Thursday, March 30, 2006

Microsoft Capital Markets Partner Summit

John and I spent Wednesday in Redmond at the Microsoft Capital Markets Partner Summit: a group of ISVs who provide tools into the Capital Markets space, and the Microsoft team that supports them.

There were some interesting companies there--I'll have another post on that later.

It was very interesting to see how Microsoft is changing their approaches to serving their customers.

On one hand, Microsoft doesn't sell very much direct to customers--indeed, something north of 95% of their revenue comes through partners.

On the other hand, Microsoft has a vested interest in talking with customers, ensuring that the end customers understand both the value of the OS and the value of the tools available on that OS.

That means that Microsoft has to work closely with their partners when talking to customers. The partners--ISVs--need to sell their products; but it's Microsoft's job to sell the platform.

For years, when a large financial company wanted to buy a large system, they went to a consulting company--say, IBM. IBM would put together a team of companies: hardware, OS, middleware, software vendors, and consulting services. It was an easy way for the customer to buy: one company was championing the whole thing (IBM in this example, but there are others). Moreover, from the customer's perspective, there was one "throat to grab" if things went wrong.

Microsoft wasn't selling that way at all. Microsoft got into financial companies the way they got into every other company on earth: selling operating systems for desktops and office applications. Then, in the late 90s and into the 21st century, a funny thing happened: Microsoft wrote a server operating system and a powerful database. Software vendors started writing high end packages on the platform.

But there's a rub: how do you sell this? Microsoft didn't write applications for finance, nor did they employ experts in the field. So they didn't have an effective way to tell potential customers about the virtues of their platform. And the software vendors knew a lot about their area of expertise, but they weren't heavyweight enough to push platform decisions on their customers. (I ought to know--I was writing enterprise software built on NT, SQL Server and IIS back in 1997. The platform was a tough sell)

In the last couple of years (especially in the last year), Microsoft has learned many lessons about selling into these types of enterprises. They have hired aggressively, bringing experts on staff who can speak the language of finance while preaching the benefits of the platform. They've also pursued the integrators: with Accenture, they created Avanade. They also work with many of the other big integrators.

They're holding events like yesterday's Capital Markets Partner Summit to help create a sense of community among partners--partners who may bid against each other on some deals, but are even more likely to have complementary products in many instances.

Finally, they're providing coordination as these efforts go forward. They can approach customers not piecemeal, but together: the platform, the software, and the integrators to make it work. And, by taking the lead, Microsoft is essentially offering up theirs as the "throat to grab."

Microsoft is doing the exact same thing in other industries, too (banking, manufacturing, health care, etc). They are helping us (the ISVs) bring our products to the market.

Most importantly, they are giving their customers a better, more complete picture of what they can have when they choose this platform: OS, database, software vendors, and integrators, all one one page.

It was a great couple of days. Thanks to Ed Muth, Kenny McBride, Rich Feldmann, Stevan Vidich, Christina Fritsch, and everyone who gave the great sessions.

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