Showdown at the SBSC

Microsoft’s phasing out of its Small Business Specialist Community in favor of a new small business competency has many channel pros seething with resentment.

By Rich Freeman

On april 14, Julie Bennani, general manager of the Microsoft Partner Network, posted big news for channel pros on a company website. Starting in June, she wrote, Microsoft would be adding a specialization to its partner program specifically for small business IT providers. Like other Microsoft “competencies,” the new small business competency would help partners highlight their qualifications for customers and forge tighter bonds with Microsoft’s sales and marketing team.

“We are very excited about what this opportunity represents for our partners and Small Business customers!” Bennani wrote.

Unstated in her post was a related decision by Microsoft to gradually turn its popular Small Business Specialist Community (SBSC) from the quasi-competency it’s been since it debuted in 2005 to a partner-to-partner peer group without entry requirements or membership benefits.

Partners greeted these changes with a range of emotions. But a surprisingly large number reacted with something few at Microsoft probably anticipated: fury.

“I’m really offended right now,” says Bob Nitrio, CEO of Orangevale, Calif.-based IT consultancy Ranvest Associates. Terminating the SBSC is an affront to Microsoft’s best small business evangelists, he argues, adding, “I don’t know if Microsoft cares. I really don’t know if they care about burning bridges this way.”

Ty Bohannon, chief technology adviser at solution provider SwiftPoint LLC, of Centennial, Colo., is equally upset. Microsoft claims the small business competency will impress customers, he notes. “I don’t think that’s true. Not in the SMB market.”

Disgruntlement is nothing new to the Microsoft channel, nor is it uncommon for partners to respond with less enthusiasm than Microsoft to the company’s latest initiatives. But the yawning chasm between Bennani’s upbeat announcement and the anger many partners are voicing is of a different magnitude. How could the same actions Microsoft views as a boon to its small business resellers have left many of them seething with resentment?
Weighing the Value
Like its peers, the small business competency is available at two levels, Silver and Gold. To qualify for either, partners must complete various assessments, provide customer references, pass technical exams, and pay a yearly fee, among other requirements. Discounted to $999 through December, the Silver-level fee rises to approximately $1,500 in 2013. Gold-level partners pay $3,800.

In return for clearing those bars, small business competency holders receive as many as 250 internal-use licenses for various Microsoft products, presales technical assistance, “partner advisory hours” that can be exchanged for various forms of technical and business aid from Microsoft, and use of the small business competency logo, among other benefits.

As for the SBSC, it will co-exist with the small business competency for one year, after which members will no longer be permitted to display the familiar blue SBSC logo. “To have two small business brands in the market for too long is not going to make any sense,” Bennani explains. Even so, she argues, the net result is a big win for the channel. “We’ve been working with partners on the definition and focus of this competency for quite a while,” Bennani says. “They’re very excited that we’re doing this.”

Indeed, “exciting” is precisely the word Carl Mazzanti uses to describe the small business competency. Mazzanti is CEO of SMB solution provider eMazzanti Technologies, of Hoboken, N.J. “We’re Gold certified right now in a competency that’s not our strongest suit but was the easiest for us to get,” he says. Earning a Gold small business competency will help him portray his firm’s capabilities to customers more accurately. John Krikke, vice president of Onward Computer Systems Inc., of Burlington, Ontario, is also a fan of the new competency. “The offer is definitely richer” than the SBSC, he says. “You’re going to have a better engagement with Microsoft.”

Affordable Entry Point
Other Microsoft partners though, many of them smaller firms, question how much that engagement—or any of the small business competency’s benefits—are really worth. “If you’re a one- or two-person shop, what do you need with 100 [internal-use] licenses?” asks Susan Bradley, a partner and SBSC member at accounting firm TSH&B, of Fresno, Calif. “The only thing that the competency gives is a lovely sticker or a logo someplace.” And that logo carries little weight with customers, some partners argue. “I would say the majority of my customers could care less,” states Jim Ray, president of Neuse River Networks, in Research Triangle Park, N.C.

What most galls the small business competency’s critics, however, is its fee structure. The biggest investment required of SBSC members was a subscription to Microsoft’s Action Pack, which for as little as $329 a year provides access to internal-use software, post-sales technical support, and more. The competency’s four-digit fees, by contrast, look to some partners like a giant price hike. “It’s out of line. It really is,” says Peter Perry, owner of Chicago-based Soaring Eagle Computer Services Inc. “It’s offensive.”

It could also end up shutting out some of Microsoft’s smallest SMB partners, worries Mira Perry (no relation). Currently senior analyst for software channels research at IDC, Perry used to work for Microsoft, where she helped launch the SBSC in Canada. Joining that program, she says, gave younger firms with limited budgets an affordable entry point to Microsoft’s partner program. “I think it’s fabulous to have a small business competency, but I like the notion of having an intermediate step for the partners that are just embarking on that journey,” Perry says. “Where do they go now?”

Microsoft, for its part, is well aware that some partners may find the competency’s requirements too steep. Bennani says Microsoft hopes that at least 30 to 50 percent of SBSC members will pursue the new competency within the next year. Partners unwilling or unable to join them, she notes, will be free to leverage the Action Pack and Microsoft’s Cloud Essentials Pack, which offers similar benefits.

As for the new competency’s fees, Bennani says Microsoft deliberately set the post-discount price for the Silver level some $350 below the normal Silver rate so smaller partners could afford it. Allowing one-person businesses to earn Silver status is a further concession, she adds, as other competencies require partners to have at least two Microsoft Certified Professionals on staff. “I would challenge you to find any other vendor in the industry who would brand a one-person shop at that level,” Bennani says.

Moreover, Microsoft continues to adjust the small business competency in response to partner feedback, she adds. For example, many partners complained that one of the technical exams that most competency holders must take covers topics more relevant to large businesses than small ones. In response, Microsoft has been preparing a new, SMB-friendly edition, which as of press time was scheduled to debut this month.

Perfect Storm
In truth, however, tests and fees alone don’t account for the anger some Microsoft partners are feeling now. Many channel pros say replacing the SBSC with the small business competency is just the latest in a series of moves by Microsoft that have left them feeling ignored and disrespected. “If this was all by itself I don’t think you’d have the same amount of frustration,” TSH&B’s Bradley says. “It’s like we’re at a perfect storm right now.”

For starters, some partners say, Microsoft’s engagement with the SBSC has been steadily weakening in recent years. “When it initially rolled out I was quite satisfied and quite excited,” says Calvin McLennan, owner of McLennan Technologies, in Waterdown, Ontario. “Within the last few years it really has fallen off Microsoft’s radar completely.” Krikke has noticed a sharp decline in SBSC communication from Microsoft too, adding that reseller participation has dropped as a result. “It’s been disappointing,” he says.

Microsoft won’t disclose how many partners belong to the SBSC at present, but concedes that number has been dropping. At its peak in 2010, Bennani says, SBSC membership stood at more than 16,000. Since then, she states in an email, “we have seen a reduction in the number of partners joining this community as we have introduced additional partner programs such [as] the Cloud Essentials, which now has over 25,000 partners who have joined worldwide.”

As it happens, however, Microsoft’s push into cloud computing is a major source of discontent for some partners. Mazzanti is one of many resellers making good money on Web-based products like Microsoft’s Office 365 communications and collaboration suite. But other partners feel Microsoft is forcing them into the cloud faster than makes sense for their customers, many of whom lack access to reliable, high-speed broadband. Microsoft’s recent decision to discontinue the Standard edition of its Small Business Server solution only makes matters worse, many partners say, by leaving SMBs without an affordable on-premise alternative to cloud-based email.

Add the demise of the SBSC to all of that and the result is a lot of deeply alienated partners. And that could have dangerous long-term implications for Microsoft, Krikke warns. “I think Microsoft is losing mindshare among smaller resellers,” he says. Bradley agrees. “Microsoft is no longer the only game in town,” she notes. “A lot of people are doing Google Docs and Google Apps.”

Bennani, at least, remains confident. “We do think a big bulk of the small business specialists will move into this competency,” she says. IDC analyst Perry believes Bennani will ultimately be proven correct, but doesn’t expect that process to be easy. “It’s the right move, what they’re doing,” she says of Microsoft. “It’s just going to be a difficult one for some of these guys.”