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Breaking New Ground @ Distribution Peter Davidson Sr. Director Distribution

Breaking New Ground @ Distribution Peter Davidson Sr. Director Distribution. Last year: Beyond the Disti Warehouse. This year: The new Disti Warehouse. Tremendous Progress in H1. On-Premises YTD SMB Open YoY Growth 13.87% Non-managed Reseller Revenue Growth YoY 14.74% WW ORR Rate

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Breaking New Ground @ Distribution Peter Davidson Sr. Director Distribution

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  1. Breaking New Ground @ DistributionPeter DavidsonSr. DirectorDistribution

  2. Last year:Beyond the Disti Warehouse This year:The newDisti Warehouse

  3. Tremendous Progress in H1 On-Premises YTD SMB Open YoY Growth 13.87% Non-managed Reseller Revenue Growth YoY 14.74% WW ORR Rate 91%+ Cloud YTD VL/FPP O365 Seats Sold YTD VL/FPP Cloud Revenue YTD VL/FPP O365 Reach 43% 23% 52% M/M Rev Growth M/M Reach Growth M/M Seats Sold Growth YTD DistiSPLA Revenue YTD Disti SPLA New Hosters 18% 51% Growth in Net-New Hosters 1.2K

  4. Advisor Direct Office 365 Progress in H1 Open FPP July 2013 December 2013

  5. A tremendous partnership UK Cloud Channel Execution Turkey Business Turn Around Middle East/Africa Cloud Compensation Drive France Cloud Readiness Drive Switzerland Tele BDM for Cloud & Cloud KPI Management South Africa Unified Distribution Strategy

  6. Thank you!

  7. Our Objective in 2H & Beyond “The opportunity ahead for Microsoft is vast, but to seize it, we must focus clearly, move faster, and continue to transform." —SatyaNadella Decisively accelerate the move by our channel to sell Services. Continue to meet the overall sales & marketing targets that we have set out for our SMB business.

  8. Partner Incentives Roadmap 2014 2017 2010 In 3 years, more than 50% of incentives will be focused on Cloud Services, Devices and Solutions. Solution Devices Devices Cloud Solution Solution Transactional Transactional Cloud Transactional Cloud Prior distribution of computing models Future distribution of computing models Distribution of models used today Traditional Virtualized Private cloud Hosted cloud Public cloud 8 This material is confidential for the use of Microsoft and Microsoft Partners.

  9. Worldwide Technology Trends 75M SMALL BUSINESSES worldwide 820K MEDIUM BUSINESSES worldwide MARKET $700B on IT in 2013 $300B on IT in 2013 $133B by 2017 $78B by 2017 $75B oncloud services $49B oncloud services SPEND 87% 54% MOBILITY Support aMobileWorkforce1 Support aMobileWorkforce1 325K NEW SMALL BUSINESSES by 2017 15K NEW MEDIUM BUSINESSES by 2017 62%SMARTPHONE 21% TABLET 86% SMARTPHONE 43% TABLET PENETRATION PENETRATION GROWTH 1Statistic from AMI-Partners 2014 ICT & Cloud Study and is an 8 country roll-up summary (includes: US, CA, FR, GE, UK, RU, CH, and IN).

  10. Dominant Market Forces Our Distributors Activate & Enable The ChannelCapacity Gaps filled with active partners selling services Drive Demand & Sell Resellers meeting high demand for Microsoft Services Retain, Renew and Upsell Resellers deliver the services and support SMBs depend on Accelerating rate of technology change Expanding services and sales models Expectations in a fast-changing market Competition Demand for customer productivity

  11. Evolving Disti Solution Accelerator (DSA) DISTI attains Eligible Competency by Dec 1 2013 Disti sells solution workloads through Resellers 1 2 DISTI is enrolled in DSA in FY14 H2 DISTI receives DSA incentive (10% of invoice value for eligible products) 50/50 Rebate/Coop 42 Subs 204 Competencies 93Distis Volume Transactional Reseller (break/fix) Client/Office Value Solution Offerings Value Added Resellers/Sis Data Center/SQL/CRM Services Service Offerings SI/Hoster/MSP Cloud services/Marketplace

  12. How Partners are Making Money with Office 365 Managed Services and Packaged IP Billable Services Margins 35-42% Add-on Projects and Solutions • Tier 1 / Tier 2 support) • New user set-up • Updates • End-user training • SharePoint Templates • Windows Intune • Desktop Management • Policy/Patch Management • Software Asset Management Revenue Deployment & Migration Services • Expansion • Customization • LOB integration • IT infrastructure design • IT planning • IT training Managed Services/IP Margins 50%+ Office 365 Licensing Revenue • Assessment / planning • Migration of data • Establishment of service Baseline Good Better Best Recurring $48-240 / seat $40-120 / seat $40+ / seat $50-80 / seat Structure of Office 365 Deal Note: Estimates are based on partner interviews so actual numbers will differ by market.

  13. Annuity Model Generates More Revenue and Margin 46% more revenue 4Xas much margin $180 $ $180 $ $180 $369 $ $ $180 $ $369 $180 Office Std. $ $180 Office 365

  14. Coming “Wave” of SMB Cloud Subscription Expirations Anniversary Net Unit Add Map Open L&SA – renew every 2 years OV/OVS – renew every 3 years Renewal Value Volume of Renewals

  15. Distributor As A Market Maker Applied market insights Grow and retain end customers Business intelligence and systems Grow new models for Disti profitability Superior Customer & Partner Experience Channel capacity Capitalize on the value distribution opportunity Integrated products and solutions Realize the Device + Services opportunity

  16. Things We MUST get right @ Distribution Cloud SureStep

  17. Our Aspiration Decisively accelerate the move by our Distributors and their resellers to sell Services. Continue to meet the overall sales & marketing targets that we have set out for Distributors Flawless Sure Step Plan Execution @ Distribution

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