use/subscription/SaaS, licensing really only works for consumer products but even then it is tough. Microsoft already knows this as Azure is essentially their main product instead of OS going forward. So this move just seems badly timed.
The other reason people are so short term focused, especially in the management/budget side, is that building value takes lots of time and is risky to budgets. Therefore budgets are guarded heavily to focus on P&L which overrides research and the open mode needed to create products.
Simply doing something that is short term does damage but ultimately brings in short term gains (budget savings), those results can be quantified and seen as a good short term solution while most of these people are long gone before the network effects of that change are realized.
Building value takes time and that is why large companies buy up startups, they are value-focused. Even Apple with the iPhone really used all the R&D at NeXT/NeXTSTEP to move so fast and have such a solid market leading launch. Ultimately value creation rules the world, it is just the value creators are usually overruled eventually by the extractors.
Ftfy
Edit: most the time short or long term stability isn't provided by such moves.
And the young people switch jobs so often because the corporations don't care for their employers less, and the corporations do that because of short term gains.
It's a vicious circle.
If people switch jobs often, you can't build complex software anymore because it takes time to grow the required knowledge.
This (attempted) change to the partner internal-use licensing feels like it's cut from the same cloth - The existence of IUR didn't seem to be an issue previously and the need to change it now doesn't pass the sniff test.
Probably a better play here would be to give partners a choice - Each year you can have the IUR OR equivalent entitlements in Azure/0365. That gives partners a transition path, within a construct where the deal can be sweetened/tweaked as necessary, and doesn't make the mistake of brow-beating anyone towards cloud adoption (which tends to have the opposite effect).
> 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.
No mention of the next fiscal year, or the one after that.
Microsoft already decided they want to push these changes through -- and they will. It might just take them a little longer than originally planned but Microsoft will continue to "extinguish" anyone or anything standing in their way.
(I know this isn't a popular opinion with some of the developers here on HN -- who seem to think they are Microsoft's BFFs -- but some of us don't forget so quickly.)
Isn't subsiding by a major market power generally seen as an anticompetitive action?
Microsoft was going to yank internal use rights from the "partners". For many (most?) of them, this is the primary reason they remain partners. Without this benefit, lots of them will choose not to remain partners.
Many companies will only work with Microsoft partners. Lots of them would work directly with Microsoft if that were an option (as some are speculating it will soon be).
So there will be a lot less "partners" standing in between Microsoft and their customers. Then, at some point, Microsoft will start working directly with these customers, cutting out the middleman, sucking them into their subscription models (which will be expanding), have more insight into their operations, and will be better able to track (and enforce) licensing.
To put it a simpler way, Microsoft is simply going to cut out the middleman -- the partners -- and take their customers -- and revenue -- away from them.
Losing them would be really bad for Microsoft, because they are at the forefront installing, integrating and extending the Microsoft stack into their customer base. Think of deals in the government or education sector.
Microsoft should not put those businesses and resellers into the same basket. But they are right now and every change affects them both. Hard to get out of that program which has been running since decades...
It would be, but they won't lose them.
Those folks aren't going to just all of a sudden stop using or recommending or integrating/deploying Microsoft products. With regard to licenses for development / test / demo machines and such, the 180-day evals (which can be "renewed" for 30 months, IIRC) aren't going away and will work just fine for them in the majority of these cases. Besides, the dev shops and integration businesses aren't who Microsoft is targeting right now -- they provide value to Microsoft and will continue to do so.
There's a lot of "partners" that are only partners because of the money they save in licensing costs. Why would Microsoft really care if they remain partners or cost? Their value to Microsoft is very little (and probably a net negative in many cases) so why not force them to pay "full price" for their licenses too? Microsoft has been effectively giving them away like candy for years and years and now that's going to change. They may have backtracked, for now, but I fully expect them to continue limiting, restricting, or totally phasing out internal use rights -- except, perhaps, for the higher/highest partner levels. To Microsoft, the smaller "partners" just aren't worth dealing with at this point and this is an easy way to get rid of many of them without simply "kicking them out" of the partner program.
I've thought about this a lot deeper than I care to write about here at the moment but I think their long-term goal here is to continue to push as much as they can into Azure for that sweet, sweet (monthly recurring) "subscription" revenue (plus licensing!) month after month. For anything else -- whatever they can't push into Azure (where they can track it much better) -- they're gonna make sure that everything is fully licensed and that they're extracting every penny that they can. They simply don't need the majority of the partners in order to do this.
Microsoft, of course, is after the large enterprise customers -- the ones they can extract the most revenue from. (By the way, they can already work directly with Microsoft Professional Services and "skip over" the partners.) Once Microsoft has gotten them to move everything into Azure, Microsoft will be able to work with them more directly and provide more services to them that would traditionally be provided by partners.
(In the interest of full disclosure, I should perhaps mention that I once owned a company that was a Microsoft partner. That's been so long ago that it really isn't even relevant to the discussion, though. More recently, I worked for another such "partner" -- in name only.)
It's really just a question if it is in MS interest to make sure their "partners" always use MS products instead of those of the competition. It's not a question of ethics.
I think the term is "price differentiation". Some people get it cheaper.
No. The US courts have held that company managers have wide latitude in how they perform their duties. Managers don't have to do anything in particular, since you know, they were hired to manage the company.
They do not have have to "maximize shareholder profit" as HN commenters always say.
Having said that, the board or large shareholders (more than 5%, or a large group of shareholders) could influence mgmt. if they wanted to either via the board or the courts. But the onus is on them, not mgmt., to make that effort.
Offering their customers exactly what they wanted so that they didn't go elsewhere to get it? That's just a smart business move.