No one wants to be uninvited from a party, and Okta is no different.

And so the news that Microsoft had uninvited the identity management vendor and long-standing Microsoft partner from exhibiting at Microsoft Ignite made for one of the more intriguing recent stories. Initially, Microsoft said the action was due to “broad competition between our companies in the mobility solution space.” 

When the news got out, Microsoft quickly reversed course and re-invited Okta to sponsor. 

This spat is the most recent example of Microsoft cutting out its partners, but is by no means unique case. 

It's My Party

Last summer, Microsoft announced major changes to its FastTrack cloud onboarding program. The offer to execute free Office 365 migrations essentially cut or diminished the role of channel partners. 

Even on the hardware side Microsoft demonstrated no reluctance to cross red lines with the release of the Surface line of PCs, directly competing with traditional hardware partners who were the lifeblood of Windows for many years.  

According to Microsoft there are over 430,000 partners around the world (pdf) and some estimate that partners generate nearly $9 in revenue for every $1 that Microsoft makes. Over the past two or so decades, a symbiotic relationship developed between Microsoft and its partner ecosystem which served both parties well.  

From my experience, Microsoft has in the past been very sensitive not to harm partners or play favorites. With a typical three-year release cycle, wide gaps existed in many Microsoft offerings that partners addressed through both service and software offerings. 

So, why is Microsoft destabilizing these longstanding relationships?

Blame It on the Cloud

I believe that the underlying reason is the “cloud.” 

More specifically, Azure and Office 365 have dramatically changed how Microsoft develops and delivers products. 

As a former Microsoft ISV, our biggest existential threat was not our competition but Microsoft itself. If it chose to develop a competing product (with its seemingly limitless resources) and give it away for free or as a part of a subscription, we had a problem. 

However, Microsoft had previously always been slow, telegraphing its intentions well in advance. This was understandable since having to write, test and support products to work in thousands of different customer environments significantly extended its refresh cycles and cost millions of extra dollars, leaving little room for innovation and even less for expansion into other areas. 

Microsoft was more than happy to leverage partners to fill the gaps.  

The “Cloud First” approach has changed the paradigm by unshackling Microsoft from this technical debt. Building in one environment allows Microsoft to innovate much faster, pushing out incremental improvements on a weekly or often daily basis (see Google and Amazon). 

What's more apparent is that Microsoft is doing more than just improving its existing products — it is adding new features and functionality that clearly overlap offerings from its partners.  

Learning Opportunities

Here is a sample of Microsoft’s product announcements over just the past few weeks: 

Arguably, each of these releases disrupts a partner community. Microsoft has obviously made the decision that implementing these features is more important than allowing partners to fill the void.  

Assuming this is the case (and it certainly appears so), what can partners do?

What's a Partner to Do?

Partners must begin by recognizing that the new approach is not really new. Microsoft has always classified certain technologies as strategic, as in the case with identity management from Okta. 

FastTrack is also not a new or surprising initiative. It has been around for years, focused primarily on email. And migration has always been cited by customers as the number one inhibitor to the cloud. Microsoft decided that the pace of adoption through partners was inadequate to meet its goals. 

As partners, we must evaluate our individual strength and weaknesses. Since Microsoft is moving faster than ever, it is incumbent on partners to match that velocity.  Those that fail, will likely be left behind.  

For partners that are exclusively aligned with Microsoft, start exploring other opportunities. Microsoft will certainly not be the sole cloud service provider that customers will need. 

None of this is to say there's no more opportunity with the mothership. Microsoft is a very large entity serving a highly diverse customer base. Many gaps exist today and others will develop in the near future. Partners who are agile, diverse and forward-looking will always find an abundance of business to win.

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