Microsoft’s mission is to enable people and businesses throughout the world to realize their full potential (Microsoft, 2016). This is an ambitious goal since the need for computer software is extremely diverse. The challenge for Microsoft is to fulfil all those different needs.
The most important instruments of Microsoft to fulfil the variety in needs, is the Microsoft Partner Network (MPN). Over 95% of Microsoft’s revenue is generated through this
channel (Perry, M. and White, S., 2012). This blog explains how Microsoft creates business value through its network.
The reason why the MPN exists
Microsoft has started the MPN because it facilitates them to generate more value for the end customer and it makes it possible to distribute software more cheaply and widely. Local partners understand the need of local markets better than Microsoft. Partners tailor the software of Microsoft to the need of the local customer by offering complementary market specific products. This allows Microsoft to sell its products more broadly without the high costs of tailoring software themselves. Bundling Microsoft software with the specific market software of partners creates higher perceived value because the complementary products better fulfil the need of the customers than the products will on their own. Additionally, bundling the products saves costs since implementation can be standardized which saves double implementation costs. So, the software of Microsoft in combination with the market specific software of partners enables their customers to realize their full potential better and cheaper than Microsoft and partners can enable customers on their own.
The reason why there is demand for the MPN
The need for software is complex and ambiguous and so requires flexible solutions. The MPN allows Microsoft to meet the ambiguous demand by bundling its products with complementary products of partners and by teaching partners about its products. As mentioned, Microsoft creates more value by bundling products with the local market specific products of the partner. When partners are better informed about Microsoft software, they can better tailor software to meet de ambiguous demand. Therefore, Microsoft started a competency program where partners can obtain free licences when they succeed exams that test knowledge about Microsoft products. This program offers both business value as the partner safes a lot of costs by receiving free licenses and the products of Microsoft better meet customer demand since partners are better informed.
The reason why the MPN is sustainable
The MPN sustains it value because it generates value for both parties; Microsoft and partner better meet more customer demand and both safe costs. The software of both is less worth without the other ones since the products are complementary and both are necessary to meet customer demand. Additionally, they both create more business for each other since Microsoft is represented more locally by its partners and the partners are represented more globally by Microsoft. Both parties safe costs; Microsoft does not need to tailor their products themselves to each different demand, partner obtains free Microsoft licenses and support processes can be standardized.
To conclude, the MPN creates business value for both Microsoft and partners. As a consequence of the network both parties better meet the ambiguous demand for lower costs than they ever would without each other. The MPN is a perfect example of how businesses can create value through networks.
Sources:
Kauffman, R.J., Li, T., and Heck, E., 2010, Business Network-Based Value Creation in Electronic Commerce. International Journal of Electronic Commerce 15(1) 111-142.
Perry, M., and White, S., 2012, The Business Value of the Microsoft Partner Network Core Benefits.
http://www.microsoft.com/enable/microsoft/mission.aspx
