Small Business Offensive Tom Healy Is Spearheading Best Buy’S Push Into Small Business Sales

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ChannelRedmond Partnerwww.rcpmag.com ■ June 2006 DRIVING SUCCESS IN THE MICROSOFT PARTNER COMMUNITY

Honored as BEST START-UP PUBLICATION Jesse H. Neal National Business Journalism Awards 2006 Best Buy’s Small Business Offensive Tom Healy is spearheading Best Buy’s push into small business sales. Can partners handle the competition? 22 +Going Gold: Worth the Effort? 30 A Dynamic Approach to ERP 36 Make Specialization Work for You 42 Project8 5/3/06 4:05 PM Page 1 Project8 5/3/06 4:06 PM Page 2 Project1 5/3/06 11:22 AM Page 1 0606rcp_TOC_1.v7 5/9/06 4:21 PM Page 1 Redmond ChannelPartnerJune 2006 DRIVING SUCCESS IN THE MICROSOFT PARTNER COMMUNITY

FEATURES DEPARTMENTS 42 36

22 Best Buy’s Small-Business Offensive In a move that’s making some Microsoft partners jittery, the retail giant plans to double the number of stores targeting SMBs this year. 14

30 Going for the Gold 4 PARTNER POINTS 22 Making the jump from Certified to Gold License management issues addressed and suggestions Certified is worth the effort—but not necessarily offered; a defense for Software as a Service; a reader for the reasons Redmond emphasizes. expands his prospects with inside information 6 CHANNEL REPORT 36 Getting Serious About ERP Support deadline looms for Windows 98/SE/Me . . . . . 6 Microsoft is getting serious about Dynamics, Piracy in China tempers business opportunities . . . . . 8 and partners should, too. Microsoft Partner Calendar ...... 9 Microsoft earnings a mixed bag for partners ...... 10 30 42 One Hat or Many? ANATOMY OF THE DEAL: Microsoft-Hyperion Solutions . 12 Can your IT services company be a generalist PARTNER SPOTLIGHT: Intellagent Solutions and a specialist? Making the move from service provider to product vendor ...... 14 51 SOLUTION SPOTLIGHT Virtual Server 2005 R2: The update release has a range of applications that can help your customers RCPmag.com improve efficiency and cut costs. Need Technical Information? COLUMNS Stop by RCPmag.com’s Tech Library for valuable FindIT Codes technical papers on a variety of topics in PDF format. PARTNER ADVOCATE: Scott Bekker You’ll get expert advice from the editors at Redmond You’ll see FindIT codes Push for Answers on Software as a Service ...... 2 (our sister publication) on topics like stopping spam, embedded throughout Redmond Channel PARTNER VIEW: Jeff Rudolph, Partner in Charge, better data recovery, Group Policy and much more. Partner. Simply type these Plus, leading IT vendors explain how to get the most Sikich LLP into the FindIT code box The Best Estimate ...... 19 out of their latest offerings. Best of all, everything’s on any RCPmag.com page free—you can download as much as you want, and you’ll jump directly to whenever you want, by completing a simple, one- the desired information. MSP VIEW: Charles Weaver, President, MSPAlliance (Note that all FindIT codes So You Want To Be an MSP… ...... 20 time registration. are one word, and they Find out more and download your favorites today. are not case-sensitive.) FindIT code: Library DIRECTIONS: Paul DeGroot Striking the Balance in Partnership ...... 56

COVER PHOTO BY JOE TRELEVEN 0606rcp_Advocate_4.v7 5/9/06 6:19 PM Page 2

ChannelRedmond Partner DRIVING SUCCESS IN THE MICROSOFT PARTNER COMMUNITY

RCPmag.com June 2006 ■ Volume 1 ■ Number 8

Partner Advocate Editorin Chief Scott Bekker [email protected] Executive Editor Anne Stuart [email protected] SeniorEditor Lee Pender [email protected] Managing Editor WendyGonchar [email protected] Solution SpotlightEditor Lafe Low [email protected] Push for Answers Editors, RCPmag.com BeckyNagel [email protected] Michael Domingo on Software as a [email protected] Associate Editor, Web Daniel Hong [email protected] Service ArtDirector Scott Shultz [email protected] SeniorGraphicDesigner Alan Tao [email protected] By Scott Bekker customers. And the company is looking at In the March issue of Redmond Channel building up a global infrastructure of server Partner, Rich Freeman’s cover story took a farms that could support that business Group Publisher HenryAllain comprehensive look at Software as a Service. model. How serious is Microsoft? Ozzie has Redmond Media Group [email protected] The gist was that Microsoft is moving rapidly a 300-page printout on his desk detailing Editorial Director Doug Barney toward this new Internet-based delivery the locations of telecom and power sources Redmond Media Group [email protected] Group Associate Publisher Matt N. Morollo model, and, as a partner, you need to start around the world. Redmond Media Group [email protected] Ithinking about where that will leave you. For Microsoft, the emphasis seems to be DirectorofMarketing Michele Imgrund [email protected] When we started working on the article, on matching Google and Yahoo. As big as SeniorWeb Developer Rita Zurcher a lot of information was coming out of Microsoft is its leadership is genuinely con- [email protected] Marketing Programs Videssa Djucich Microsoft about this services push, includ- cerned about being outmaneuvered by its Associate [email protected] ing internal memos from Bill Gates and Ray search-engine rivals. But just because Editor, ENTmag.com Scott Bekker [email protected] Ozzie and the company’s efforts on Windows Google and Yahoo are the ones in the Editor, MCPmag.com Michael Domingo Live and Office Live. crosshairs doesn’t mean that partners [email protected] Editor, Redmondmag.com BeckyNagel Although the memos were highly publi- won’t feel the impact when big changes hit. CertCities.com [email protected] cized outside the company, it was hard to It’s been apparent since last year that tell at first how much momentum they had Microsoft is approaching small business

inside. Also, with the main memo coming customers directly online. With ad-sup- President & CEO Neal Vitale [email protected] from new guy and Chief Technical Officer ported free e-mail and Web sites for compa- CFO Richard Vitale Ray Ozzie, instead of Chairman and Chief nies with 10 or so employees, the Office [email protected] Executive Vice President Michael J. Valenti Software Architect Bill Gates, who is the Live push threatens partners whose busi- [email protected] traditional sender of disruptive internal ness relies on implementations at the Assistant Controller Janice Ryan missives, it was hard to know how seriously smallest customer sites. The strategic fight [email protected] Director, PrintProduction MaryAnn Paniccia to take the messages. with Google and Yahoo signals that [email protected] But evidence that the online-services Microsoft could also soon chase partners Director, Data Services Abraham Langer [email protected] initiative is real, and that the company is up the value chain when it comes to mid- DirectorofWeb Operations Marlin Mowatt serious about change, keeps piling up. size and even enterprise customers. [email protected] Director of IT JerryFrazier Recently, Fortune magazine ran an inside You need to push hard for answers from [email protected] account in which key Microsoft executives your Microsoft contacts about how and Chairman ofthe Board JeffreyS. Klein [email protected] spoke frankly about the business discus- when these services are going to be real. sions and sense of urgency permeating the And you need to keep after partner execu- Redmond Channel Partner The opinions expressed within the articles and other contents herein upper echelon at Microsoft. tives to make sure they’re thinking about do not necessarily express those of the publisher. Postmaster: Send address changes to A few details from the Fortune article ways for partners to fit into the picture. The Redmond Channel Partner, P.O. Box 2166, Skokie, IL 60076 bring sobering news for partners. Microsoft Microsoft Worldwide Partner Conference is looking seriously at providing hosted e- in July would be a great place to start mail and file server capability to enterprise that conversation. • BPA Worldwide Membership Applied forMarch 2006

2 REDMOND CHANNEL PARTNER June 2006 RCPmag.com Project3 5/9/06 9:37 AM Page 1

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A Sampling of Letters PartnerPoints

License Management Made Easy [In reference to Paul DeGroot’s Directions SAAS COMPANIES REALLYDO CARE I disagree with Christopher Bell’s comments column, “My Dog Ate My License,” May [see “Partner Points,” April 2006, p. 4]. A 2006], given Microsoft’s supposed major SaaS company cares about your data as push for the [small to midsize business] much as you do because a SaaS company will no longer be in business if it does not. SMB market, I do not understand why they Because you pay monthly, instead of don’t make it easier for SMBs to purchase upfront, and because we need to have many happy customers to be successful (low price- the software in North America. point, high volume is the name of the The “Open Value Subscription game), our interests are aligned with yours. Option” is exactly what a lot of U.S. SMB My company is a SaaS e-learning and webcasting company. It would only take a few customers want. It’s simple, they only unhappy customers to trash our company and have to think about it once per year and spread the word to others. Not caring about you is not caring about our own success. they can spread their payments out. Most And I would bet, in our example as an clients that I work with want to be com- e-learning SaaS provider, that we have much more experience caring for and pliant with their licenses, but find it impossible to do so. The Open Value managing e-learning data than our cus- Subscription Option could help make it easy for them, but it is not avail- tomers do. We eat, sleep and breathe this able in North America. stuff every day. Peter Cervieri U.S. customers are saddled with the company-wide option and the New York, N.Y. standard option. I think that if they opened this option up to U.S. SMBs INSIDE INFORMATION I found this article [“Reaching the Decision they would find a lot of takers. Customers just want license management Maker,” April 2006] very interesting. I really to be easy. Even customers with 100 PCs want options to simply re-up liked the part about deliberately dialing the wrong extension and then saying, “Oh, I was once per year with an accurate count of desktops. Dealing with Windows trying to reach ‘Joe CEO.’” and Office licenses every time you purchase two to three PCs is a night- I work “outside sales” in risk manage- mare and they simply don’t want to have to deal with that. I have never ment and used to limit my prospects to companies where I knew that the only person I seen anyone from Microsoft explain why this option is available world- would need to talk to were the owners them- wide, except in North America. Josh Krueger selves. Since I started receiving this magazine Bloomington, Ill. and the Redmond Partner Update newsletter, that is changing. And it’s all thanks to inside information like this. Keep up the good work. It’s very appreciated. SOUND Got any tales ofyour own you’d like to share? Thoughts about stories Rollin Walter in this issue? Send your rants and raves to [email protected]. Salem, Ore. OFF! Please include your name, title, company, city and state.

4 REDMOND CHANNEL PARTNER June 2006 RCPmag.com Project1 5/3/06 9:44 AM Page 1 0606rcp_CR_6-12.v7 5/9/06 11:27 AM Page 6 ChannelReportNews + Analysis

This isn’t Microsoft’s first attempt to Putting completely cut support for the Windows 98/SE/Me group. Microsoft originally planned to scrap support for the platforms Windows on Jan. 16, 2004. Just before that date, Microsoft reversed course, extending the 98 on Ice deadline until the end of this month. July 11 support deadline looms for Microsoft explained its decision by saying Windows 98/SE/Me. Windows 98 that its ongoing evaluation of its Support Lifecycle policy, which lays out periods of By Scott Bekker Time Capsule mainstream and extended support for On July 11, Microsoft will officially retire Windows 98 was launched on June Microsoft products, revealed that cus- support for Windows 98, Windows 98 25, 1998, at an event in San Francisco. tomers in smaller and emerging markets Second Edition and Windows Me. Following is a sampling of what else needed more time to upgrade. IDC, the Microsoft has been phasing out the was happening in the world around Framingham, Mass.-based IT research and three Win9.x-based platforms for years. the same time: analysis company, estimated that, at the One major step, taken in 2004, was limit- end of 2003, nearly 60 million PCs were ing security updates only to critical issues. Cost of a gallon of still running Windows 98. Other supported Microsoft operating sys- $1.05 regular gasoline That original deadline was one of the tems, such as Windows XP and Windows first major tests of the company’s Life- Server 2003, get additional patches for cycle Support policy, and Microsoft security vulnerabilities in Microsoft’s low, 9,200-9,300 flinched by acquiescing to user requests moderate and important categories. Dow Jones Industrial Average for additional time. On June 30, 2003, Microsoft formally This year, IDC expects Windows 98 ended both no-charge incident support usage to fall fast. “The installed base for and extended hotfix, or bug-fix, support Osama bin Laden Windows 98 currently accounts for about for Windows 98 and Windows 98 Second Implicated in the bombings of two 8.7 percent of the overall Windows client Edition. No-charge incident support and U.S. embassies in Africa OS total,” says Al Gillen, IDC’s research vice extended hotfix support were shuttered president for system software. “By the end for Windows Me on Dec. 31, 2003. Ken Starr of this year, that number should drop to Officially ending for all three systems Appointed to head investigation of under 3 percent of the total. The time for on July 11 are: Bill Clinton/Monica Lewinsky saga Microsoft to drop support, if not now, ■ Paid incident support that dominates Washington, D.C. would surely be in the near future. ■ Critical security updates on the Windows 98 has been replaced by two con- Windows Update site Microsoft’s recorded sumer releases and two business releases.” ■ Consideration of customer requests $14.48 annual revenues for Customers—and the partners support- for non-critical security fixes on the BILLION fiscal 1998 ing them—will have ways to hang on to three operating systems and their com- Windows 98 if they must. Microsoft has ponents through standard assisted- Microsoft’s committed to leaving self-help support support channels $108.37 share closing online until at least June 30, 2007. But ■ No-charge downloads for existing on June 30 Microsoft clearly doesn’t want customers security issues through regular assisted- to stay on Win9.x indefinitely, and that support channels Continued on page 8

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Continued from page 6 stance isn’t all about upgrade revenues. With the release of Windows XP in 2001, Microsoft achieved a longstanding ambition of bringing its consumer operating systems onto the more secure and stable Windows NT code base. Since the release of Windows 2000, Microsoft has implored Taking on businesses to get off Windows 9.x onto its more robust business client operating sys- the IP Thieves tems. New security vulnerabilities continue to dog the Win9.x platform, with many of the issues discovered this year raising critical threats to users of Windows 98/SE/Me. Back on Jan. 16, 2004, it might have seemed to partners that the new support deadline would be a good opportunity to talk customers into Windows Longhorn Piracy in China tempers the enormous business (now Vista) upgrades. At the time, few opportunities there. By Anne Stuart probably imagined that Windows Vista still wouldn’t be available by June 2006, let sing a one-to-one approach, Microsoft has taken a leading role in the fight alone until early in 2007. (Analysts at against software piracy in China. But many experts question whether any Gartner even recently predicted that the U.S. effort is strong enough to reduce intellectual property counterfeiting new OS won’t make it out the door until and theft in the world’s most populous nation. the second quarter of 2007.) Users now U have the option of hanging on with an Microsoft officials have said that while China is the world’s second-largest PC market, it’s only the 25th largest for legal software purchases. The Business Software unsupported platform or investing the Alliance, an international trade group, estimates that 90 percent of the software used time and effort to upgrade to a Windows in China is pirated. XP operating system that’s already five Microsoft recently stepped up its anti-piracy campaign through a combination of years old. • high-profile diplomatic meetings with Chinese officials and cooperative agreements with Chinese technology companies. In April, Microsoft Chairman Bill Gates met brieflywith Chinese Software piracy by the numbers President Hu Jintao on the Microsoft campus in Redmond. Although part oftheir discussion was offthe record, Hu publiclypraised Gates as “a friend ofChina” and added: “I’m a friend ofMicrosoft.” Gates, in turn, told 90 percent Estimate of how much the visiting head ofstate that “we are encouraged bythe efforts ofthe software in use in China is unlicensed Chinese government to strengthen intellectual propertyprotection.” Speaking with reporters later, Hu—an engineer by profession— $6.6 billion Amount of U.S. industry’s reiterated his support for combating software piracy. losses due to piracy worldwide Around the same time, two leading Chinese PC manufacturers formally pledged to work with Microsoft in promoting IP protection in $3.5 billion* Amount of Chinese their homeland. TCLGroup and Tsinghua Tongfang Co. Ltd. signed agree- industry’s losses due to piracy worldwide

mentspromising to install only“genuine,” or valid, licensed copiesof * in U.S. dollars Microsoft software on PCproductssold in China. Tsinghua Tongfang SOURCE: BUSINESS SOFTWARE ALLIANCE AND IDC GLOBAL SOFTWARE PIRACY STUDY, 2005 expectsto purchase $120 million in Microsoft Windowslicensesover the Continued on page 10

8 REDMOND CHANNEL PARTNER June 2006 RCPmag.com 0606rcp_CR_6-12.v7 5/9/06 11:27 AM Page 9

MICROSOFT PARTNER CALENDAR

>>FOLLOWING ARE LISTINGS for upcoming events Gainesville, Fla. (Event ID: 1032293889) “Competitive Tools and Resources,” describing that may be of interest to Microsoft channel partners. Austin, Texas (Event ID: 1032293890) current market opportunities for partners with Please note that times and dates are subject to Lotus Domino or Novell migration expertise. change; visit www.microsoft.com/events for June 7 Scheduled locations include: updates. Anchorage, Alaska (Event: 1032293891) June 14 Iselin, N.J. (Event ID: 1032288721) Conferences June 8 Overland Park, Kan. (Event ID: 1032288736) Cromwell, Conn. (Event ID: 1032293892) Microsoft Tech·Ed 2006 Jacksonville, Fla. (Event ID: 1032293893) June 21 June 11-16, Boston San Antonio, Texas (Event ID: 1032293894) Independence, Ohio (Event ID: 1032288735) At this annual conference, partners can try out cur- San Diego, Calif. (Event ID: 1032288654) rent and soon-to-be-released products, network June 13 with peers, meet with Microsoft and industry experts Stratford, Conn. (Event ID: 1032293895) June 27 and socialize at a variety of events, including a major Fort Wayne, Ind. (Event ID: 1032293896) St. Louis, Mo. (Event ID: 1032288733) party at Boston’s famous Fenway Park. For details and Topeka, Kan. (Event ID: 1032293897) to register, visit: www.microsoft.com/events/ Rochester, N.Y. (Event ID: 1032293898) Partner Solution Briefings teched2006/default.mspx. Microsoft offers a half-day presentation entitled June 15 “Seize the Opportunity in Midsize Business.” The Microsoft Worldwide Partner Conference: Carmel, Ind. (Event ID: 1032293899) session will cover: Velocity 2006 Wichita, Kan. (Event ID: 1032293900) ■ Midmarket trends and challenges July 11-13, Boston Jersey City, N.J. (Event ID: 1032293901) ■ Ways to help your clients strengthen customer The Microsoft Partner Program’s premiere annual Albany, N.Y. (Event ID: 1032293902) relationships gathering will be packed with information sessions, ■ Live solution demonstrations keynote presentations, hands-on learning labs and June 20 ■ Opportunities and incentives for sales plenty of networking opportunities. For details and San Diego, Calif. (Event ID: 1032293934) Scheduled locations include: to register, visit: www.microsoft.com/partner/ Tallahassee, Fla. (Event ID: 1032293935) June 7 events/wwpartnerconference. Toledo, Ohio (Event ID: 1032293936) Phoenix, Ariz. (Event ID: 1032294549) Portland, Ore. (Event ID: 1032293937) Partner Events, Presentations, June 8 Briefings June 22 Denver, Colo. (Event ID: 1032294550) TS2 events and Microsoft partner briefings are Garden Grove, Calif. (Event ID: 1032293938) Waltham, Mass. (Event ID: 1032294551) free, but pre-registration is required. For details Pensacola, Fla. (Event ID: 1032293939) and to register, visit www.microsoft.com/events Cleveland, Ohio (Event ID: 1032293940) June 13 and search by event ID code or browse by date. Eugene, Ore. (Event ID: 1032293941) Reston, Va. (Event ID: 1032294552) Dates, times, locations and agendas are subject to change. June 27 June 15 Columbia, Mo. (Event ID: 1032293944) Norfolk, Va. (Event ID: 1032294554) TS2 Events Columbia, S.C. (Event ID: 1032293945) Microsoft’sTS2 Team has scheduled a series of part- Corpus Christi, Texas (Event ID: 1032293946) June 20 ner events nationwide. Each half-day session Southfield, Mich. (Event ID: 1032294555) includes previews, demonstrations and discussion of June 28 Microsoft products and services, including: Honolulu, Hawaii (Event ID: 1032293947) June 22 ■ Microsoft Windows Vista Franklin, Tenn. (Event ID: 1032294556) ■ Windows Server 2003 Release 2 June 29 Atlanta, Ga. (Event ID: 1032293948) ■ Small Business Server 2003 Release 2 ■ The Small Business Specialist community Creve Coeur, Mo. (Event ID: 1032293949) Know about partner-related activities you’d like Redmond Channel Partner ■ Microsoft’s volume-licensing program Houston, Texas (Event ID: 1032293950) magazine to promote? Scheduled locations include: You can send details to: Executive Editor Anne [email protected] June 6 TS2 Presentations Stuart, . Please include Danbury, Conn. (Event ID: 1032293888) Microsoft’sTS2 Team offers a two-hour presentation, your name and contact information for verification.

For more information and to register, visit www.microsoft.com/events.

RCPmag.com June 2006 REDMOND CHANNEL PARTNER 9 0606rcp_CR_6-12.v7 5/9/06 11:27 AM Page 10

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Continued from page 8

next three years; TCLGroup plans to spend An Unfinished about $60 million on Microsoft licenses over the same period. There are other signs of progress. Also in April, the Chinese government Story decreed that newly manufactured com- Wall Street punishes Microsoft for playing close to the vest puters must be equipped with licensed on investment plans. By Scott Bekker software (previously, some PC-makers sold “naked” machines that buyers Microsoft is planning to invest so much share projections, analysts see Microsoft could run with their own, presumably money next year that it will depress its spending about $2 billion more than the pirated, operating systems and other future earnings. But both financial ana- outside experts had anticipated. software). But it wasn’t clear how that lysts and Microsoft partners will have to The prevailing view: Spending will be mandate would be enforced. wait until July to find out where all that devoted to the company’s efforts to chal- In addition, the Chinese government money will go. lenge Internet search engine rivals Google is offering rewards for tips about large- Wall Street reacted swiftly to Inc. and Yahoo Inc. Despite trying to boost scale counterfeiting operations and has MMicrosoft’s disclosure during the compa- MSN Search, Microsoft has actually been opened regional centers for handling ny’s third-quarter earnings call that its pro- losing ground against its search rivals in complaints about IP rights violations. jected earnings for fiscal 2007 (July 1, recent user-behavior surveys. Meanwhile, Gates has cited such measures as 2006-June 30, 2007) would be well below MSN revenue actually declined during evidence that China, like South Korea analysts’ expectations. The next day, April the financial quarter. The business seg- and Taiwan before it, is making incre- 28, Microsoft’s stock plunged 11 percent, ment saw revenues fall 3 percent to $561 mental progress toward adopting the largest single-day drop in Microsoft’s million and swung from being $102 mil- Western IP protection standards and stock value in five years. The decline wiped lion in the black to $26 million in the red. licensing practices. But he adds that out about $32 billion in Microsoft’s market The MSN division reportedly has about 20 China won’t change overnight: “It will be value, the equivalent of about $3 billion for Internet service projects in development. a decade before we get to that level,” he Bill Gates and $1 billion for Steve Ballmer. Initially, Microsoft said it wouldn’t give said earlier this year. In published interviews, analysts any details on its R&D plans until a July Still, some experts question whether reported feeling blindsided by the news. analyst meeting. But as the stock price such change will come at all. An October With Microsoft’s investments in developing fell, Ballmer provided more tidbits for fis- 2005 PricewaterhouseCoopers report, SQL Server 2005, Windows Vista, Office cal 2007: MSN R&D will get $1.1 billion “Redefining Intellectual Property Value: 2007, Exchange Server 2007 and Windows and capital expenditures will be $500 The Case of China,” suggests that IP Longhorn Server, the view from the Street million. “We have told our R&D folks that abuses may even increase as China’s had been that 2007 was a time for our number one priority is software as a power and influence grow in the next Microsoft’s profits to soar. With so many service,” Ballmer said. years between major releases, investors had Meanwhile, Microsoft invested in the few years. “China is defining its own hoped that all Microsoft’s spending on channel for its traditional businesses during approach to IP management, consistent product development would finally pay off. its third financial quarter, which ended with some traditional and widely accept- But the company’s forecast for its fiscal March 31. It spent $68 million more on ed tenets in China, but starkly different 2007 calls for operating income of about partner marketing and Windows Vista pre- from what has been accepted practice in $19 billion on revenues of about $50 billion. launch programs than it had the year before mature economies,” says Mark Haller, a The company’s diluted earnings per share in the client business segment. Within PwC lead partner and report co-author. projections of $1.36 to $1.41 were lower Microsoft Business Solutions, an increase in As a result, Western companies like than analysts expected. Reading the tea sales and marketing expenses also reflected Microsoft and its many partners need to leaves behind Microsoft’s earnings-per- channel development. • keep close tabs on the China story.•

10 REDMOND CHANNEL PARTNER June 2006 RCPmag.com Project1 3/31/06 12:00 PM Page 1

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*IDC December 2004 2IIHU JRRG RQO\WRWKH ÀUVW FRPSDQLHV WKDW VLJQ XS IRU D 6HFXULW\6ROXWL RQV &RPSHWHQF\E\-XQH /LPLWHG WR WZR H[DP YRXFKHUV SHU FRPSDQ\ 0LFURVRIW&RUSRUDWLRQ$OOULJKWVUHVHUYHG0LFURVRIWLVDUHJLVWHUHGWUDGHPDUNRI0LFURVRIW&RUSRUDWLRQLQWKH8QLWHG6WDWHVDQGRURWKHUFRXQWULHV 0606rcp_CR_6-12.v7 5/9/06 11:27 AM Page 12

ChannelReport

Hyperion’s well-regarded BI application tightly integrated with increasingly pervasive SQLtechnologies. Customers have demanded a combination of SQL and Hyperion, says Tobin Gilman, Hyperion’s senior director of product marketing. James Kobielus, principal analyst for data management at Washington, D.C.-based Current Analysis Inc., agrees. “The fact that Anatomy of the Deal Hyperion has a strong partnership with An inside look at prominent deals within the Microsoft Microsoft means that Hyperion is aware that partner community. Part of an occasional series. customers are asking for tighter integration with SQLserver,” he says. MICROSOFT-HYPERION SOLUTIONS CORP., APRIL 25, 2006 also lets users access Hyperion’s analytics HOW USERS WILL BENEFIT functions through a Microsoft front-end. The pairing is especially beneficial for THE PARTNER Customers will be able to use SQL Server mutual customers of the two companies, Hyperion Solutions Corp. is a leader in what Reporting Services, Microsoft’s front-end who will now be able to go beyond simply it calls business performance management reporting engine, to directly access data using System 9 BI+ to perform SQL queries software, a category it claims to have stored in Hyperion System 9 BI+ Essbase and reports. pioneered. (Analyst firm Gartner Inc. calls Analytics. It’ll work the other way around, the category corporate performance too: Users will also be able to access SQL HOW HYPERION WILL BENEFIT management.) Hyperion’s applications Server Analysis Services data using The partnership gives Hyperion critical combine financial management capabilities Hyperion System 9 BI+ and display SQL access to the SQL Server DBMS. Kobelius with business intelligence (BI) functionality. reports in the Hyperion System 9 notes that Hyperion doesn’t have a DBMS Based in Santa Clara, Calif., Hyperion is a Workspace front-end interface. System 9 of its own. “Hyperion is regarded as being a Microsoft Global ISV partner that participates will use SQL Server Integration Services to very strong best-of-breed player,” he says. in beta programs. The company has also move SQL data from a Microsoft environ- “It’s just a matter of Hyperion, a superior long competed with Microsoft in the online ment to a Hyperion environment. BI suite, wanting to hook up with one of the analytical processing (OLAP) space and is leading platform players, which has a actually a competitor in the BI space as well. THE MARKET DBMS at its core.” Hyperion generated revenues of $703 mil- BI is a highly competitive sector that lion for its fiscal year ending June 30, 2005. includes stars such as Hyperion, Ottawa- HOW MICROSOFT WILL BENEFIT based Cognos Inc. and Business Objects SA, Microsoft, despite having a strong BI offer- THE DEAL based in Levallois-Perret, France and San ing, wants to demonstrate that it’s serious BI applications cut through SQLcode, giving Jose, Calif. Gartner predicts that BI will be a about moving into the BI space, Kobielus non-technical users easyaccess to real-time $3 billion market by 2009. Microsoft itself is says. A partnership with Hyperion demon- reportson keymetricswithin a company also a significant BI player and made further strates just that and also signals that the or industrywithout requiring ITpeople to inroads into the space in April, when it company believes that BI is an important intervene in the report-creation process. This bought ProClarity Corp., a Boise, Idaho- technology. Once Redmond has customers’ link-up will integrate SQLServer 2005 tech- based Microsoft Gold Certified Partner and attention, Kobielus says, it will be able to sell nologies with Hyperion System 9 BI+, the BI maker of BI tools. more of its own BI applications and push component ofHyperion’s system. It gives strategic partners’ wares less often. Hyperion customers access to Microsoft’sSQL HOW PARTNERS WILL BENEFIT “[Microsoft] will de-emphasize strategic Database Management System (DBMS) This deal will create a powerful combination partnerships going forward in favor of its through a Hyperion front-end interface and for partners, who will be able to sell own tools,” he says. — Lee Pender ILLUSTRATION BYILLUSTRATION GETTYIMAGES

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ChannelReport

PARTNER SPOTLIGHT Market Shift On the strength of its scanning tool, Intellagent is making the move from service provider to product vendor. By Paul Desmond

For a guy who never really intended to get into the customer relationship management (CRM) business, Kurt Reiter is certainly making it pay. When Reiter founded Intellagent Solutions in October 2003 with his partner, Alex Gorlotov, the idea was to provide business process management (BPM) solutions for midsize companies—those with roughly 200 to 1,000 employees. Reiter, who is president of Intellagent, notes that he and Gorlotov, now the company’s vice president of solution development, each had years of experience implementing BPM solutions in both commercial and government markets. “We were strictly a service provider and reseller of BPM Intellagent products,” Reiter says. But in working with an early cus- Solutions tomer, Platform Learning Inc., Headquarters: Sterling, Va. the Intellagent team realized its President: Kurt Reiter client needed not only BPM, but a CRM solution as well. Reiter Founded: 2003 and his team researched the Line of Business: Microsoft Dynamics CRM market and decided CRM and Bluespring BPM Suite that Microsoft CRM Microsoft Partner Program Level: v1.2 would fit Certified the bill. Microsoft Competencies: Microsoft Business Solutions, with Microsoft Dynamics CRM specialty; Business Process and Integration Annual Revenue: $1.2 million in 2005 Growth Rate: 50 percent, 2004 to 2005 Employees: 10 Customer Base: Midsize businesses, including educational organizations and government agencies (notably, the Kurt Reiter hopes his company’s U.S. Department of Defense) transition from service provider to Clients: U.S. Army Central Clearance product vendor will cause some Facility; Platform Learning Inc. “high-class problems.” www.intellagentsolutions.com

14 REDMOND CHANNEL PARTNER June 2006 RCPmag.com Project1 4/10/06 9:32 AM Page 1

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ChannelReport

As it turned out, many other Intellagent clients were in the same boat. And they shared another problem: lots of paper. Intellagent developed software that made it easy for clients to scan in documents and associate them with customer records in the CRM system. “So you not only had access to data related to Beating customers and prospects, but also any paper documents that went along with it,” Reiter says. As the business grew from about $800,000 in revenue the first the Odds year to $1.2 million in 2005, Reiter saw even greater potential in A graduate of George Mason University, Kurt Reiter the scanning solution, called IntellaScan. To capitalize on was somewhat torn as his company was hawking its that potential, Reiter decided to get out of the service-provider wares at the recent Microsoft Convergence confer- business and into the product business. The software was offi- ence in Dallas. On Sunday, the show expo was start- cially launched in January 2006 and the company essentially ing at just about the same time Reiter’s GMU made its public debut in late March at the Microsoft Convergence Patriots were tipping off against the University of conference in Dallas. One of Intellagent’s new partners at the show Connecticut, continuing their improbable march predicted that the company will sell 500 copies of IntellaScan this through the NCAA Men’s Basketball Tournament. year. That would make revenue growth “somewhat exponential,” In the company’s booth in the exhibit hall, “we Reiter says. “My dad used to call that a high-class problem.” had a little window on one of the machines that we LESSONS LEARNED kept popping into to see what the score was,” From his years of experience as a service provider, Reiter has Reiter says. The Patriots earned a trip to the Final learned some valuable lessons. Four by defeating UConn 86-84 in overtime. “At First is the importance of customer satisfaction, which, in his the same time, [his alma mater’s Patriots] were view, extends to building a system the way the customer wants it beating the odds and really getting a national even if you don’t think it’s quite the best technical approach. spotlight, and we felt like we were doing the same “Sometimes you have to roll with it to make sure they’re happy thing there at Convergence.” — P.D. and getting the system they want,” he says. Another critical element: establishing and maintaining good personal relationships with customers at every level. “Doing BPM solutions, it’s easy to get sucked into just seeing the C-level vision for how they want the system to work,” Reiter says. “But if up 3,000 students or more in two or three days—all using you don’t take into account the people who will actually use the paper forms. system and really understand their needs and relate the system In its first iteration of a BPM solution, Platform Learning execu- to them, it’s not going to be a success.” tives decided to make field personnel responsible for ensuring that all those forms were complete and accurate. In practice, however, BIRTH OF A PRODUCT with so many students signing up in such a short time, that system Reiter and his team did just that for Platform Learning, a New York just didn’t work. “We had tens of thousands of [entries in the sys- City-based company that provides tutoring services to grade- tem] with nothing more than a first name and a last name,” he school students, says Eric Burke, who was vice president of tech- recalls, noting the company grew from servicing 3,000 students to nology at Platform Learning when it hired Intellagent in 2004. about 70,000 in just over two years. Platform Learning targets students in schools deemed as needing Burke, now president of Information Architects, a service improvement under the federal No Child Left Behind (NCLB) Act. provider in Lake Hopatcong, N.J., says Intellagent helped imple- Many of those students are eligible for stated-funded tutoring ment a more workable solution. Reiter and his team conducted services under NCLB. To get paid, however, Platform Learning numerous requirements sessions involving everyone from compa- must adhere to strict requirements, including having students ny executives to the actual tutors. sign an attendance sheet for each tutoring session they attend. “They literally drew a map of how the process actually functioned The registration process is likewise paper-intensive, Burke and the expectations at each step,” Burke says. Intellagent also devel- says. The company regularly holds recruiting events at schools oped the scanning solution that would become IntellaScan. “A lot of that are eligible for NCLB funds; its representatives may sign what is now in IntellaScan was born out of this project,” he says.

16 REDMOND CHANNEL PARTNER June 2006 RCPmag.com 0606rcp_PrtnrSpot14-18.v4 5/9/06 1:48 PM Page 17

With the system Intellagent built, Platform Learning can know as much or more about what they do than any one person now scan in a document and the system will run a number of in their organization,” Reiter says. algorithms to determine whether it represents a new child or refers to one already in the system, associate the forms with the SERVICE PROVIDER BIT appropriate record and point out where information is missing. It’s no accident that, in addition to partnering with Microsoft for Burke was impressed enough with Intellagent that he hired the CRM, Intellagent is also a member of Bluespring’s partner pro- company to implement Microsoft CRM, BPM and IntellaScan for gram. Like Microsoft Dynamics CRM, the Bluespring BPM prod- his own company, which focuses on disaster recovery and high- uct is easy to customize because of its .NET architecture, Reiter availability solutions for small and midsize businesses. says. That capability is important because customers almost By diving deep and talking to all project stakeholders, you always want a custom user interface on their BPM solutions. go beyond simply doing a good job for your customers, Reiter At one time providing that customer interface required doing says. Instead, you essentially become a subject-matter expert significant custom development, but now Intellagent simply in your client’s business: “That makes you an extremely valu- builds on top of Microsoft Dynamics CRM 3.0. “CRM is a great able resource to them on an ongoing basis, as their business application platform, even if you don’t use any of the CRM func- grows,” he says. tionality,” Reiter says. “You can build all kinds of custom entities Another case in point is the U.S. Army, for which Intellagent within the CRM product and it can be literally embedded and implemented an early version of IntellaScan along with a BPM operated directly within Outlook. So the software that everyone solution based on Bluespring software. Since then, the Army has lives in every day can be the same place where your business brought Intellagent back for two more projects. “They feel we applications reside as well.”

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ChannelReport

Reiter also likes the way Microsoft and Bluespring treat their pany conducted about 120 product demos in three days, with respective partners and considers them both models to emu- people often waiting in line to see one. Now Intellagent has to late. Neither sells directly to customers, instead working to continue learning how to find leads and effectively market to bring that business to their partners. “I can’t name the number them. That means learning the ins and outs of tools like e-mail of experiences where, after I brought a vendor a bunch of busi- marketing and advertising, as well as revamping the Web site ness, it took the customer direct,” he says. “In each case, it was to reflect the product focus. the end of the relationship.” And the product requirements are already coming in, with a With that in mind, Intellagent will get out of the CRM imple- number of requests for a version of IntellaScan that works with mentation business, he says: “We don’t want to repeat what we Dynamics GP, the ERP product formerly known as Microsoft consider to be the sins of other product vendors that ended up Great Plains (for more about Dynamics and the impact the new competing with their partners.” products will have on partners, read our feature story, “Getting Reiter is also now learning the strategies associated with Serious About ERP,” on p. 36). That version is now on tap, and being a product vendor. As a services company, developers and Reiter hopes to have it done in time for the next big Microsoft project managers were the mainstay. Now, the emphasis is on event: the Worldwide Partner Conference in July. • customer support, including technical support, along with sales and marketing. Paul Desmond, the founding editor in chief of Redmond “The No. 1 hurdle for us going forward is awareness,” Reiter Channel Partner magazine, is president of the IT publishing says. Convergence was the company’s first real marketing firm PDEdit in Southborough, Mass. You can reach him at push, and Reiter couldn’t be happier with the result. The com- [email protected].

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18 REDMOND CHANNEL PARTNER June 2006 RCPmag.com 0606rcp_PrtnrView_19.v5 5/9/06 5:06 PM Page 19

PARTNERVIEW

The Best Estimate BY JEFF RUDOLPH PARTNER, SIKICH LLP

Estimate. Although that magic word appears in every proposal, it means different things to different people. For a solution provider, an estimate includes a well-defined set of deliverables documented in the proposal and the subse- We begin each project with a simple one-page letter of under- quent requirements document. Ultimately, it represents an edu- standing. This document explains how we reached our estimate, cated guess about the project’s cost, which is, of course, subject noting that it’s subject to change as the project moves forward. It to change as a result of unforeseen challenges or circumstances. also says that all adjustments will be discussed with and approved Too often, though, customers see an estimate as a bottom line by the client via a change order before work begins. Both our proj- that’s set in stone and that includes all the costs of implementing ect managers and the client sign this letter at the outset. We then a new system as well as any additional costs that might come up hold a kick-off meeting with the customer to discuss the project’s during installation. stages, team members, sign-off documents, change-control Once, in the middle of a three-month ERP implementation, process and our status-reporting mechanism—including the all- our client landed a new account of its own and needed to begin important budget report. working with its new customer right away. To comply with that That bi-monthly report shows our progress toward proj- customer’s electronic data interchange (EDI) process, our client ect milestones, comparing actual time to estimated time. If it had to adopt a complex set of rules into its practice. So our imple- appears that we’re exceeding our original estimates, our project mentation team hunkered down, wrote the necessary interface manager discusses the situation with the client, and they agree and met our client’s tight deadline. As a result, we billed an upon a remedy, signing a change order if necessary. Regularly amount well beyond our original estimate. Our team assumed scheduled meetings with the client allow us to discuss new that the client understood that this extra work hadn’t been includ- requests and potential problems. Results of all meetings, status ed in the estimate. However, our client didn’t think that adding a reports, change orders and other pertinent project documents new customer should change the project’s scope. Eventually, we are posted to a dedicated SharePoint portal. reached a compromise, but not without some ill will. Our well-documented processes and procedures, along with Unfortunately, such situations are all too common in ERP our use of SharePoint and a change-order system built into our implementations. We make money by billing customers for time Navision ERP application, keep project management overhead to spent on projects. Unlike other products for sale, hours can’t be a minimum. returned. If we don’t get paid for our time, it’s gone and can’t be And, while we’re constantly refining our methodology, sold to someone else. Our implementers want to do the best for we’ve made great strides in reducing “returned time” and defin- their customers, and our customers want to run profitable coming “estimate” with its intended meaning. • panies. So how do you balance those positions to manage customer expectations about estimates—and prevent writing off Jeff Rudolph is the partner in charge of Sikich LLP’s ICS Technology billable hours? Division. Based in Aurora, Ill. Sikich (www.sikich.com) is a First, here’s what not to do: Don’t beg for forgiveness at the Microsoft Gold Certified Partner providing Microsoft Dynamics end of a project. Ask for permission before it starts by having the ERP solutions with Great Plains, Navision and CRM as well as customer acknowledge that there might be some cost overruns. If infrastructure solutions with the Microsoft platform. you wait until the end to bring up that issue, your chances of recouping money for extra hours spent are next to nil. CONTRIBUTE TO Share your partner expertise in a future issue— PARTNER VIEW contact Lee Pender at [email protected]. PORTRAIT BY SCHNARE JILLIAN

RCPmag.com June 2006 REDMOND CHANNEL PARTNER 19 0606rcp_MSPView_20.v4 5/9/06 6:25 PM Page 20

MSPVIEW

So You Want To Be an

MSP... BY CHARLES WEAVER PRESIDENT, MSPALLIANCE

Managed services is everywhere today. The thirst for recurring revenue, better margins and happier clients has never been greater. In the midst of all this hoopla, there’s never been a better time for a healthy dose of reality when it comes to understanding end up with a business plan dictated by the type of tool that what managed services is all about. you bought. Managed services is more than collecting recurring revenue 4. Understand what really makes an MSP. The true test of from a client each month. It’s about changing the way clients whether you are an MSP should be when you make money. An consume IT services as well as how service providers deliver MSP makes money when clients’ networks are up and running. A them. Following a few critical steps will help ensure that you break/fix company, on the other hand, makes money when start your career as a managed services provider (MSP) on the clients’ networks aren’t functioning. Remote monitoring, recur- right foot: ring revenue and other MSP hallmarks are just the byproducts of 1. Realize that becoming an MSP is a business-changing an efficiently run MSP business. The real measure of an MSP is decision. Unlike choosing which brand of fire- how efficient it is and how much it can scale. wall or server your company will sell and sup- 5. Strive for continuous improvement. Finally, port, becoming an MSP involves a complete The true test of focus on continuous improvement. Managed transformation of your company and how you whether you are services is a profession. An important element of deliver your services. Far too often, companies being successful in any field is striving to better have casually made the choice to switch to this an MSP should yourself in the practice of your craft. But that business model only to meet disastrous ends be when you doesn’t necessarily mean investing in expensive that could have been avoided had they simply instruction. Currently, there’s a huge industry of taken the decision a little more seriously. make money. consultants who have developed overnight meth- 2. Recognize that simply purchasing the right ods and programs for getting into managed serv- products doesn’t make your company an MSP. ices. Be cautious about seeking expert help. I While there are plenty of well-made hammers, buying one believe that the best place for an MSP to get help is from other wouldn’t make you a carpenter. It takes time, education and con- MSPs. After all, who better to consult than a peer who has been in tinued practice to make someone a professional in any field. your shoes? Today’s MSP environment places far too much importance on the Today’s MSPs face increasingly complex issues on behalf of tools—and not enough on the skills of the people and companies their clients. Regulatory compliance, data privacy and security wielding those tools. are just a few of the challenges MSPs deal with daily. Still, if done 3. Start with a solid business plan. Before you even begin correctly, being an MSP can be a lucrative and rewarding busi- shopping for MSP-enabling tools, you should have a very clear ness model. By taking a thoughtful approach, you’ll infinitely idea of what your objectives are. That means having an up-to- increase your chances for success. • date business plan. Many companies that switch from break/fix IT services into managed services do so without developing such Charles Weaver is the co-founder and president of MSPAlliance, a a blueprint to guide them. It’s essential that you understand from Chico, Calif.-based global trade group for the managed services the start exactly what types of services you’ll offer so that you can industry with more than 250 corporate members worldwide. assemble the right tools for delivering them. Otherwise, you'll Contact him at [email protected]. PORTRAIT BY SCHNARE JILLIAN

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FEATURE BEST BUY’S SMALL BUSINESS OFFENS VE In a move that’s making some Microsoft partners jittery, the retail giant plans to double the number of stores targeting SMBs this year. By Scott Bekker

In a presentation at a Bear Stearns retail conference in New York a few months ago, Tom Healy summed up Best Buy Co. Inc.’s grand ambition in a single sentence. “We’d like to change the way that small businesses buy IT,” said Healy, the executive vice president of Best Buy for Business, the electronics retailer’s SMB division. Those Microsoft partners who sell Windows and other software to small businesses—especially those who provide simple servers, e-mail and networks to very small companies—may not be aware that this consumer giant has designs on its market segment. But Best Buy is well aware of the Microsoft SMB partner community and its massive

customer base. BYPHOTO JOE TRELEVEN

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RCPmag.com June 2006 REDMOND CHANNEL PARTNER 23 0606rcp_F1BestBuy_22-29.v7 5/9/06 10:30 AM Page 24

FEATURE | Small-Business Offensive

“We think that right now there doesn’t exist anyone [else] that can be a single point of contact for small business to obtain, to even be aware of, technology solutions that can improve their business.”— Tom Healy, Executive Vice President, Best Buy for Business

Asked during that same March presentation which major Bates presents the retailer’s move, which includes the competitors Best Buy planned to wrest market share from, staffing of every Best Buy for Business location with at least one Healy replied: “The only ones offering a real service offering or Microsoft Small Business Specialist, as a significant advantage a complete solution are … value-added resellers. There are for customers. (For more on the SBS designation, see the January some 90,000 of them throughout the United States. It’s about 2006 story, “Microsoft’s Small Business Specialist Designation: as fragmented as any market can become, particularly with the What’s in It for You?”) size revenue market it is.” Having such specialists available at the point of sale means that Best Buy clearly isn’t aiming to put VARs out of business. small-business customers “can ask specific questions on the tech- Instead, the goal appears to be helping the company sustain the nology they’re looking for and be confident that they’re receiving kind of growth Wall Street demands. Being aware of those plans educated answers before they make the decision to purchase,” can help small business resellers and solution providers to Bates says. “This helps the customer easily and accurately identify adjust, partner or fight for turf. exactly what they need to help their business grow and thrive.” Best Buy for Business has been a pilot program for the last few years, but now the company is aggressively rolling out a full- THE BIG PICTURE scale initiative. Currently, about 115 of Best Buy’s stores offer The Best Buy for Business initiative wasn’t hatched in a vacuum. the SMB services program, and Best Buy plans to double that It’s part of a three-year-old effort to transform the company from number this year. Eventually, the company hopes to run the pro- its product-oriented focus of the 1980s and 1990s, when Best gram in every store. Meanwhile, the company continues on an Buy was the place to find “all the cool stuff,” to an organization expansion tear that has it approaching the 1,000-store mark. focused on employees meeting customers’ needs. Referring to Many SMB-focused Microsoft partners are already aware of that transition, CEO and Vice Chairman Brad Anderson said in Best Buy’s plans, and their responses vary. Some see opportuni- March that “we called fiscal 2006 our tipping point.” ty, while others see trouble, says Harry Brelsford, a Bainbridge Major investments in services, for both home PCs through Island, Wash.-based author and consultant who runs the SMB the acquisition and rapid expansion of the Geek Squad and in- Nation conference series, targeted primarily to Microsoft part- home theater installations, were a big part of the customer- ners. Says Brelsford: “We are a divided community.” focused initiative for the company’s fiscal 2006, which ended on Feb. 25. There’s no question that the company’s commit- BEST BUY GETS THE GOLD ment to its Best Buy for Business expansion also fits neatly into While Best Buy’s been working on the Best Buy for Business ini- the customer-oriented strategy. tiative for a few years, the Richfield, Minn.-based company real- Best Buy for Business is also among the next big steps in ly cranked up its PR efforts in March. In addition to the Bear that framework for Best Buy’s fiscal 2007. When Best Buy laid Stearns presentation and details in an earnings call with finan- out its six goals for the year for investors in March, building cial analysts, Best Buy and Microsoft jointly announced that that division’s capabilities and presence ranked as No. 5. Best Buy had become the first national retailer to achieve “We’ve announced plans to add enhanced small business capa- Microsoft Gold Certified Partner status. bilities to more than 120 additional stores in the country,” Sensitive to those unusual circumstances, Microsoft officials Brian Dunn, president and chief operating officer, said in the are quick to point out that the Microsoft Partner Program wasn’t earnings call. “We’ll offer an expanded Geek Squad presence, modified to allow Best Buy to earn the top-tier ranking. “Best Buy small business products, help from business pros and kiosks embraced our partner program like many other large partners. We with additional solutions.” did not create a special program for them,” says Cindy Bates, In recent quarters, Best Buy took nearly half its revenue from Microsoft General Manager for Small Business. consumer electronics, about a third from home offices and most

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tion—including the network, the server, services and maintenance—“makes it a much stickier sale and a much longer-term opportunity with those customers.”

THE BEST BUY FOR BUSINESS PROPOSITION To hear Best Buy executives tell it, the retailer doesn’t need to steal the SMB market from anyone. It’s simply that no one else can address that audience’s needs. “So what does Best Buy bring to the table here?” Healy asks during the interview. He ticks off answers: “Nine hundred-plus retail stores; Geek Squad agents; product and service expertise; multiple brands, multiple products across multi-channels. And an existing relationship with the customer that’s very strong.” Compare that to the competition. “Right now, our competition is fragmented. Not only in terms of geogra- phy, there’s no national player, but also in terms of what they offer. So nobody’s offering multiple brands, multiple products with services face-to-face in a local location. We’re the only ones that can do that,” Healy says. His conclusion: “We think that right now there doesn’t exist anyone [else] that can be a single point of contact for small business to obtain, to even be aware of, technology solutions that can improve their business.” The model Best Buy for Business location consists of a beefed-up computer section in a regular Best Buy store. Physically, there’s a kiosk, which allows customers to order server components—blades, networking gear, business software—that the store won’t necessarily stock. A few high-turnover products may of the rest from entertainment software and appliances. When be kept on-site, but most will come from distributors. Floating the company went looking for adjacent pools of customers it around the computer section are Business Technology could serve, small business seemed to offer the biggest potential. Specialists, typically dressed more formally than the usual blue- The federal government defines SMBs as companies with shirted Best Buy employee. Best Buy for Business locations also fewer than 1,000 employees. Healy points out that those busi- include a Business Technology Consultant, who spends more nesses spent $350 billion last year on IT services and IT prod- time at customer sites. In addition, there’s a special Best Buy for ucts. How much of a cut of that is Best Buy eyeing? Estimates Business public Web site, a direct-sales group based in Montreal seem to vary depending on the audience. At Bear Stearns, Healy and some overlap with the Geek Squad (see the sidebar on p. 26, said Best Buy expects to target the small end of that range— “What Is Best Buy for Business?”). companies with 100 or fewer employees. “This represents an “The investment this year will be in adding the head count as $80 billion addressable opportunity for Best Buy,” he said. well as adding training and support capabilities for those folks,” However, Brelsford says Best Buy representatives tell him the Healy says. By using Microsoft’s certification infrastructure, Best sweet spot is companies with one to five employees. In an interview Buy can get a handle on its daunting training task, according to with Redmond Channel Partner, Healy put the initial market at 10 Microsoft’s Bates. “Our certification programs help Best Buy apply and under. In all those cases, though, Best Buy expresses willing- an industry-recognized standard for measuring quality and capa- ness to move up the size chart when the opportunity presents itself. bility in their employees,” she says, noting that such evaluations There’s no ambiguity about one thing: Best Buy finds the rev- represent “a formidable job” for any large employer. Best Buy exec- enues associated with server and network work very attractive. utives say they’re also taking advantage of other vendor certifica- “When you install a server, you tend to have a much longer-term tions, such as the Cisco Certified Network Associate designation. relationship than if you sell a typical computer in our store,” Healy Healy believes Best Buy’s employee pool and economies said during the recent earnings call. Providing a complete solu- of scale give the company a unique capability for churning

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FEATURE | Small-Business Offensive

out trained workers. “We think that through scale, you just end up with a more efficient model,” he said at the Bear Stearns event. “I don’t know anybody else who can create a What Is Best Buy technician as efficiently as we can and then deploy them with Volkswagen Beetles. It’s the lowest cost operating model you for Business? can probably get.” Meanwhile, one of the most powerful tools available to Best Buy for Business stems from the chain’s existing customer rela- Best Buy for Business operates through a number of channels: tionships. It takes the form of the retailing giant’s database of 80 In the Store: The most visible components of the SMB push million unique customers, which the company can slice and dice are the kiosks and the extra staffers, known as Business to cross-sell its small business offerings. The company also plans Technology Specialists, in the computer department of Best to do list-based direct marketing for specific solutions. Buy retail stores. Stores will carry some limited extra inventory of high-turnover products, but most will be ordered direct and WHERE MICROSOFT SOFTWARE FITS IN installed by Best Buy for Business’ services arm. Plans call for Multi-platform support is key to Best Buy for Business, but even having Best Buy for Business in 240 stores by February 2007 so, Microsoft software is a critical competency for anyone aiming and eventually expanding the program to all of Best Buy’s to serve small business. Best Buy for Business sells Windows 900-plus locations. Small Business Server and Microsoft Point of Sale and the retail chain is looking for a boost in revenue when Windows Vista ships, Mobile Consultants: BusinessTechnology Consultants fulfill a as well. sales engineering role and spend most of their time outside the “By year end, we plan to have trained more than 900 retail stores. The Best Buy Geek Squad supports them in actual Microsoft Certified Professionals, giving us further authority to implementations. serve these customers,” Dunn said on the earnings call. BestBuyforBusiness.com: A public Internet site linked to the For Microsoft, which has identified small business as a key main Bestbuy.com Web site provides another channel for sales. metric for its own growth, Best Buy’s success has the potential for a large positive impact on its own revenues. DirectSales: In a model similar to those used by Dell and CDW, Microsoft’s Bates emphasizes that the Best Buy opportunity Best Buy for Business also employs 100 Montreal-based sales doesn’t compromise its efforts with other partners of all types agents who call directly into businesses. and sizes. “Microsoft will continue to reach customers via a Commercial Sales Group:This group, not limited to IT, handles broad variety of channels. We know that customers prefer to sales of furniture, televisions and other merchandise to purchase their solutions in a variety of ways,” she says companies. The group differs from the IT group in that it focuses on businesses of all sizes. PARTNER REACTION SMB Nation’s Brelsford says a vocal portion of the Microsoft SBS Best Buy for Business also includes employees who work community has serious concerns about Best Buy’s forays into the with customers in government agencies and educational small business market. “I would say a third of the people don’t institutions. — S.B. like that message and view Best Buy as a competitor,” Brelsford says, basing his estimate on evaluation forms submitted by partners attending his conferences. Some partners, especially those whose practices consist of “What frightens me is the possibility of Best Buy sending setting up basic or wireless networks and configuring e-mail, see someone who doesn’t have the experience that most people who a straightforward financial threat to their practices from the have this certification have, and a customer gets something that’s entrée of a major national retailer with foot traffic and a large not what they should have gotten. They get bad advice from database of customers to draw upon. someone who just knows what SBS is but they don’t know what Cynthia Slade, founder of the Chicago Small Business Server should or shouldn’t be implemented,” Slade says. User Group, doesn’t anticipate her clients going to Best Buy for She’s particularly concerned about the retail industry’s typi- their networking needs, but she does worry about the potential cal high turnover rate. “Let’s say they have a young kid and he devaluing of the Microsoft certification and the Small Business takes the test,” she says. “He works there for two months and he Specialist designation. “I don’t want to be considered like a used leaves. Now there’s nobody there who is actually certified.” car salesman,” says Slade, owner of Shalli, an IT consulting firm Best Buy is no stranger to the turnover issue. During the for small business and a Microsoft Registered Partner. March earnings call, for example, Anderson noted that boosting

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employee retention was among the company’s strategic goals for fiscal 2006. The numbers are impressive by retail standards: During that year, employee turnover decreased by 15 percent, going from 81 percent to 69 percent. On the other hand, turnover rates like that are alarming when you’re talking about skilled positions. In discussing those retention rates, Best Buy didn’t break out the figures for its more specialized employees, which are almost surely much lower. And priorities have turned to other areas for 2007: Retention wasn’t among the major goals listed for the current year. Slade will be keeping a close eye on the value of the SBS designation as Best Buy for Business expands. “I put on my Bring out the Geeks [business] card that I’m a Small Business Specialist,” she says. “If the word has gotten around how bad that service is, from Between acquisitions, new division launches and hiring sprees, Best Buy, I’m going to take that certification off my card.” Best Buy suddenly has an array of IT services people on its shop floors and on the street. There are two main tests for telling the PARTNER OPTIONS major players apart: what they wear and what they drive. However, the Best Buy initiative doesn’t just spell doom and gloom for Microsoft’s SMB-focused partners. WHAT THEY WEAR Brelsford, who gives Best Buy credit for taking the high road Blue Shirts: While “Daily Show” comedian contributor Demetri by achieving Microsoft certification, believes there’s an upside for Martin was uncharitable in his characterization that the require- partners even if the retailer ends up botching implementations. “I ment for earning a Best Buy blue polo shirt is “a torso,” it’s fair to get most of my business as the second consultant in, [after the] say that Best Buy’s 100,000 blue shirts have the least technical first one comes in and screws it up,” he notes. “If the market training of its employee groups. Best Buy looks to this pool of grows, there’s always going to be more rebound opportunities.” employees for promotion into the other areas. Best Buy, which acquired its way into the IT services market by buying the Geek Squad in 2002, isn’t ruling out further Shirts and Ties: The first line in the Best Buy for Business acquisitions. “We don’t have a particular plan for it. You know, employee chain are the Business Technology Specialists. These we’re open to that sort of thing,” Healy told analysts. employees, who will be a bit more dressed up than cashiers and A more likely route is that Best Buy and Microsoft partners salespeople, are generally found in the computer section of the will find new ways to work together. retail stores, near the Best Buy for Business kiosks. “I can tell you, those folks who add value will continue to add value,” Healy says “They have a certain vertical expertise that we WHAT THEY DRIVE may never have. So we may well just partner with them as well.” VW Beetle: The standard-issue vehicle of the Those best positioned, in his view, are partners with deep knowl- Geek Squad employee is the black and white edge of the legal, medical and other professions. Volkswagon Beetle with the orange logo on the Brelsford agrees that Best Buy is better off teaming with side. Best Buy hired 5,000 new Geeks in the last year, bringing consultancies in many areas. For instance, “Best Buy isn’t really the total to about 12,000. But expansion is largely over. While prepared to deal with CRM 3.0,” Brelsford notes. “On the other the Geeks are primarily for home computer maintenance and hand, Best Buy, first and foremost, is really good at selling installation, they’ll also provide support services for Best Buy’s licenses. Our people are not especially good at selling licenses.” increasing small-business installation and maintenance work. As is the case in partnering with any giant in the market So look for the VW bugs in company parking lots as well as in (think Microsoft), the challenge for smaller partners is simply residential driveways. getting noticed. Brelsford recommends doing that by reaching out to the competition. “I would be taking those Best Buy Geek Honda Element: In blue, this will be the standard-issue vehicle Squad people to a baseball game and buying them hot dogs,” he for Business Technology Consultants, the other main group of says. “Then they’ll be calling you, ‘Hey man, we’ve got a law firm employees in the Best Buy for Business operation. Acting as sales [with an IT problem] that we just can’t handle.’” engineers, the BTCs will spend most of their time at customer sites. • — S.B. Scott Bekker ([email protected]) is editor in chief of Redmond Channel Partner magazine.

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WINNING SCORE! FEATURE 120

GOLD GOLDL GOLD 30 G 50

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GOING FOR THE GOLD Partners say that making the jump from Certified to Gold Certified is worth the effort—but not necessarily for the reasons that Microsoft emphasizes. By Rich Freeman

PolyServe Inc. is a somewhat unlikely Microsoft Gold Certified Partner. “We actually started out as a Linux-based company,” notes Todd Behrbaum, general manager of Microsoft solutions for the 7-year-old Beaverton, Ore.-based maker of shared data- clustering software. Eager to tap into a new market, however, PolyServe soon began shipping Windows-based products as well, with encouragement and technical assistance from Microsoft product groups in Redmond. Before long, the company was exhibiting with Microsoft at trade shows and co- sponsoring customer events. The payoff was substantial: In the second half of 2005, PolyServe saw revenue from

ILLUSTRATION BY CHAN ILLUSTRATION LILLIAN Windows-based clustering utilities grow nearly 400 percent.

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FEATURE | Going forthe Gold

What role did being Gold Certified play in generating those ful—even though that benefit is available impressive numbers? Technically speaking, none. The company to Certified Partners as well. Another had only achieved Gold Certified status in February 2006, weeks to refresh his memory with a quick visit to after racking up that sales growth. Yet Behrbaum is convinced the Partner Program Web site before com- that simply pursuing Gold Certified standing—an effort that menting on the incremental privileges of Microsoft strongly encouraged—generated invaluable support being a Gold Certified Partner. and co-marketing opportunities for his company. And he has no What partners value most about the hesitation about encouraging other partners to make the jump Gold Certified classification isn’t the from Certified Partner to Gold Certified Partner. “We would say formal benefits as much as something hands down it’s a critical component to your success in partner- Microsoft rarely addresses directly in its ing with Microsoft as well as demonstrating to customers that partnering literature: the heightened credibility that comes you have widespread success,” he maintains. with qualifying for the Partner Program’s top echelon. Mel Few Gold Certified Partners are likely to disagree. Ascending Gordon, director of the infrastructure and engineering practice to the highest tier of the Microsoft Partner Program isn’t easy, but at Statera Inc., an Englewood, Colo.-based solution provider many firms that have made the trip believe it’s worth the effort. with five competencies, says that being Gold Certified tells Though the official rewards are nice, they say, the true benefit of clients that “these guys know what they’re doing; we can have a achieving Gold Certified status isn’t what it gets you but what it comfort level of knowing that they truly are thought leaders says about your company. Above all, the Gold Certified ranking is and subject-matter experts.” a statement—an official stamp of approval by Microsoft and a for- That added confidence is unlikely to close deals on its own, mal declaration to Microsoft that you’re serious about partner- suggests Henry Webb, director/practice manager for distributed ing. Firms that earn only a small portion of their revenue on the computing services at The Signature Group Inc. (TSG), but it can Microsoft platform are likely to gain little from that statement, push a tottering sale into the win column. Based in Vienna, Va., and even more committed partners have trouble quantifying its TSG is a network consulting firm and Microsoft Certified Partner value. But make no mistake, they say: it’s real. that ensures its potential clients know it’s on the verge of becoming Gold Certified. “Honestly, I’m not sure if our customers really HIGHER COMFORT LEVEL understand what a Gold [Certified] Partner is versus a Certified n mid-April 2006, Microsoft had about 23,300 Partner,” Webb admits, but adds that many prospects do take Certified Partners worldwide (down 17 per- notice when it’s explained to them. “It may help solidify the cent from July 2005) and 7,000 Gold Certified client’s decision to work with you,” he says. Partners (up 52 percent since July—and up Gold Certified status also provides a critical competitive edge I100 percent from early 2005). Given that over Certified Partners, says Michael Richmond, chief operating Microsoft describes the latter group as elite organizations that officer of P&N Technologies, a Gold Certified Partner and “have passed the highest level of requirements,” the official list of provider of data security and network integration services with exclusive perks that they receive is relatively modest. Among offices in Baton Rouge and Metairie, La. “If we’re going up just other things, Gold Certified Partners have access to training against a Certified Partner, versus us being Gold [Certified], we resources and technical support offerings that aren’t available to can really spell out the specifics of why we bring a little more ben- Certified Partners, and they also receive more free software efit,” he says. All other things being equal, Richmond says, cus- licenses for demo and internal use purposes (see the sidebar, tomers are more likely to go with the partner that has access to “More Reasons for Moving Up,” opposite page). But from a pro- better technical resources and more support from Microsoft. gram-benefits perspective, stepping up from Registered Meanwhile, customers aren’t the only ones who find the Member to Certified Partner is arguably more lucrative than Gold Certified ranking reassuring. Vonexus Inc., an moving from Certified Partner to Gold Certified Partner. Indianapolis, Ind.-based maker of Internet telephony solu- Freshly minted Certified Partners receive 18 incremental bene- tions, leverages its Gold Certified status to attract resellers. “It’s fits, including access to a Partner Account Manager (PAM) and very important for us to be able to advertise the fact that we’re presales technical support. Partners ascending to Gold Gold Certified,” says Jerry Fleming, the firm’s president, Certified status get just seven additional benefits. adding that the designation provides “a heck of a lot of credibil- Few Gold Certified Partners seem especially concerned about ity within the partner community.” What’s more, ever since benefits, however. In fact, several partner executives interviewed Vonexus went Gold Certified in November 2004, Microsoft has for this article were barely familiar with the official list of extras been directly assisting its channel-recruitment efforts. “They attached to Gold Certified status. One cited the Customer make introductions to their top partners, who then become Satisfaction Index, a source of client feedback, as especially use- high-quality prospective partners for us,” Fleming says.

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PROOF OF COMMITMENT MORE ltimately, however, it’s not customers or other partners but Microsoft itself that takes the Gold Certified status most seriously. REASONS “Microsoft now looks at [our company] a lit- Utle differently than they did before,” says Mike McMillan, director of system integration at DSM Technology Consultants, a Lakeland, Fla.-based services FOR provider that became Gold Certified this January. “We’ve got their attention.” Same goes for Statera, according to Jessica Jorgensen, the company’s vice president of marketing, inside MOVING sales and strategic alliances. “There’s a greater level of comfort in being able to bring us in on engagements,” she says. “They know we’ve done the work.” UP Microsoft interprets the Gold Certified level as proof of a partner’s dedication to the alliance, says Chris Smaldone, Statera’s vice president of Microsoft Business Solutions. “If Partners cite heightened credibility with Microsoft we just delivered really solid Microsoft solutions [but never and its customers as the biggest rewards of being achieved Gold Certified status], over time, that would dilute Gold Certified. Here are a few smaller, but still the relationship with Microsoft,” Smaldone says. In other welcome, bonuses: words, reaching the Gold Certified level is a necessity to earning Microsoft’s complete trust. Loads of Licenses. Microsoft Gold Certified Partners receive Webb confirms the symbolic importance of being Gold free internal-use licenses for 44 Microsoft products. For example, Certified. Before joining TSG, he worked nine years in each Gold Certified Partner is entitled to 100 free licenses of Office Microsoft Consulting Services, where he saw first-hand just Professional and two free licenses of SQL Server Enterprise how much the Gold Certified label matters in Microsoft’s sales offices. “The business model tended to support better those Edition. Partners may use the software to run their businesses or partners who really took the effort to show Microsoft they were keep their staffs up to speed on Microsoft’s latest wares. (Certified serious about being in the Partner Program,” he recalls, “and Partners also receive free licenses, though in smaller quantities.) the way we saw that was making Gold [Certified] status.” Now In addition, Gold Certified Partners are entitled to unlimited free Webb hopes that when TSG reaches the Gold Certified level, demo licenses for 30 Microsoft products. “The generous licensing Microsoft will send him more leads. they provide Gold Certified Partners allows us to push those tech- That’s certainly what happened for Vonexus. Microsoft nologies out in front of clients and really use that as a resource to has collaborated with Vonexus on several joint marketing drive sales,” says Michael Richmond of P&N Technologies. campaigns since the company ascended to Gold Certified Partner. One recent effort produced hundreds of leads, which in turn yielded multiple wins. Significantly, TAM Time. When Vonexus Inc. achieved Gold Certified status, Microsoft covered 80 percent of the campaign’s costs. “We it received not only a Partner Account Manager (PAM) but a couldn’t have done that program ourselves if we had to fund Technical Account Manager (TAM) as well, says company the whole thing,” says Fleming. The cumulative impact of president Jerry Fleming. TAMs assist partners with their technical such campaigns has been substantial, he adds: “I can’t give support requirements. “That really helped our developers and you an exact figure, but [there’s been] at least a 10 percent technical people get to the right person,” Fleming reports. increase in revenue as a result of [becoming Gold Certified], and possibly more.” Co-Marketing Cooperation. Many Gold Certified Partners Richmond, of P&N Technologies, attaches less importance to the leads Microsoft provides. In fact, he says, P&N say they’ve done more customer events with Microsoft since salespeople rarely bother with them because they have plen- going Gold Certified. “The joint-venture marketing stuff seems to ty of homegrown opportunities to pursue already. Of more be a lot more active,” says Mel Gordon, of Statera Inc. “We now value, Richmond argues, has been the greater access to have a lot of events where we’re doing the hosting and present- Microsoft employees that P&N now enjoys. “The communi- ing, but it’s facilitated out of the [local] Microsoft office.” — R.F. cation level is definitely a little higher,” he observes. “I have

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FEATURE | Going forthe Gold

multiple contacts now, and in different areas. That gives me mul- between $20,000 and $25,000 all told in time, labor and certifica- tiple paths to the information I need.” tion fees. On the other hand, Scholtes observes, that’s a one-time Some partners say they’ve gotten better PAM support since join- expense for an asset with numerous benefits. ZyLAB’s U.S. ing the Gold Certified ranks. Microsoft has both in-person PAMs, Department of Defense records management certification costs who typically cover between eight and 10 partners, and “telePAMs,” the company $25,000 every three years and, he says, confers no who provide phone-based assistance to as many as 60 partners. rewards beyond the right to say that they have it. Though no universal standard applies, Certified Partners generally In fact, few partners appear to regret the time or money they put work with telePAMs and Gold Certified Partners usually receive into becoming Gold Certified. “Sure, there’s an incremental cost PAMs. Don Nelson, general manager for partner sales and readiness over what you’re doing,” says PolyServe’s Behrbaum. “We feel it’s at Microsoft, says that “some very long-tenured partners actually absolutely well worth it. It’s very strategic.” Smaldone agrees, say- prefer a telePAM, because they’re at their desk when they need ing that for Statera to excel in its field, it needed to obtain MCP certi- them,” unlike PAMs, who travel frequently and can be hard to reach. fications and competencies anyway. Qualifying for Gold Certified Fleming, however, was delighted to have his telePAM status was mostly a matter of documenting work that Statera was replaced with a PAM when Vonexus became Gold Certified. The already doing. Bottom line, he says: Being Gold Certified produces way he sees it, telephone account management means that “if results. “That’s why we keep investing in it,” he says. you call into Microsoft, there will be someone sitting there who will take your call. It’s reactive. Now we have a more proactive SEEKING NEW HEIGHTS relationship with [Microsoft].” s more and more partners achieve Gold Certified status, and the percentage of Gold Certified INCREMENTAL COSTS Partners in Microsoft’s channel rises, will being t’s easy to summarize the base requirements for in the Partner Program’s top tier eventually lose becoming Gold Certified. Companies must earn Asome of its cachet? Statera’s Gordon, for one, 120 partner points (versus the 50 needed to doubts it. In his view, more Gold Certified Partners means more sat- qualify as a Certified Partner) through such isfied customers, which in turn means greater trust in the Gold Iactivities as selling Microsoft software, boosting Certified brand. As long as customers are happy with their Gold the number of Microsoft Certified Professionals (MCPs) on staff, Certified vendors, adding more Gold Certified Partners “doesn’t and submitting customer references. In addition, every Gold water down the gene pool. It just proves the value of the gene pool.” Certified Partner must acquire at least one competency, a process McMillan, of DSM, suggests another possibility: “It will be that imposes varying additional requirements. interesting to see if they eventually come out with a platinum Sounds straightforward, right? Think again, say many partners. level,” he says of Microsoft, adding that DSM would likely pursue Those simple prerequisites are accompanied by a lot of fine print. such a designation. Indeed, Microsoft’s Partner Program Guide dedicates 14 pages to McMillan’s eagerness to join a new top tier, should one ever accumulating partner points, and another 47 pages to qualifying for be created, underscores a key reason that Certified Partners competencies. “It was very difficult to understand the tool set and continue climbing the Gold Certified mountain: because it’s which things were important,” complains Webb. there. Simply put, there’s something irresistible about a summit. Meanwhile, once you understand the requirements, you then “When you log into the [Microsoft] partner site, they immedi- have to assemble proof that you’ve met them. Webb estimates ately tell you how many points you have and how many points that he spent two weeks pulling together references, MCP test are required to go to the next level,” McMillan notes. “I’m a very scores and the like. “Ideally, I’d have liked to see that process take competitive person. That drive to go to another, higher level was a day or a couple of days,” he says. “There should be a whole lot all I needed.” less overhead.” Meanwhile, he says, achieving Gold Certified status has been According to some partners, the qualification process can be its own reward. “It’s going to be difficult for me a year from now expensive as well as time-consuming. McMillan, of DSM, isn’t to determine how much business I’ve gained from this new level sure exactly what it cost his company to achieve its Gold Certified of partnership with Microsoft,” he acknowledges, but adds: designation, but notes that he personally put in 25 to 40 hours of “There’s something about accomplishing a difficult task that to work that could have been billed out at up to $180 an hour. me speaks for itself.” • Johannes Scholtes, president of ZyLAB North America LLC, a Vienna, Va.- Rich Freeman is a Seattle-based freelance Log on to RCPmag.com for more info about reaching based developer of information access writer who specializes in writing about Gold Certified status, including a link to the Microsoft solutions that’s currently applying for Partner Program Guide. FindIT code: GoingGold business and technology. You can reach Gold Certified status, expects to invest him at [email protected].

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“The key to profitability is the same as it has always been—specialize to be successful.” — Tami Reller, Corporate Vice President, Microsoft Business Solutions Marketing Group G S a E

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FEATURE GETTING SERIOUS Microsoft has finally put together a strategy for its Dynamics business applications and is pumping major resources into the product line. Partners need to be ready about for what’s coming. By Lee Pender and Vicki Powers ERP

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FEATURE | Getting Serious aboutERP

This is the next BIG THING. Once just a group of disparate business applications cobbled size companies, which it defines as businesses with between 50 together through a series of acquisitions, Microsoft Dynamics is and 1,000 employees. finally coming together as a cohesive offering of enterprise Bill Gates, Microsoft’s chairman and chief software architect, resource planning (ERP) and customer relationship management has emphasized that Dynamics will focus on ease of use and (CRM) products. A new advertising campaign and serious talk of implementation, characteristics not usually associated with ERP. product roadmaps are signs that partners should pay attention to “A new generation of software has to step up and provide capabil- what’s happening in Redmond’s once-marginalized Microsoft ities in a way that’s incredibly reliable, easy to set up, and brings Business Solutions (MBS) division. Bottom line: Microsoft has the information to the right people,” Gates said at the first-ever arrived on the ERP scene, and there’s money to be made. Microsoft Business Summit for midsize companies last fall. But in order to make it, many current partners will need to With 1.4 million midsize companies worldwide, Microsoft is overhaul their strategies. Forthcoming changes in the product chasing a potentially highly profitable audience. Many of line will require them to rethink how they approach selling and Microsoft’s past business offerings—as well as those of its competi- supporting Dynamics. None of this activity will happen tors—have overlooked these companies, typically challenged by overnight. Still, now is the time to prepare for what’s coming. limited resources of time, budget and personnel. Microsoft officials also have argued that the market is under-served by ERP giants such FROM TROUBLED CHILD TO FAVORITE SON as Oracle Corp. and SAP AG, which focus more on large enterprises. Microsoft Business Solutions was once the company’s black Analysts say that bridging the midmarket gap is critical for sheep, with its collection of acquired applications that were the success of the MBS group, which consists primarily of the largely devoid of the Microsoft look and feel. During the divi- Dynamics applications. “In the last five years, Microsoft has sion’s five-year history, it has grown its product base through the attempted to grow the [Business Solutions] business, and it has acquisitions of Great Plains and Navision in 2001 and 2002. not grown as fast or as successfully as Microsoft hoped it would,” Previously, Great Plains had purchased Solomon Software, while says Chris Alliegro, lead analyst at Directions on Microsoft, a Navision had acquired the Axapta application (see the sidebar “A Kirkland, Wash.-based research and consulting firm. “It did some Microsoft Dynamics Timeline” on p. 40). soul-searching to ask why products weren’t selling faster and Dynamics, a brand name unveiled at a Microsoft conference how to make costs less than revenue. This is what’s driving the last fall, is a suite consisting of the Microsoft CRM application focus on the midmarket.” (now known as Dynamics CRM) and the four acquired products, MBS executives say Microsoft is poised to cash in on an Dynamics GP (from Great Plains), Dynamics NA (from Navision), ERP revival. Dynamics SL (from Solomon) and Dynamics AX (from Axapta). “We believe the market is at the verge of a major implementa- Cobbling Dynamics together since those acquisitions hasn’t tion wave,” says Tami Reller, corporate vice president of the been easy. The four ERP suites’ functions overlap in many ways— Microsoft Business Solutions marketing group. “In the late for instance, all four offer portals and e-commerce solutions— 1990s, just prior to Y2K, many customers patched or implement- and, at first, many of their functions didn’t integrate well with ed new systems. [Now] these systems are aged or aging, and we other Microsoft applications. None of them, for instance, offered see customers moving to their next-generation solutions.” the familiar Microsoft appearance and functionality. However, Dynamics is already showing promise as a contender for that Microsoft has significantly increased cross-integration of the business—and for a more favored position within the Microsoft products’ features, particularly for the 2006 release cycle, says family. The long-struggling MBS group remains in the red, and Joe Wilcox, senior analyst at Jupitermedia Corp., a Darien, Redmond doesn’t expect the division to be consistently profitable Conn.-based IT research firm. until fiscal year 2007, according to Microsoft CFO Chris Liddell. Now the company is pumping money into an advertising blitz However, MBS did post an impressive 17 percent year-over-year to promote Dynamics and spell out how the product will evolve revenue growth in the second fiscal quarter of 2006 and racked over the next few years. Microsoft has also made it clear that up a 21 percent increase in Q3, from $179 million in Q3 2005 to Dynamics is a chief component of its massive push to target mid- $216 million in Q3 2006.

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All that paper… Document Scanning for Microsoft CRM • Forms • Contracts Scan any Document Directly into CRM • Letters • Invoices • Easier than sending a Fax • Easy setup and configuration • Simple push-button operation • Available for USB and SCSI scanners • Quotes • Drawings • No complicated scan interface • Supports Web and Outlook CRM clients • Orders • Reports • No PC attached to the scanner • Works in both Local and Hosted • No client software to install CRM configurations Become an IntellaScanTM Partner … just a click away in • Enhance your vertical solutions without any programming Microsoft Dynamics™ CRM • Increase opportunities with new and existing CRM customers • Close more deals and generate more revenue • Medical • Real Estate IntellaScanTM Partners Receive • Legal • Insurance • Pre-sales and technical demonstration assistance from our expert staff • Highly discounted copies of IntellaScan for internal and demo use • Finance • Education Contact Intellagent Solutions at 703-378-8701 or • Mortgage • Government [email protected] • And Many More! www.intellascan.com

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FEATURE | Getting Serious aboutERP

In addition, a November 2005 report from Boston-based AMR Research Inc. showed MBS as the No. 1 vendor on companies’ evaluation lists for future ERP purchases, with 58 percent of respondents saying they’ll look at Microsoft Dynamics. In the A Microsoft report, MBS just nudges Oracle (57 percent) and solidly beats SAP (49 percent). Dynamics Timeline And Microsoft is just getting started. MBS is still the second- smallest revenue producer among Microsoft’s seven main divi- 2001: Microsoft acquires Great Plains Software of Fargo, N.D., sions, but the company’s renewed commitment to pushing (a few years after Great Plains bought its major competitor, Dynamics to the midmarket indicates that there’s plenty of Solomon Software of Findlay, Ohio). room for growth. Furthermore, when Microsoft gets serious about a market with enormous potential—think back to the 2002: Microsoft acquires Navision, of Vedbaek, Denmark, Internet Explorer initiative of the mid-1990s—it’s got a track for $1.4 billion, providing an entry to the European market. record of success. Navision’s product lines were XAP, Attain/Financials and The Dynamics push is based on a coherent message. Earlier Axapta, which the organization acquired when it bought this year, Microsoft launched a major new ad campaign touting Damgaard in the Netherlands in 2000. Dynamics as “people-ready” business applications. The idea behind the tag line: Software should empower employees to 2003: Microsoft launches the initial release of Microsoft CRM. solve their own problems, become more efficient and move their businesses forward. The message fits with Microsoft’s much- 2005: Microsoft announces re-branding of Microsoft Business publicized role-based approach to software development, which Solutions products as “Dynamics.” focuses on providing functionality tailored to users based on individual jobs and needs. 2006: Microsoft announces it will integrate Dynamics Jon Pratt, senior director, product marketing and partners, applications with Office and Windows. Microsoft Business Solutions, draws a distinction between IBM Corp.’s “On-Demand” message and Microsoft’s “people-ready” 2006-2009: Microsoft will combine best-of-breed functionality stance. “[IBM’s message is,] ‘You have a problem, press the button; from its overlapping ERP suites and produce single-platform we can solve it.’ [Microsoft says,] ‘Your people can solve it. You Dynamics suites tailored for small and larger enterprises. already have the brains in your organization to get that done.’”

WAVES OF CHANGE Curtis Jones, senior business consultant at Vis.align, a Microsoft, in a strategy it detailed at MBS’s Convergence confer- Microsoft Gold Certified Partner and Dynamics specialist based ence in Dallas in March, plans two waves of improvements for in King of Prussia, Penn., that provides IT deployment and opera- Dynamics. The first is crashing on the ERP shore now, and the tional services to midmarket companies, says the human side of next will roll in over the next two to three years. It’s that second complex ERP implementations—often the most important ele- wave that threatens to wash some Dynamics partners away if ment of an implementation because of the importance of user they’re not prepared for its arrival. acceptance—will be easier with Dynamics natively integrated As part of that initial wave, Microsoft is already integrating into Office applications. He predicts that the percentage of the four Dynamics ERP products into Windows and Office. That employees using the ERP systems in most companies will jump effort will continue as the company introduces Microsoft from 10 percent to 50 percent or higher before long. Jones also Windows Vista, Office 2007 and new versions of Dynamics appli- says integration and a focus on ease of use will be key differentia- cations over the next two to three years. Such integration is tors for Microsoft, despite projects such as the Microsoft-SAP designed to provide users with a unified view of all four ERP Duet effort that integrates SAP applications with Office. applications within a familiar Microsoft interface, something the “Microsoft will quickly surpass those guys because none products previously lacked. Microsoft officials call such integra- of them will focus on the user experience,” Jones predicts. tion consistent with the company’s “people-ready” message. “SAP is not even integrated with itself. The time that it Microsoft is banking on ease of use and its role-based will take the other ERP firms to move toward integration approach serving as the primary competitive advantages over based on user experience is huge. Microsoft is focusing from offerings from better established and more advanced ERP rivals, the user experience back to the underlying systems. When such as SAP and Oracle. For partners, simplicity and native inte- you do that, you see a much wider view of applications that gration into Windows and Office are key selling points. impact people.”

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So while Wave One of Dynamics can be viewed as positive for ners,” he says. “Where they don’t lie is moving down-stack and partners, Wave Two may require some individual reflection and trying to provide general platform capabilities.” Microsoft analysis from partners. Due to hit in 2008 and 2009, with itera- integrated public-sector accounting capabilities into its prod- tive releases for each product along the way, the second chapter ucts, for example, after purchasing a company last year with in the Dynamics product strategy involves combining all four this solution. Customers at a lower platform level can now do ERP products on a single platform. That move will eliminate the public sector accounting, whereas partners used to provide current functionality overlaps, as Microsoft officials say they will these specific modules to accompany Dynamics GP. Alliegro pick and choose the best features from each application for that says partners should always be wary of playing too close to the single final product. Officials expect to offer different versions platform space. for large and smaller businesses. Reller also says Microsoft will be there for partners making Microsoft officials maintain that single-platform Dynamics the transition. The company is pumping money into retaining will lead to easier implementations through a true best-of-breed existing Dynamics partners and training new ones and has estab- approach that will eventually benefit companies more than the lished several programs to help partners deal with refocusing current overlapping models do. their strategies and expertise: This, however, is where the work comes in for partners. Many, ■ Microsoft Solution Finder, a Web-based tool that helps if not most, Dynamics partners are focused on just one of the four customers search for and connect with Microsoft partners ERP products—perhaps dating back to the days when the compa- worldwide based on their industries, locations or specific nies that made them were still independent of Microsoft. During Microsoft products. the second round, when the best elements of all four are com- ■ Microsoft Partner Solution Profiler, which allows part- bined into a single suite, having deep expertise in one product ners to describe their company’s offerings and gain exposure to will obviously lose its value. customers and other Microsoft partners through several online systems, such as Microsoft Solution Finder and Microsoft Partner THE ONLYWAY IS UP Channel Builder. The answer? Verticals. Instead of being Navision or Axapta ■ Microsoft’s Partner Channel Builder, an online tool that resellers, for instance, partners will need to re-focus providing solu- allows all Microsoft Partner Program Registered Members to col- tions in vertical industries such as health care or finance. Reller says laborate on new business opportunities. it’s the way Microsoft is moving—and partners should move that Still, for companies that have spent years becoming product- way, too. Microsoft’s goal is to assign 50 percent of its current part- focused experts, shifting to a vertical strategy won’t be as easy as ner base into one of 14 verticals by June 30, 2006, its fiscal year end. dropping in on a few Web sites. Columbus IT Partner, a Gold “Microsoft is increasingly adopting a vertical strategy and Certified Partner based in Brondby, Denmark, and 2005 Global focus to better address the needs of its customers and create addi- Partner of the Year, acquired in January another partner tional opportunities for partners to deliver rich solutions using focused exclusively on the food and chemical industries. Microsoft’s products,” Reller says. “The key to profitability is the Columbus IT, which has 900 employees in 22 countries and same as it has always been—specialize to be successful.” develops part of the Dynamics AX application, has been prepar- Alliegro says partners can line up in vertical industries as ing a vertical strategy for years, says Jim Bertschneider, the well as create practices and specific applications around verti- company’s managing director. cal industries. “That’s where the opportunities lie for part- “It’s not an option whether we want to do it or not,” Bertschneider says of that effort. “We have to do this. The challenge is going to be for the smaller partners. There’s huge potential, but also a risk.” Nevertheless, Bertschneider remains positive about Alphabet Soup Dynamics. “We have no disappointment in what they’re Following are the new names of Microsoft BusinessSolutions products: doing,” he says of Microsoft’s push into that area. “We have concerns, but no disappointment. This is definitely going to Microsoft Business Solutions-Great Plains: Microsoft Dynamics GP be good stuff for partners.” Microsoft Business Solutions-Solomon: Microsoft Dynamics SL As long as partners are prepared. • Microsoft Business Solutions-Axapta: Microsoft Dynamics AX Lee Pender is senior editor of Redmond Channel Partner Microsoft Business Solution-Navision: Microsoft Dynamics NAV magazine. You can reach him at [email protected]. Microsoft CRM: Microsoft Dynamics CRM Vicki Powers is a freelance writer based in Houston and can be reached at [email protected].

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FEATURE

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PAIN POINTS One hat ormany Can your IT services company be a generalist and a specialist? By Ted Dinsmore

Why do many IT services companies targeting small and midsize businesses (SMBs) act as if they can deliver anything and everything to their clients? In theory, they may be able to do so, but it’s a hard proposition to sell to customers. And it’s even harder to differentiate your company from your competitors when you’re promoting yourself as a “jack-of-all-trades” because the old adage’s follow-on clause—“and a

ILLUSTRATION BYILLUSTRATION JAMES STEINBERG master of none”—is often closer to reality than that first part.

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FEATURE | Specialization vs. Generalization

As Edward O’Connor and I mention in our book Partnering with Microsoft, one of the Microsoft Partner Program’s flaws is the need for companies to specialize Does YourCompany Have an to qualify for a competency. Obviously, Microsoft corporate views its partners as specialists rather than as gener- alists. In addition, Microsoft has a fundamental need to Integrity Problem? categorize its huge volume of partners. This need has Consider your answers to these guiding questions to determine evolved as the partner program has grown and become whether your business has integrity problems that may influence more sophisticated, with the latest iteration being the relationships with customers or Microsoft: competency program. It’s not only in Redmond that Microsoft thinks of partners by specialty—the Microsoft Identify the problem: What is your company’s message? field offices look at partners that way too. But in some For example, is it “We can do anything for a manufacturing ways, Microsoft’s specialization requirements turn out 1 company”? Or is it more specific, as in: ”We can refine to be a blessing in disguise for most partners. your ERP solution so that you can source raw materials, then manufacture and ship them in half the time it BECOMING A TRUSTED ADVISOR takes today”? To demonstrate the value of specialization let’s back up and address some fundamental questions: What is Talkto your delivery people: What’s their impression the goal of being an IT services player in the SMB of your messaging? Do they understand it? Does it space? Is it to sell more products, whether Microsoft’s 2 correspond to their view of what they’re doing in the or another vendor’s, within a specific segment? Is it SMB market? strictly bottom-line driven? Talkto your salespeople: Are they comfortable with The better approach, of course, is serving as a trusted the messaging? Are they aware of any inabilities to advisor to a set of customers, depending on your compa- 3 deliver to customers what they promised when they ny’s focus and expertise, where proven value can be sold the services? articulated, demonstrated and extended. Assuming that you agree, let’s take the questioning a Talkto your support people: Ask the same questions step further. Because we’re all somewhat driven by the you posed to your delivery people. Are your delivery and bottom line, how do you reach your financial goals while 4 support people on the same page? maintaining and demonstrating your company’s integri- Talkto your customers: Are they aware of any ty to your customers? And how do you leverage your oversell/under-deliver issues with your company? relationship with Microsoft, based on the same integrity, 5 Consider using the Microsoft customer-satisfaction to reach those goals? tool. It’s useful to have a third party take the pulse of For those who might wonder how integrity got your customers. — T.D. smuggled into the equation, raising the question could signal a problem with your fundamental vision. Showing your customers—and your partners, including Microsoft—that your company has integrity is para- mount to winning, keeping and extending both customer Too often, SMB-focused IT services companies that are and partner relationships. struggling to win customers promise that they can provide any Integrity boils down to a correlation between your compa- and all IT services. That approach may appeal to a few cus- ny’s capabilities and its messaging. Consider these guidelines tomers because it offers one-stop-shopping, single-point-of- and what they say about your SMB-focused IT services company: contact convenience. Most, however, won’t like it because it’s ■ Corporate integrity: This means having everyone not entirely credible. giving the same message, from your sales team doing busi- Besides, if your IT services company is a Microsoft partner, ness development to your implementation staff performing you just have to be a master of something to get any desirable solution delivery. traction out of the partnership. That is, you have to be heard ■ Market integrity: This refers to what customers see. and seen as a specialist, although you may also have deep gen- Deliver what you promise; only promise what you can deliver. eralist talents. This principle applies both to success in the SMB ■ Profitable integrity: This results from the previous two market and to getting results from partnering with Microsoft. guidelines, and it represents the Nirvana that every sales

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FEATURE | Specialization vs. Generalization

organization exists to reach. It involves achieving a trusted-advisor relationship with your customers. If there’s a disconnect between what your company says it will do for customers (sales) and what it can do and actually does (delivery and support), then you may have an integrity problem of the first order. Your cus- Getting Microsoft’s tomers are obviously the final arbiters, the benchmark, in this important inquiry. (See the sidebar “Does Your Attention Company Have an Integrity Problem?” on p. 44.) Assume that your messaging is a valid representa- As a Microsoft partner, it’s critical to make sure that the company tion of what your company can and does deliver—and understands who you are and what you do. Getting the company’s thus that the critical elements of your company (sales, attention, though, is easier said than done. Anecdotally, the average delivery, support) are aligned. If your customers agree, Microsoft customer-facing person receives around 200 e-mails a day then your company is aligned with the market. Your from partners as well as six to 10 voice-mail messages. company has integrity. Given that level of activity, how can you get noticed amidst all The next step is to chase after profitable integrity, or this noise? After all, these are the people you want to know about achieving a trusted-advisor relationship with your cus- your services and products because they should be your addition- tomers. Charles Green, author of “Trust-Based Selling,” al feet on the street. To capture their attention, you need a highly defines trust as “the elusive but essential basis for the most focused message that’s also short and sweet. Once you have your successful sales relationships.” That definition is especially Microsoft contacts’ attention, it’s in your best interests to create apt for the SMB market, where IT is often a big mystery and your trusted-advisor relationship with them. the person who unlocks it—who makes it work—is an Consider how not to get their favorable attention: the first essential and trusted member of the extended team. thing that many SMB-focused IT services companies do is to ask Trust-based selling is simple. It’s common sense. And their Microsoft counterparts, “Where are my leads?” That’s a great it works. Following are some guidelines for thinking question, but entirely the wrong approach. about the practice: Put yourself in Microsoft’s position. How would you react if a ■ Trust-based selling is rooted in four principles. vendor called and demanded an answer questions like these: Customer-centricity, medium-to-long-term focus, col- “Where are my sales from you? You resell my product. Where are laboration and transparency. you in delivering sales?” ■ It’s not about “being nice.” It involves using soft It’s a bit insulting, isn’t it? skills for hard purposes. So how do you take this to a trusted-advisor relationship with ■ A customer who trusts you is invaluable. Trust Microsoft as you have with your customers? Consider these three trumps product excellence, salesmanship and price. steps for relaying your message to Microsoft: ■ Trust begins with the sale. How you sell creates or destroys trust for the relationship in the future. Introduce your company and its specializations ■ Trust isn’t a business process. The only way to be succinctly: “We have a proven track record in XYZ.” trusted by yourcustomers is to be trustworthy. You can’t 1 fake it. Emphasize your company’s achievements and why Ultimately, trust-based selling can massively increase they’re important to Microsoft: “We are trusted advi- profits for seller and customer alike. When both those in 2 sors to our customers—such as A, B and C—that account your organization and your customers understand and for [a specific dollar amount] in cross-sales of Microsoft agree upon who you are and what you can do, you’re posi- products D, E and F.” Impressive names and numbers will tioned to become a trusted advisor. From this happy posi- capture Microsoft’s attention. tion, you can look to extend your customer base. Make the pitch: “We’re campaigning to develop new HONING YOUR MARKETING MESSAGE relationships with new customers in our core area So how can you get specific enough in your marketing 3 of expertise in [a specific vertical or geographical area]. message without shutting off potential sales outside of We’d like to work together with you on that.” — T.D that highly focused message? The answer involves finding a message consistent with what your company does especially well in order to differentiate it from

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FEATURE | Specialization vs. Generalization

Cross-selling offersa differentmessage from “We can do itall,” which simplydoesn’t make sense to most SMBcustomerswith experience in buying IT productsorservices.

others. That’s your specialization, the hook by which to catch cus- Now let’s tie the discussion back to the Microsoft Partner tomers. (See the sidebar “Getting Microsoft’s Attention” on Program and how those Microsoft competencies integrate with p. 46.) Once you’ve aligned your company’s message with its deliv- your messaging. If you create a trusted-advisor relationship with ery and established your reputation in the market, you can cross- your customers, you can easily achieve the same kind of relation- sell partner solutions within your customer base. And as you get to ship with your Microsoft colleagues. With Microsoft, the rela- know your partners better, you can educate and leverage them on tionship will be based on technical competency, sales strategy the cross-sell. For example, if your company provides Microsoft (that is, focused messaging), and the ability to generate refer- Dynamics AX (formerly known as Microsoft Business Solutions- ences, which is the ultimate measuring stick for trusted-advisor Axapta) services and you also offer deep infrastructure skills in status with your client base. Microsoft Exchange, that’s an added bonus to both your Microsoft An educated customer won’t buy from a vendor that says it partnership and to your customers because you can help them meet can do this, that and everything else. Customers will buy from their needs on multiple fronts. (For more on Microsoft Dynamics, vendors who understand their business needs, provide concrete read the feature, “Getting Serious About ERP,” p. 36.) options with measurable returns and demonstrate capabilities The cross-sell can be extended to many levels and, in some for supporting those customers’ solutions across their business- cases, it can serve as your differentiator. But note that it offers a value lifetime. That’s the point when the specialist becomes the different message from “we can do it all,” which simply doesn’t generalist —that is, when the IT-services company achieves the make sense to most SMB customers with experience in buying IT trusted-advisor role with customers and with partners and can products or services. And the jack-of-all-trades approach will get sell both on an increasing array of services. you nowhere with Microsoft. Achieving trusted-advisor status with your customers and Thus, the messaging is the important point. Once you’ve your Microsoft counterparts is a long, complicated process, but established your message, educate your employees on the precise because it’s well worth the effort, I challenge you to consider it.• focus. Typically, they want to be excited about what they do and to do everything they can to provide value to your customers. If Ted Dinsmore is co-author, with Edward O’Connor, of Partnering your personnel are well-trained about what your company does with Microsoft: How to Make Money in Trusted Partnership and doesn’t do, it will be clear to your clients—and your part- with the Global Software Powerhouse (CMP Books,2005). ners—and it will get their attention. When you are on a sales call Dinsmore, who has worked in the IT services industry for 20 and you acknowledge that there are certain things your company years, is currently managing director of Conchango, a systems can’t do, people tend to pay more attention to what you say your integration company in New York and Boston. You can contact company actually can do. This is integrity in action. him at [email protected].

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> Solution Spotlights > Product Reviews > Partner Views > Channel News > Webcasts > And Much More! Visit RCPmag.com today! RCPNewsletterFinal.qxp 5/1/06 11:25 AM Page 1 0606rcp_SolSpot_51-54.v4 5/9/06 3:06 PM Page 51

SolutionSpotlight

Virtualization Saves Real Dollars Virtual Server 2005 R2 has a range of applications that can help your customers improve efficiency and cut costs.

By James LaTour OSes include Windows Server 2000 and Virtual computing was once the purview 2003 (except Enterprise edition), NT 4.0 of research technologists—testing Enterprise Edition and XP Pro. It also applications, building test environ- supports Red Hat and SuSE Linux. Your ments, running demonstrations and Virtual Server customers can run other OSes within a other high-level tasks. As the hardware virtual machine, but that’s not an offi- required to run those virtual machines 2005 R2 cially supported configuration. has become more powerful and less Virtual Server runs as a Windows expensive, though, companies are Microsoft Corp. service—not an application. It supports increasingly looking to virtualization as a Release Date: April 2006 the 32-bit x86 and 64-bit x64 architec- practical way to improve efficiency and Price: Available as a free download (Guest tures as both host and guest. Your cus- reduce costs. operating system licensing costs are tomers can also remotely access Virtual VThere’s still some confusion about the Server machines over a network. They’ll additional and vary based on the guest OS) differences between server and desktop need to use an IIS Web page and an www.microsoft.com/windowsserversystem virtualization. The real difference lies Active X control that lets them manage not in what they do, but how they do it. and control a virtual machine from any Virtual PC is a desktop application tar- computer with an Internet browser geted at average users. It has a simple interface and enhanced without needing the client console installed. interaction between the host and guest machines. Users can drag Any customers who have recently upgraded from an older OS to files from their computer to the guest computer and hear audio XP Pro may have problems running older software. By installing from the guest PC through their physical computer’s speakers. Virtual PC with their previous OS, though, they can still run legacy They don’t need too much technical background apart from the software without sacrificing the increased security features of XP, ability to install an operating system. having to configure a dual-boot environment or holding onto out- Virtual PC will run on Windows 2000 and XP Professional and dated hardware. Similarly, any of your customers on a drive to supports workstation-level guest machines such as 2000 and XP reduce hardware expenses through server consolidation or look- Pro, Windows 98, Millennium Edition and NT Workstation. It ing for a way to affordably upgrade legacy servers will find Virtual also supports MS-DOS and OS/2 Warp 4. Server a great help. Virtual Server, on the other hand, is targeted toward higher- powered server platforms. It supports multiple and multi- WHAT’S NEW IN R2? threaded CPUs, SCSI disks, clustering, remote management, The R2 version of Virtual Server adds a lot more power and func- configurations with or without SSL and up to 3.6GB RAM. tionality to the base product. Originally slated to be the first serv- Virtual Server runs on Windows Server 2003, Small Business ice pack for Virtual Server 2005, R2 is a more technology-aware Server and XP, although Microsoft strongly recommends against version of its predecessor. It supports hyper-threading, PXE boot, running it on XP in production environments. Supported guest the 64-bit x64 platform, iSCSI and Virtual Server Host

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SolutionSpotlight

Clustering. Here’s a look at some of the petes with Microsoft on both the desktop major enhancements: and server side. VMware Workstation is Virtual Server Migration Toolkit: These comparable to Microsoft Virtual PC. tools help customers migrate their existing Spotlight VMware Server and ESX Server are server- physical servers onto Virtual Server 2005 based products similar to Virtual Server. machines. The Virtual Server Migration Highlights ESX Server is a “virtualize everything” Toolkit (VSMT) runs on most Windows NT solution. Built on a Linux-based operat- 4.0, Windows Server 2000 and Windows Key Features: ing system, ESX server is exclusively ■ Server 2003 computers. It creates virtual Advanced guest and host clustering designed to host virtual machines. You capabilities images of the server’s configuration and can’t use the physical server on which ■ Includes server migration toolkit hard disks. Although your customers will ESX Server runs to host Active Directory, ■ Supports advanced 64-bit features need to have Windows Server 2003 DHCP, DNS or any other network service. Automated Deployment Services (ADS), Competition: Every bit of the server’s processing power this is as simple as downloading and ■ VMware Server is dedicated to hosting virtual machines. installing the ADS add-on for companies ■ VMware ESX Server Two potential disadvantages to ESX already using Windows Server 2003 Server are price and hardware compati- Enterprise Edition. Opportunities: bility. It’s considerably more expensive Guest Clustering: Your customers will be ■ Promote as tool for server than GSX or Virtual Server. Pricing starts able to use Virtual Server 2005 R2 to cre- consolidation at $3,750 for dual-CPU support, and ate virtual Windows clusters, as it supports ■ Easier integration with Microsoft there’s a $30,000 price tag for a 16-CPU SCSI and iSCSI clusters within guest shops server. This price doesn’t include the cost ■ Ties into Microsoft’s Dynamic machines (as long as the guest operating of the guest virtual machine OSes or Systems Initiative system supports them, like Windows hardware. Also, because ESX Server is its Server 2003). They can configure their vir- own OS, it only runs on a limited amount tual machines with multiple SCSI and net- of hardware. Virtual Server runs on any work adapters to emulate a physical cluster setup. They can hardware that supports Windows. connect shared disks between multiple cluster nodes and use them VMware Server (formerly known as GSX Server) is a closer for data storage, quorums and a heartbeat network to ensure inter- comparison to Virtual Server. VMware Server runs on an existing node communication for status and failover. Windows or Linux server and supports hosting guest machines Host Clustering: Your customers can also set up host clustering such as Windows, Linux and NetWare. Because both products with Virtual Server 2005 R2. This will ensure that their guest offer comparable features, competitive pricing (both VMware machines are always available. Virtual Server 2005 R2 with the Server and Virtual Server R2 are offered as free downloads) and Windows Cluster Service lets them consolidate onto one physical apply to the Dynamic Systems Initiative (more on that later), server without causing the host server to become a single point of your customers will have to consider different factors when failure. Configuring a host cluster can help maintain high avail- deciding which is the right choice. ability for virtual servers. By configuring a physical host computer Virtual Server and Windows are both from Microsoft, so sup- as a node of a Windows server cluster, the virtual machines running port is a single phone call. This could be an issue when running on that physical machine can failover to another cluster node if the VMware Server atop Windows Server 2003. Support for all active node fails or has to be taken offline for maintenance. VMware server products is available only through a platinum or As with all clustering techniques, these are fairly advanced gold server contract (which provides 24x7 mission critical or practices. Microsoft provides step-by-step guides on their Web 12x5 non-mission critical support, respectively). There is no pay- site that can help both you and your customers. per-incident support available for VMware Server or ESX Server. Virtual Server is highly extensible and takes full advantage of COMPETITIVE LANDSCAPE the Component Object Model (COM). All aspects of virtual Microsoft certainly isn’t the only company supporting the virtu- machine management, administration and automation are avail- alization movement. VMware (now owned by EMC) has been able through the COM API and common .NET Framework lan- focused on virtual technology since it started in 1998. VMware com- guages such as Visual Basic, .NET and C#. VMware solutions

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support fewer COM interfaces, but they do support a handful of resources to handle a task regardless of their physical location. PERL modules through an add-on SDK. As companies look to cus- They can monitor progress, adjust policies and manage service- tomize and automate virtual machine solutions, the value of a level settings in real time. The resulting virtual infrastructure is standardized, integrated solution should be part of your push for more secure, reliable, manageable and easier to automate. Virtual Server. Along with DSI, Microsoft is making its virtualization technologies more appealing through creative licensing programs. In MARKETING AND SALES October 2005, it adopted a new licensing policy for virtualization No matter which company’s virtualization solution you choose, to help keep the cost of software licensing down, while adapting you’ll benefit from the Dynamic Systems Initiative (DSI). DSI is a to newer technologies like multi-core and hyper-threading commitment from Microsoft and its partners to develop self- processors. Some of the licensing changes include: managing dynamic systems. The goal is to help IT teams design Pay only for what you use. Customers are only required to more manageable systems and automate operations to reduce pay for the maximum number of running instances (in other costs and have more time to focus on other business goals. words, an instance of original installed software). They can Virtualization ties into the DSI strategy by making it possible to then create and store an unlimited number of virtual machines manage business tasks independently of the resources needed to on a particular server. execute them. Resource management becomes easier with virtu- Easier deployment across servers. Customers can move al machines, as your customers can assign the necessary active instances from one server to another without limita-

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SolutionSpotlight

tion, provided the physical servers are Why Go licensed for the same product. So customers can now store a set of instances on a storage network and deploy any instance to a rack server or blade server Virtual? with an available license. Flexibility per processor. Customers can There are several compelling reasons your customers will want to consider stack multiple virtual instances on a virtualization technologies. Here are the top three: machine by licensing for the number of vir- 1. Design and Proof-of-Concept: If your customers have ever had to reconfigure a tual processors they’re using, rather than for computer to test a new operating system or application, they know how long it can all of the physical processors on the server. take. Virtualization can speed up this process in three ways: R2 Enterprise Edition. The new policy for the Enterprise Edition lets customers run up a. Once they create a virtual machine with a base operating system, they to four virtual instances on a single server at can reuse it for different projects. Building the virtual system once takes no additional licensing cost. This limit will the same amount of time as building a physical system, but copying the be lifted entirely for customers choosing to virtual hard disk file and applying it to a new virtual machine only takes a run the forthcoming Windows Server matter of minutes. Datacenter Edition. In this case, customers b. Second, they can save a virtual machine’s state and make an exact point- can run an unlimited number of virtual in-time duplicate for reference purposes. This is extremely useful when instances at no additional cost. recovering from a bad software install, patch conflict or any other disaster. Simply shut down the failed virtual machine and restore the copy to pick up MAKE VIRTUALIZATION A REALITY where you left off. Virtualization is being increasingly embraced as a viable business technology. The ability to c.Third, virtual machines are ideal for development labs since there’s no risk of better utilize powerful high-end servers making changes to production servers and destabilizing systems. through virtualization and the potential cost 2. Server Consolidation and Application Migration: One of the big benefits savings for server migrations is becoming of Windows Server 2003 is server consolidation—being able to do more with more accepted and commonplace. Incentives less. Virtual Server 2005 R2 takes this a step further by giving your customers like the Dynamic Solutions Initiative should a way to combine servers onto a single physical server, thereby consuming increase interest and entice your customers a fraction of the resources it would otherwise. Servers requiring different who are serious about improving efficiency operating systems can co-exist on a single server, creating a less expensive and and lowering cost to give careful consideration to Virtual Server. more efficient solution. Legacy operating systems and application can still run • on newer hardware along with more recent and secure operating systems. James LaTour, MCSE, is a consultant for Trinity 3. Training and Demonstration: Training and demonstrating software with Consulting (www.Trinity-Inc.net), a Microsoft virtual machines is a common practice for two main reasons. First, it’s easy to Gold Certified Partner in Marlborough, Mass. build and distribute pre-configured training and demonstration environments. He also volunteers as webmaster and adminis- Using flexible and portable virtual hard disk technology, your customer can trator for MARX7.org, the Massachusetts Area create a virtual image to demonstrate a beta application on hardware entirely RX-7 and Rotary Powered Club, a non-profit different from the one on which the demonstration will be viewed. Second, automobile enthusiast club in the New England with “save state” functionality, your customers can restore a virtual image to area. Reach him at [email protected]. its exact state when the virtual machine started. This is useful for training purposes, where actions performed on the virtual machine can easily be undone Go to RCPmag.com and follow our links to between sessions to ensure the same experience for all students. — J.L. more information about Virtual Server 2005 R2. FindIT code: RealDollars

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C2 www.raritan.com Corporate Headquarters: ©2006 by 1105 Media, Inc. All rights reserved. Redmond Channel Partner 47,49,50 www.rcpmag.com Reproductions in whole or part prohibited 9121 Oakdale Ave., Suite 101, Chatsworth, CA Sunbelt Software 35 www.sunbelt-software.com 91311, www.1105media.com except by written permission. Mail requests to “Permissions Editor” c/o RCP magazine, 16261 Trend Micro Inc. C4 www.trendmicro.com Media Kits: Direct your media kit requests to Laguna Canyon Road, Suite 130, Irvine, CA WennSoft 39 www.wennsoft.com Matt Morollo, Associate Publisher, 92618. The information in this magazine has Z-Firm LLC 53 www.zfirmllc.com 508-532-1418 (phone) 508-875-6622 (fax), not undergone any formal testing by 1105 [email protected] Media Inc., and is distributed without any war- ranty expressed or implied. 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DIRECTIONS

Striking the Balance in Partnership BY PAUL DEGROOT

“Partner” can mean many things—buddy, co-investor, lover, co-con- spirator among them—but sooner or later most people engaged in a partnership realize that the partners’ agendas are different. That can be a vive la différence moment or a “whoa” moment. Partner Conference), Redmond listed 4,600 Gold Certified In the tech world, where alliances, dalliances, competition, Partners, 28,000 Certified Partners, and 266,000 Registered cooperation and their variations are the rule, it’s worthwhile to Members. As of mid-April, 2006, it had 6,997 Gold Certified start out with a clear view of who is after what in a partnership, Partners (up 52 percent), 23,287 Certified Partners (down 17 per- and to revisit that arrangement from time to time. cent) and 310,430 Registered Members (up 16 percent). A large vendor like Microsoft, with a broad portfolio of hori- Impressively, the highest—and hardest—partner level is zontal applications, wants to make partner channels as broad as seeing the greatest growth. That says those partners are seeing possible. Partners, on the other hand, prefer a narrow channel and real value in the program. Even though their numbers are grow- exclusive territories and sales leads, to maximize the returns for ing, the rewards they’re getting from partnership also appear to their sales efforts. However, the optimal balance between a narrow be growing. For example, Gold Certified Partners get better visi- channel and a broad one can’t be decided by a simple formula, bility in Microsoft marketing programs and are more likely to because the optimal choice for Microsoft will be different from the show up first when customers query Solution Finder, a database optimal choice for partners. that customers use to find a Microsoft partner. Before it introduced its new Partner Program a few years Certified Partner numbers have gone down, but that may not ago, for example, Microsoft had about 35,000 Certified and Gold be serious. Many of those partners are moving up to the Gold Certified Partners in its Certified Partner Program. Certified Partner ranks, exactly what Microsoft wants to see. For When it revised the Partner Program, with a clear aim to another, if they don’t requalify in 2006 as Certified Partners, they broaden the partner channel, it created the no-fee Registered don’t drop off the partner radar—they merely become Registered Member level. Now it has more than 330,000 partners, most of Members, and when they check the Partner Membership Center them in that entry-level Registered Member tier. they’ll see that they’re probably just a few customer references or a That’s a “whoa!” moment for partners if I ever saw one. certification away from getting back to the Certified Partner level. At the same time, Microsoft maintained some substantial The Certified Partner level may prove to be a fast-changing requirements for participation at the higher levels of the pro- intermediate stage for partners, as they improve their qualifica- gram. Competencies, Partner Points, customer references and tions and earn Gold Certified Partner status, or their priorities other requirements are more rigorous and broader than previ- change and they reduce their commitment. For example, ously required. Furthermore, many of them are annual: You need Microsoft says more than 5,000 Registered Members have to come up with new customer references every year to maintain moved into the Certified Partner level in the last year. your level. Overall, it’s an impressive performance. It suggests that, in The combination—stringent program requirements and a spite of their different agendas, both Microsoft and its partners larger number of potential competitors—starts to look bad for long- may have an occasion to say vive la différence. • time partners. Except, as it turns out, Microsoft may have come pretty close to achieving that optimal balance between lots of part- Paul DeGroot is an analyst withDirections on Microsoft, an inde- ners and partner profitability. Look at recent numbers for the pendent research firm focused exclusively on Microsoft strategies and Microsoft Partner Program: In July 2005 (at last year’s Worldwide technology. Reach him at [email protected]. PORTRAIT BY SCHNARE JILLIAN

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