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You Can’t Turn a Horizontal Reseller into a Vertical One
By Steven J. Vaughan-Nichols

Opinion: Microsoft can claim that it controls the horizontal and the vertical, but it doesn’t. No one can.

I had been wondering how Microsoft’s vertical partner efforts were going.

Now I know: Badly. Very badly.


Bad enough that One Microsoft—its direct-sales vertical sales force— but pushing horizontal partners into becoming vertical ones? Talk about trying to put round pegs in square holes!

Microsoft senior VP Doug Burgum said that “vertical is just a code word for specialization.”

And that helps how?

Here’s the problem. The vertical, or specialist if you prefer, business is indeed a business for “specialists” in a vertical channel.

The important word is “specialist.”

You can have all the tech savvy in the world—and many of Microsoft partners do—but that’s only the start in the vertical world.

Vertical VARs and integrators know their customers’ businesses and how they work almost as well as they do their own. If they don’t, they go out of business in a hurry. It’s their specialist knowledge that gives them their edge.

Over the years, I’ve worked with several successful channel players in the legal, library, and real-estate verticals.

What they all had in common was that they knew their customers’ businesses, they knew how their customers thought, and they knew what their customers wanted and what sounded good but what really wasn’t.

You can’t get that kind of business savvy from Microsoft. You can’t get those kinds of smarts from anything except from working in that particular field.

That’s not the game plan that horizontal VARs signed up for. Most of them are in the general office and network world.

eWEEK.com Special Report: Microsoft Targets Vertical Markets

Many of them are killers at deploying Exchange or managing Server 2003, but knowing how to tune Great Plains for a law office? I don’t think so.

Even in those verticals where Microsoft offers a pre-built solution, as it does for human resources and field service management, your best horizontal partners are going to have trouble getting the solution customized to the customers’ needs.

They probably know just enough accounting to keep their own business out of trouble with the IRS—or maybe not!—and they’re almost certainly not going to know how to set up field service accounting for say a small satellite TV VAR that uses both in-house and freelance technicians in North and South Carolina.

When you get right down to it, the horizontal and vertical businesses aren’t really the same at all.

Oh sure, most Microsoft channel customers are going to be using Word for their word-processing, and they can get that from either one, but that’s only the start.

The horizontals are good at things like deploying 10,000 copies of Microsoft Office 2003 or deploying an entire basic SMB (small to midsize business) office suite.

The verticals do best at taking any of the basic programs and making them sing for the special needs of their customers.

They’re also the ones to take the more esoteric programs like Axapta, Microsoft’s supply chain program, and making them work.

Maybe from the outside looking in, these look the same. What surprises me is that Microsoft can’t see this.

Yes, IBM went vertical and SMB, and it’s been very good for them. However, there’s a basic difference between IBM and Microsoft: Microsoft sells products; IBM sells services.

IBM partners have long taken IBM applications and turned them into services for specific customer groups. In short, IBM’s partners were already largely vertical ones. That’s been IBM core business plan since they started getting out of the hardware business and into the service business.

So, for IBM partners, the change to vertical was an easy one. It’s anything but that for Microsoft’s horizontal partners. Trying to push them into changing their business model, as my grandpa might have said, is like trying to milk a bull. It annoys the bull and it doesn’t get you any milk.

There’s room for both vertical and horizontal partners. Come on, Microsoft. Start fully supporting both groups. They’ll be glad you did, and so will you.

eWEEK.com Senior Editor Steven J. Vaughan-Nichols has been using and writing about operating systems since the late ’80s and thinks he may just have learned something about them along the way. He can be reached at [email protected]

Click here for an archive of Steven J. Vaughan-Nichols’ columns.



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