In-Depth

Turning the Corner

The Microsoft Small Business Specialist Community's enrollments and brand awareness are weak. But some members are profiting already, and signs of improvement abound.

• By Rich Freeman
• February 01, 2007

The Lenexa, Kan.-based Dynamics CRM reseller and Certified Partner displays the Small Business Specialist logo prominently on its business cards, marketing materials and Web site home page. "It helps when we give our introductory presentation on who we are and why we're well suited to meet [a small business customer's] needs," says Jerry Weinstock, the company's president and CEO. Being identified as a Small Business Specialist in Microsoft's partner search tools has paid off too, Weinstock adds: "We've gotten leads, and we believe that being higher up on the list as a result of being a Small Business Specialist clearly has helped."

Just the same, Weinstock feels that joining the SBSC is currently too easy -- any Microsoft Partner Program member is eligible for the designation if at least one employee has passed a marketing and sales assessment test and one has passed either of two technical exams. To keep the value of SBSC membership from becoming diluted, Weinstock wants Microsoft to add further qualifications. He'd also like to see Microsoft more aggressively promote the merits of working with Small Business Specialists.

So it goes these days for the SBSC: Just over a year and a half since its inception, nearly everyone involved praises it and nearly everyone -- Microsoft included -- wants more from it. Introduced in July 2005 at Microsoft's Worldwide Partner Conference in Minneapolis, the SBSC is a sort of channel within a channel for partners with small business know-how. Microsoft says the program's off to a strong start, but the company is still working hard to boost enrollment. Partners say SBSC membership helps them showcase their small business expertise, but many want changes in eligibility requirements and additional marketing support. Almost everyone agrees that the SBSC has shown great promise in its first 19 months. But what happens in the next 19 could well prove decisive in determining whether one of the biggest additions to the partner program since its inception in 2003 meets Microsoft's ambitious expectations or fades into partnering obscurity.

Establishing a New Category
One thing is for certain: Small businesses (which Microsoft defines as companies with up to 50 employees and 25 PCs) represent a huge market opportunity. According to company estimates, there are some 40 million small businesses worldwide spending more than $40 billion a year on software alone. The SBSC is designed to help those current and potential customers find appropriate partners, while simultaneously helping small business partners acquire the skills and support they need to drive increased revenue for themselves and Microsoft.

It's an elegant arrangement, with just one complicating factor: Many of the resellers, integrators and solution providers best qualified to serve small businesses are small businesses themselves. Understaffed and overextended, such firms often lack the resources to move beyond the partner program's low-entry-barrier Registered Member tier. Consider, for example, Affordable Computing Enterprises LLP, a Registered Member, integrator and Small Business Specialist based in Havre, Mont. Ed Lohman, officially the company's vice president, is in fact one of just two employees -- the other being his wife, who keeps the books and manages scheduling. Certified Partners must have at least two Microsoft Certified Professionals (MCPs) on staff, and though Lohman is an MCP himself, he has no plans to hire another any time soon. "I just can't afford it right now," he says.

Hence the SBSC's somewhat awkward fit within the Microsoft Partner Program. To ensure that companies such as Affordable Computing can participate, the SBSC is neither a fourth membership level (in addition to Registered Member, Certified and Gold Certified) nor a full-blown competency (which would typically require a company to employ multiple MCPs). Instead, according to a July 2005 Microsoft announcement, it's a "competency-like designation," putting it in an ill-defined category all its own. The designation's requirements are simple enough for even a sole proprietor to satisfy. Its benefits, which are identical for large and small partners alike, include use of a Small Business Specialist logo, priority listing in the small business partner directory on Microsoft's Web site, and access to a variety of exclusive resources, such as licensing rebates and private, managed newsgroups.

As of November 2006, Microsoft had just over 9,800 Small Business Specialists worldwide, including 3,100 in the United States. When the SBSC marks its second birthday in July, the company hopes to see those figures reach about 14,855 worldwide, including 5,000 U.S. members. According to Christopher Goebel, the group marketing manager responsible for the SBSC in Microsoft's U.S. subsidiary, such numbers are in line with the company's pre-launch expectations. However, late in 2005, Cindy Bates, Microsoft's general manager for U.S. Small Business, told Redmond Channel Partner that the company expected to enroll 5,000 U.S. Small Business Specialists within the first few months of 2006 and 20,000 worldwide within the next 18 months (see "Microsoft's Small Business Specialist Designation: What's in It for You?" January 2006).

Even Microsoft admits to some disappointment with the sluggish SBSC enrollment rate among Registered Members so far -- currently, about 50 percent of U.S. Small Business Specialists are from the partner program's Registered Member tier. "I was expecting to see the mix be a little more weighted to Registered Members," Goebel concedes. In hindsight, though, he adds, the smaller-than-expected initial response among Registered Members actually makes sense: Smaller partners often have their hands full just keeping up with customer demands, he notes, so preparing for the Small Business Specialist exams takes them longer. Over time, Goebel expects Registered Member numbers in the SBSC to grow: "I feel very bullish that we're going to continue to see strong interest and strong growth in this space," he says.

Getting the Word Out
Many current SBSC members say that their top motivation for joining was to differentiate themselves from local competitors by highlighting their small business orientation. "It gives us a stamp that basically says 'This is what we do,'" observes Arlin Sorensen, CEO and president of Harlan, Iowa-based Heartland Technology Solutions Inc., a Gold Certified solution provider that serves small businesses exclusively. Frederick Johnson, president and CIO of Ross-Tek, a Registered Member small business integrator based in Cleveland, Ohio, agrees. "It shows that this business has made a commitment to really understanding what small businesses are looking for from a technology perspective," he says.

How much impact that message has on customers, however, is open to debate. Many partners say that being a Small Business Specialist gives them added credibility with prospects and clients; others question how big a difference that extra credibility makes in the end. "I've never had a customer say, 'Hey, the only reason we use you is because you're a Small Business Specialist,'" says Michael Cocanower, CEO of itSynergy, a small to midsize business (SMB) technology consulting firm and Gold Certified Partner headquartered in Phoenix. "I don't think the brand is strong enough in the customers' eyes yet."

Cocanower is one of many Small Business Specialists who would like to see Microsoft promote the designation more forcefully. Curtis Hicks, president and CEO of Center for Computer Resources, a Gold Certified integrator, Dynamics CRM reseller and Small Business Specialist based in Oak Park, Mich., is another. "I just think Microsoft needs to do a little better job of getting the word out to the small business user community," Hicks argues. "If [it's] doing something, [Microsoft needs] to do a better job of sharing that with us so we can piggyback on it."

Goebel, however, notes that Microsoft has taken several steps in recent months to both improve customer awareness of the Small Business Specialist brand and drive leads to SBSC members. Most Microsoft small business marketing campaigns now make contacting a local Small Business Specialist their primary call to action, he says. Additionally, the company has moved its small business partner search tool, which currently gets more than 40,000 queries a month, into a prominent spot on its small business home page. For his part, Sorensen believes that at least some responsibility for marketing the Small Business Specialist brand lies with the channel. "We don't do a very good job ourselves of evangelizing that," he says. "We can all sit here and say Microsoft should make everyone understand what this is, and that's a great goal. But it's not realistic."

According to many partners, Small Business Specialist brand recognition is actually stronger -- and more valuable -- among audiences other than customers. "Probably the biggest impact is in the channel," says Sorensen, who has had enterprise partners pass small business leads to his firm based on its SBSC membership. Moreover, Microsoft itself has been recommending Heartland to customers more often since the company became a Small Business Specialist. "It really makes the field sit up and take notice," Sorensen says.

In addition to whatever value the Small Business Specialist name confers, most partners also like the SBSC's list of benefits. Registered Members in particular enjoy having use of the Small Business Specialist logo. "In the past, a Registered [Member] couldn't use the Microsoft logo," explains Paul DeGroot, an analyst with Kirkland, Wash.-based research firm Directions on Microsoft. "You had to be Certified to do that. So that's probably the most important thing they get." Partners also speak highly of the SBSC's educational and marketing resources, such as the small business technical-assessment kit, a set of tools that helps partners analyze customer needs and propose solutions. "For the first time there's a tool that not only focuses on the product side, but really goes deep into understanding what the needs of small businesses are from a business perspective," Ross-Tek's Johnson says of the kit.

Sorensen, however, would like to see Microsoft invest in helping SBSC members become better business leaders. Many Small Business Specialists, he notes, are led by one-time technicians with strong technology skills but little management experience. "We haven't necessarily had business training, and so a lot of times we struggle with things just because we don't know any better," Sorensen says. Microsoft does little to help, he adds: "[The company's] pretty focused on sales training and technical training today, but we need help with the whole gamut of business decisions that we face out here. How do you hire somebody? How do you fire somebody? How do you measure your services team?" Partners equipped to answer such questions would be better positioned to grow their own revenue -- and thus Microsoft's -- more rapidly, Sorensen argues.

Setting the Bar
Without question, the most controversial aspect of the Small Business Specialist designation is how easy it is to attain. By design, membership in the SBSC is open to everyone from a one-person Registered Member consultancy to a giant Gold Certified multinational. From the beginning, that openness has left many partners uneasy, observes Harry Brelsford, CEO of SMB Nation Inc., a Poulsbo, Wash.-based provider of conferences, workshops and books for small business partners. Brelsford remembers the buzz among 2005 Worldwide Partner Conference attendees when Microsoft officially launched the SBSC. At that time, Registered Members predicted that Gold Certified firms would quickly overrun the new program. "On the other hand," he recalls, "the Gold [Certified] Partners were saying that, 'Now a sole proprietor gets all these benefits and a cool-looking logo and they didn't have to get all the partner points that we did.'"

Partners have been bickering about the SBSC's entry requirements ever since. Most Registered Member-level Small Business Specialists say Microsoft has set the membership bar appropriately. "It's not too low, but it's not too high either," says Lohman, of Affordable Computing Enterprises. "Large businesses can do it, but us small businesses can attain it too." Many Gold Certified small business partners, however, worry that the SBSC is becoming overpopulated. "We can't just say we're a Small Business Specialist [anymore], because in our market there are 25 other Small Business Specialists," notes Hicks, who would like to see Microsoft thin the SBSC ranks by adding a customer-reference requirement.

Meanwhile, some Registered Member-level and Gold Certified Small Business Partners agree that too many big companies that don't know the small business market are earning Small Business Specialist status. For example, in a major bid to drive up SMB revenues, hundreds of Best Buy Inc. stores have signed on as Small Business Specialists. That move has many traditional VARs and integrators worrying that a big box retailer with a relatively inexperienced, high-turnover workforce could wind up tarnishing the Small Business Specialist brand by offering customers bad advice. (For more on Best Buy and the SBSC, see "Best Buy's Small Business Offensive," June 2006.)

Similarly, some SMB-focused partners have been displeased to see midmarket and enterprise firms join the SBSC. "If 80 percent of your business is made up of businesses that are 100 employees or more, then you're not a small business specialist," says Johnson. But, he adds, such companies often siphon opportunities away from SMB-only companies such as Ross-Tek simply because they have bigger names. Johnson, however, has found a unique alternative to combating larger rivals: partnering with them. Ross-Tek has established relationships with several local enterprise partners that now send him small business opportunities that they can't profitably pursue themselves.

In the end, of course, Microsoft is the final arbiter of who gets to be a Small Business Specialist, and reforming the SBSC's eligibility requirements is not currently on its agenda. Goebel notes that customer feedback on the SBSC has been positive, which, in the company's view, indicates that the current set of entrance exams are adequately filtering out inappropriate partners. Nor should smaller partners worry about larger ones squeezing them out of revenue, he adds: "There's plenty of room for everyone to grow."

That is Brelsford's perspective too, and he hopes more partners eventually come to share it. Brelsford was an integrator himself once as well as an early enthusiast for Microsoft's Small Business Server (SBS). Initial versions of that product were difficult to install, he says, but Microsoft has since fixed those problems and partners who got in on SBS early and stayed with it through its stumbles are now earning dividends on their persistence. Brelsford expects to see the SBSC follow the same pattern. So, he says, perhaps partners haven't signed up in huge numbers yet and maybe brand awareness is still a little weak. Microsoft will get it right eventually, and when it does the early adopters will reap the rewards, "To me, that's reason enough to get involved now," Brelsford says. "Smart people are going to see that fortunes are always made out of chaos."