So You Want to Build a Microsoft Practice? Here's What It Will Take
“It's a labor of love, and it didn't happen overnight," Jim Campbell of Opkalla said.
![Business building block growth Business building block growth](https://eu-images.contentstack.com/v3/assets/blt10e444bce2d36aa8/bltb871edc7e4426720/652429a5c39fc8176fdd636a/1-Building-Block-Growth.jpg?width=700&auto=webp&quality=80&disable=upscale)
Shutterstock
Opkalla’s Jim Campbell said the idea to build a Microsoft practice came from customer demand.
“We just continued to be asked, ‘Are you doing Microsoft? Are you helping with Microsoft?'”
Many customers and prospective customers, Campbell said, were looking for a change.
“We found a gap in the market for our customers who have been very unhappy either working with Microsoft directly or through their incumbent partner,” he said.
Opkalla became a Microsoft gold partner after 18 months of running the practice. Campbell said the success came from asking customers candid questions about their experiences with Microsoft.
“For us, it was an easy way to earn client trust and save them a little bit of money, because we discount off list price,” he said. “And it’s a segue into other products and services we could sell.”
An early step in building the practice was finding a distributor. Opkalla, which technically falls under the category of “indirect reseller” in Microsoft nomenclature, engages directly with a distributor for licenses.
Campbell said his team interviewed various distributors, with each interviewee outlining their discounts, support and infrastructure. Ultimately, Opkalla chose Arrow.
“Arrow has built the infrastructure to create the portal, which is now customized for us. So they’re just giving us the tools to build to pass along. So every dollar we sell in Microsoft goes through Arrow, who then pays Microsoft. They take a small percentage of every licensing sale we make,” Campbell said.
Microsoft this year put pricing changes into effect in conjunction with its New Commerce Experience (NCE).
The changes added a 20% price uplift for month-to-month subscriptions to Microsoft 365, Dynamics 365, Windows 365 and Power Platform. On the other hand, annual and 36-month terms come without the uplift.
Campbell said the shift reflects an attempt by Microsoft to build predictable income.
“Microsoft wants to become less involved in this flexible pricing model. I think that’s become an operational bear compared to more of a commitment-based annual subscription model,” he said.
Campbell said the NCE consumption shift presents difficulties for customers, due to the fact that many of them don’t run their Microsoft budget in an annual fashion.
“These changes are in place, meaning any net-new contracts have to go this way, and any renewal contracts coming up will have to transition,” he said.
He said some of Opkalla’s largest clients have yet to make the switch.
“For the 100-user organization, this isn’t that big of a deal. But if someone’s spending $360,000 a year on Microsoft, and what was $30,000 a month now turns into either $34,000-plus a month or $350,000 upfront, that’s a change,” he said.
The NCE also significantly changes life for the partner. That’s due to the fact that Opkalla now has to buy licenses upfront.
“So if one of our clients commits to the discounted rate through an upfront payment, we will pay Microsoft their cut with 72 hours, which is a significant amount of that $100,000. However, as the partner, we must be very diligent to collect payment from the client to minimize our exposure. We have also added additional language to our proposals to guard against this because if for whatever reason we do not receive payment, our business will be more at risk.”
Campbell said Opkalla has made a point of proactively communicating with customers about NCE. He said Opkalla has been running pricing matrices to help customers understand future monthly costs versus future annual costs.
“We’ve built a strategy to communicate this to every single one of our clients. So every single one of our clients have now been briefed. We’ve done webinars. They’ve all been briefed on the changes. Generally speaking, the clients have been OK with it.”
He said most customers haven’t been surprised.
“Most of our clients feel as if this is just what Microsoft does,” he said. “They are almost sadly expectant of changes like this to happen. And Microsoft is the big name in the industry. They don’t have a choice. What are they going to do? They’re not going to move to Google.”
Campbell said partners can earn customer trust through communication. But that goes both ways.
“There’s also an opportunity for them to lose it all if they haven’t communicated and haven’t gotten in front of this,” he said.
Campbell said Opkalla has a 100% retention rate. But now’s not the time to rest on its laurels.
“It will be an opportunity for us to gather more Microsoft business because people were unhappy with whom they’ve been working with. But it’s also a challenge, because if we don’t do it, then we’ll lose clients,” he said.
For Opkalla, the Microsoft practice connects symbiotically to other products in its portfolio. The former helps draw in and retain customers for future upselling. Specifically, Campbell said collaboration, network or cybersecurity provide more lucrative opportunities down the road in the customer life cycle.
“Microsoft is a great revenue driver for our business, but it is not a massive profit driver. We are not going to hit our goals by only selling Microsoft licensing. But we do have an opportunity to upsell our clients or at least talk about other products and services because of it,” he said.
Opkalla has built a security practice, which involves a mix of indirect and direct supplier relationships the firm leverages. And Microsoft is becoming part of that portfolio.
“Microsoft is becoming more and more relevant in the security space than they ever have before, so those worlds for us are kind of intertwining actually,” Campbell said.
Opkalla has built a security practice, which involves a mix of indirect and direct supplier relationships the firm leverages. And Microsoft is becoming part of that portfolio.
“Microsoft is becoming more and more relevant in the security space than they ever have before, so those worlds for us are kind of intertwining actually,” Campbell said.
For Jim Campbell and his team at Opkalla, starting their Microsoft business was no small feat.
Opkalla’s Jim Campbell
“It’s a labor of love, and it didn’t happen overnight,” said Campbell, managing partner for the Charlotte-based consultancy. The technology advisory services and vendor management firm has built a gold-certified Microsoft practice. It’s quite an accomplishment for a company that launched in 2019.
Perhaps more interesting is how Opkalla’s business model compares to other companies in the technology advisory space — or agent channel. Agent partners historically rely on commissions rather than resale margin and leverage technology solutions brokerage (formerly known as master agent) partnerships for their suppliers rather than using direct contracts or an IT distributor. But in the case of Opkalla, the firm has diversified to resell Microsoft 365 licenses using a distributor.
Campbell spoke to Channel Futures about what it took to build the Microsoft practice, the value it adds to the business and how Opkalla and its customers are navigating the New Commerce Experience (NCE).
Want to contact the author directly about this story? Have ideas for a follow-up article? Email James Anderson or connect with him on LinkedIn. |
About the Author(s)
You May Also Like