IT channel partners who offer cloud-based solutions are more successful than their peers, according to Microsoft’s partner guru– but playing in the cloud computing space can require significant adjustments.

Phil Sorgen, corporate vice president in Microsoft’s worldwide partner group, said that the most successful Microsoft partners are those who invest in extending its Azure cloud services further.

“Partners who are building more first-party IP, more capabilities of their own that they can monetize and that wrap around or extend services like Microsoft’s, are who we see being extremely successful early on in the cloud,” Sorgen said.

“That can be in the realm of managed services, IT services, or being an ISV, or writing SaaS extensions,” he continued. “Even just creating repeatable methodologies given the predictability of the back end that the cloud represents.”

Adapting to cloud-based solutions may be harder for some than others, though. Some resellers who haven’t developed the capability to add value to the cloud may find it difficult to differentiate themselves.

“There are those that have more experience building IP that are finding this to be an easier transition,” he said. “And there are some that didn’t provide the skills to their customers that we described, that are having to do more change within their organisations and build capabilities that they haven’t traditionally had. For them, they do find the transition more challenging.”

One challenge affects resellers who traditionally sold software solutions for an initial capital outlay. The transition to a different business model in which cashflow is more continual can be difficult. Customers moving from capital to operational expenditure will often pay smaller amounts, more frequently, in an ongoing arrangement.

It can be difficult to build an annuity business that mixes the partner’s own intellectual property with Microsoft’s public cloud, Sorgen said. “You have to build that phase, and you build it through accelerated customer acquisition, and by continuing to cross-sell and upsell.”

According to Microsoft, the benefits of selling cloud services are worth the effort. In an announced that it will be providing cloud services for Azure, Office 365 and Dynamics CRM locally from its Toronto and Quebec City datacentres from next year.

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