the microsofty 365 teamwork partner opportunity · 4 | the microsofty 365 teamwork partner...

A Forrester Total Economic Impact™

Study Commissioned By Microsoft

July 2019

The Microsoft 365 Teamwork Partner Opportunity A Total Economic ImpactTM Partner Opportunity Analysis

Table Of Contents Introduction 1

Market Trends 1

Customers’ Perspective 1

Partners’ Perspective 3

Teamwork Service Offering Opportunites 5

Deployment 6

Advisory And Adoption Services 7

Business Solutions 8

Managed Services 9

Financial Examples 10

Go-To-Market Best Practices And Investments 11

Conclusions 13

Appendix A: Meeting And Calling Technographics 14

Appendix B: Endnotes 14

Project Director:

Jonathan Lipsitz

Project Contributors:

Edgar Casildo

Andrew Savage

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1 | The Microsofty 365 Teamwork Partner Opportunity

Introduction

Teamwork represents the largest and fastest expanding Microsoft 365

opportunity for partners across all four delivery areas: deployment,

advisory and adoption services, business solutions, and managed

services. A major catalyst for this growth is the increasing adoption of a

Teams-centric model where companies make Microsoft Teams a hub for

all collaboration, which integrates other collaboration solutions, information

sources, and tailored workflows. Another driver is the increased

opportunity to integrate meeting services, meeting rooms, and calling into

a unified collaboration and communication solution for enterprise

customers.

“Teamwork” solutions support organizations’ and users’ new ways of

working to improve collaboration and streamline business processes.

These may be unique to a specific industry and/or role. Teamwork

combines components of the Microsoft 365 platform (e.g. Teams,

SharePoint, and OneDrive), custom solution development, and integration

into other line-of-business (LOB) applications. Altogether, teamwork

delivers rich user experiences and a comprehensive collaboration

environment, which support a company’s digital transformation initiative.

This study focuses on what is new and what has changed for partners in

the teamwork space over the last year in terms of how they are making

money, where they are investing, and what is making them successful. It

also distinguishes between the partner opportunity tied to an SMB

customer versus an enterprise customer. For this year’s analysis,

Forrester interviewed 31 additional Microsoft 365 partners with teamwork

practices of varying maturity; this included some specialized meeting and

calling partners. These new interviews build on findings from more than 80

previous partner interviews, 100+ customer interviews, and multiple

partner surveys. Forrester also completed two companion studies: One

looks at the overall Microsoft 365 partner opportunity for teamwork,

security and compliance, and modern desktop, and the other focuses on

the entire managed services opportunity.1

Market Trends

Customers’ Perspective

Forrester’s research has identified collaboration as one of the most

important initiatives and challenges that companies are facing over the

next 12 months and forecasts that they will spend $40 billion on

collaboration solution licenses and subscriptions in 2019.2 Effective partner

services and solutions around teamwork tie together information,

processes, and tools that touch all parts of an organization (see Figure 1)

in order to streamline operations, improve business outcomes, create

better user experiences, and achieve digital transformation initiatives.3 The

breadth of this creates many opportunities for Microsoft partners to make

more money and to become more strategically important to their

customers.

Key Stats

Three-year best-in-class partner revenue per user from a complete teamwork (including meeting and calling for enterprise) customer journey:

$930 $340 Enterprise SMB

Increased revenue opportunity from the previous year’s analysis:

20% 14% Enterprise SMB Forrester Technographics® research respondents (telecommunication decision makers) who said they plan to use third-party managed network and telecommunications services:

62% 49% Enterprise SMB


Figure 1: Collaboration Crosses Functional Boundaries

Forrester Analytics’ Business Technographics®

surveys thousands of technology purchasers and

decision makers from across the world. This dataset

reveals macro trends that are driving customers’

decisions around adopting Microsoft 365 for their

teamwork needs and why they select the partners they

do.4 In the Forrester Analytics Global Business

Technographics Priorities And Journey Survey, 2019,

20,812 respondents answered the question, “Which IT

initiatives is your IT organization prioritizing over the

next 12 months?” “Increase innovation” was the top

response (90% of companies with 500+ employees and

83% of companies with < 500 employees); teamwork

represents a very large opportunity for partners to help

their customers’ achieve their innovation and digital

business transformation initiatives using the Microsoft

365 platform.

Additionally, Microsoft solutions were the most

commonly deployed in the teamwork space. In total, 1,186 purchase influencers answered the question, “Which

vendor(s) did you purchase Advanced Collaboration from in the past 12 months?” Forty-one percent of

respondents at companies with less than 500 employees selected Microsoft; this was 12% higher than the

second-place vendor. Representing companies with 500+ employees, 45% of respondents said Microsoft, and

the next closest was 31%. In the meeting and calling space, 4,097 telecommunications decision makers

answered the question, “What are your organization’s plans to adopt the following voice and video services over

the next 12 months?” A large majority of enterprise customers have plans to implement or expand meeting and

calling solutions that are part of the Microsoft 365 teamwork opportunity.

“What are your organization’s plans to adopt the following voice and video services?” (Planning to, implementing, or expanding)

% of companies <500 employees

% of companies 500+ employees

SIP trunking 45% 65%

Managed telepresence 49% 74%

Managed HD rooms or portable videoconferencing systems 50% 75%

Managed or hosted IP conferencing services, systems (audio, web, video)

50% 79%

Managed unified communications (on-premises) 55% 76%

Hosted unified communications (single or dedicated instance) 53% 72%

UCaaS — unified-communications-as-a-service (multitenant) 49% 68%

Base: 21,047 purchase influencers (past 12 months/next 12 months) of the specified technology

Source: Forrester Analytics Business Technographics Global Priorities And Journey Survey, 2019

Sixty-two percent of the telecommunication decision makers at companies with 500+ employees and 49% at

companies with less than 500 employees said that they are “interested in using some or more third-party

managed network and telecommunications services.” This represents a very large opportunity for Microsoft

partners — both meeting and calling specialists and more generalized partners. (See Appendix A for additional

Technographics data around meeting and calling.)

The Technographics data also looked at why companies selected the professional services organizations they

did. For both organizations with less than and more than 500 users, price was the No. 1 reason a solution

partner was chosen — 39% and 30% respectively. However, there were other reasons that were closely behind

price that represent an opportunity for teamwork partners to differentiate themselves. These reasons included:


customer service, support, and experience; brand/reputation; existing relationship; broad technology expertise

(security, hybrid cloud, networking, business continuity); and knowledge/experience with the industry. The

interviewed partner insights described below are consistent with these findings.

Partners’ Perspective

Teams Is The Epicenter For Partner Services And Solutions For Teamwork

The focus on Teams by Microsoft and partners has created enormous new opportunities. Partners said that the

potential is much larger than with previous solutions like Skype for Business. One global partner specializing in

collaboration, including meeting and voice, reported 40% year-on-year revenue growth in this space along with

margins increasing from the mid-30% range to the low-50% range. The

move from project services to managed services is driving a lot of this

growth.

Both customers and partners view Teams as the successor to other

Microsoft 365 solutions. This includes Skype for Business features being

subsumed into Teams. Partners see Teams-centric solutions replacing

SharePoint portal projects and look favorably upon this. One interviewee

said, “We are starting Teams journeys for a lot our large customers.”

Another partner said that Teams-centric work really took off last November and is already 20% of all their

teamwork revenues. This partner expects it to be at 50% within a year.

In the SMB space, Microsoft’s decision to include Teams rather than Skype for Business as the default in Office

365 deployments of less than 500 users has driven adoption. A deployment includes a migration from Skype for

Business unless a customer specifically opts out. Partners focused on SMB customers have had to come up to

speed quickly on Teams to best support their customers.

The Most Valuable Partner-Built Solutions Include Much More Than Teams

The solutions that partners create that best transform how people and

companies work are built on a wide range of technologies and services

depending on the business requirements. Creating transformative solutions

also requires a customer who sees the vision and is willing to embrace the

change. One partner said, “Ten percent of our customers see beyond

Teams as a solution in itself and really understand that Teams is a vehicle

to tie everything together and improve business outcomes.” Forrester

expects the portion of customers who fully understand and embrace the

transformative teamwork potential to increase rapidly in the near future.

Partners described a typical, integrated solution that moves from point

applications like chat into a “centralized platform for the proliferation of

communication and collaboration tools.” This enables virtual teams by

integrating Teams, SharePoint, One Drive, Planner, and other Microsoft 365

solutions. To achieve this goal, partners may also tie in other vendor

solutions as well as partner-created IP business solutions.

Given the breadth of solutions involved, partners now have opportunities in many new areas, which may include

some that they did not have expertise in, e.g., networking technologies. For direct partners that do not have the

time or desire to build out these new skills, indirect partners such as distributors are stepping up to augment

direct partners’ capabilities in both sales and delivery.

User Experience Is More Important Than Ever

Teamwork is all about empowering new ways of working, and this puts a

greater emphasis on the user’s experience (UX) than ever before. Partners

are embracing persona-based design to create and roll out solutions. One

partner explained: “Teamwork projects are less focused on technology and

more on the user and their experience. It’s all about how they can best

collaborate. This also includes governance, connectivity, and overall

system performance.”

“Teams is driving an entire new

opportunity. We are truly seeing

customers embrace

collaboration and changing how

they do business.”

Global practice lead

“Microsoft 365 has made us

more engaged with our

customers. We use personas to

create high-value, secure

collaboration experiences for

every user type, and this

increases our growth.”

Chief architect

“A customer comes to us and

says, ‘I want to embed

collaboration into the way we

work and improve productivity.’

We need to create a vision and

road map and bring together all

the tools Microsoft provides as

well as other technologies. This

creates a completely new, huge

opportunity.”

Senior director infrastructure

services, unified communications


An important aspect of UX is having everything that a user needs in one place without being overwhelming. This

is where partners can add a lot of value and make a lot of money. “Everyone having the same experience is

what customers want,” one partner said. “It’s easy to create a meeting in Teams, but what is the experience?

Agendas are not attached, notes are not attached, true collaboration is not taking place. Partners who say,

‘Teams provides the meeting,’ are missing the point. Teams gives you video chat, but online meetings are about

being able to communicate and collaborate with all the information and not losing it afterwards. There is a lot of

money to be made there.”

New User Experiences Make Advisory And Adoption Services Critical To Success

Partners (and customers interviewed for other Forrester TEI studies) said

that adopting Teams and teamwork represents a fundamental change in

how people work. That means there is a large need for advisory and

adoption services, and these are typically a combination of customer self-

directed activities and partner services, both one-time and ongoing.

Change management is important to factor into teamwork programs from

the very beginning, and partners often begin by understanding how users

are currently working and the company culture. A person-based approach,

as discussed earlier, makes adoption planning and success easier.

Partners have seen a large increase in advisory and adoption services with

enterprise customers. For SMBs, the adoption component is smaller, but partners are still reporting training and

other related business consulting opportunities. One partner said: “We are seeing a solid upward trend in change

management and associated managed services. We are focused on the solutions we are delivering, not generic

change management. We help customers understand teamwork, how they are working today, and how to

transition to best leverage new solutions.” The service offering section of the study below goes into more detail

about the type of services being provided and the associated revenue opportunities.

Partners Are Selling To The Entire Organization

Partners reported that the teamwork discussion is broadening whom they

speak to within a prospect’s organization. This includes line-of-business

leaders, human resources, and internal communications teams. Corporate

IT is still involved throughout the sales process, and the decision around

what solutions to create and which partners to use is often a joint one.

Corporate IT is also getting the business more involved in the IT decision-

making process for a couple of reasons. The first is that IT is receiving much more demand for collaboration

solutions and wants to be sure they are delivering on internal customers’ needs. The second is that corporate IT

is trying to eliminate shadow IT collaboration solutions. Co-opting the business helps eliminate shadow IT.

Unified Communication Is In High Demand

Many customers are focused on unified communications and how it fits into

their broader collaboration solutions. Much of this is around moving beyond

Skype for Business. Companies want a seamless experience across all

communication modalities and one that supports all user types, e.g., mobile

workers and firstline workers. One partner described it as follows: “Six

months ago, all we were being asked about was voice — ‘Get us on to

Teams.’ Now, customers are asking about unified communication meeting

experiences — start in a meeting room, walk back to a desk while still on

the call, switching from a laptop to a mobile phone, etc.”

Partners also said that unified communication needs to be solved without throwing away all the existing

hardware solutions and starting from scratch. “Most customers want to keep their video system technology. It’s a

deal breaker if we can’t make non-Microsoft devices compatible with Teams.” Unified communication is also

changing how some partners are structuring their practices. A typical example one partner shared was that

“meeting and calling now falls under the collaboration practice. Our people who install video equipment now sit in

the same collaboration practice as the Microsoft 365 folks. It simplifies our interactions with customers for both

sales and delivery.”

“Teams has a lot of rich

capabilities, but it looks and

works very different from what

customer are used to. That

creates significant change

management opportunities.”

Sr. director, infrastructure services

— unified communications

“The majority of the effort is

selling on the business side.

Five percent is selling directly to

IT.”

Managing director

“Sixty-five percent of our

business is helping customers

with figuring out how unified

communication will work for

them.”

Sr. director, infrastructure services

— unified communications


Meeting And Calling Is An Expanding Opportunity For Both Specialized And General Partners

The meeting and calling solutions within Microsoft 365 are significantly changing how partners with traditional

voice and meeting room practices deliver solutions to enterprise customers. The transition to cloud PBX, SIP

trunks, and other internet-based solutions are often reducing the one-time, large implementation projects with as-

a-service models. The opportunities for traditional meeting and calling partners are very large because of an

expanded pool of possible customers and a limited number of partners with

specialized skills around voice. One partner that is a managed services

provider (MSP) and systems integrator (SI) with a voice practice said:

“There are not a ton of partners out there who understand this space. Other

Microsoft partners are including us in their broader collaboration projects to

provide the voice and meeting room pieces.”

A telco partner with both a Microsoft teamwork practice and a traditional

voice practice said that this is a natural extension for it: “We have a very

large, established practice doing PBX modernization with other vendors.

Microsoft Teams fits perfectly into that model. We can take the traction we

have in our core business and transform that into a Microsoft cloud motion

around Microsoft Teams and phone systems.” A big driver of this from the customer perspective is not having to

pay for two phone systems.

For meeting and calling, partners think the bigger opportunity is in direct routing rather than selling Microsoft

calling plans. Several partners, including non-telcos, are offering their own calling plans. Nonmeeting and -calling

partners are also starting to play more in this area where solutions are not as complex. This can be in the

meeting room space to create unified experiences between dedicated conference rooms and Teams meetings or

including voice solutions in Teams for customers with simpler needs. Some more general teamwork partners are

starting to invest in meeting and voice to increase their core capabilities.

Examples of how specialized and general teamwork partners are making money in meeting and calling are

discussed in the service offerings sections below.

Teamwork Service Offering Opportunites The trends discussed above have created many new ways for partners to engage with customers and generate

revenue. There is also a move to deliver these offerings in an everything-as-a-service (XaaS) model, which more

closely aligns to the new Microsoft (and other vendor) solutions delivery and pricing paradigm. The teamwork

opportunities discussed here fall into three buckets: collaboration, meeting, and calling. For the purposes of this

study, meeting refers to solutions tied to dedicated meeting/conference rooms and calling refers to traditional

voice solutions that are being replaced by Microsoft voice solutions. Collaboration captures all of the other

solutions powered by Microsoft 365. In reality, partners are delivering a mix of all three, but they are partially

broken out here because of the specialized skills required in the meeting and calling space.

Most of the collaboration solutions are similar for both enterprise and SMB customers in terms of business

transformation and making users and organizations more effective. Where applicable, differences are noted.

Forrester created separate financial models for enterprise and SMB opportunities, which reflect the likely

services, pricing, and attach rates.

Before going into the details of offerings and pricing, it is useful to first look at a typical teamwork program

progression:

1. Planning and design. A multiyear teamwork initiative usually begins with “imagining-the-possible”

workshops to define how people should work in the future. This is followed by more concrete

assessment, design, governance, and planning efforts around business processes/workflows, user

experience, and technologies. Adoption and change management discussions and planning also begin

at this stage. If meeting and calling is included, this will include a deep dive into networking to ensure the

quality of service.

2. Deploying Teams. Teams is set up as the hub, and other collaboration solutions are integrated into it.

Teams delivers core collaboration functionalities such as videoconferencing, chat, and document

sharing. Often this includes a Skype for Business migration and integrating SharePoint and One Drive.

“Our big focus right now is the

migration from Skype to Teams

for enterprise voice. We focus

on specific use cases instead of

generic organizational needs.

Industry requirements and

idiosyncrasies are a big piece.”

National practice manager


3. Building custom workflows and templates. As part of rolling out the new collaboration solutions,

partners are layering on workflows and templates to improve UX and efficiencies. This often takes the

form of prebuilt IP business solutions, which can be adjusted to meet an organization’s unique needs

based on user personas and industry requirements. Partners are making extensive use of PowerApps

and Microsoft Flow to create low-code/no-code solutions.

4. Integrating disparate systems. Partners are integrating other vendor solutions as well as applications

that their customers have built into the single teamwork environment built on top of Microsoft 365.

5. Integrating meeting rooms. If there are dedicated meeting rooms, they are transitioned into the unified

collaboration experience. If a customer has a lot of existing videoconferencing equipment, this is

repurposed as much as possible and tied into Teams.

6. Moving to cloud calling. Moving traditional voice to the cloud and integrating it into the overall solution

comes last according to partners because the change to how people work is very big. This can include

redesigning networks for quality of services, integrating with on-prem PBX or migrating to cloud PBX,

and other voice infrastructure initiatives.

7. Providing change management and managed services. All of the above include a change

management component. For SMBs, change management is smaller and usually involves some user

training. For enterprises, adoption and change management activities are very heavy initially and often

include ongoing services to monitor usage and change how solutions are configured. Managed services

of many different kinds are put in place as solutions go live to ensure that users and IT organizations are

properly supported and the solutions deliver the promised value.

Deployment

Overall, the opportunity for partners is flat to slightly declining (see the financial examples below) because much

of the initial work has been done, and/or they are activities that replace something else that required more effort,

e.g., deploying Teams instead of Skype for Business. That said, deployment sets the stage for a successful

teamwork program because of the upfront visioning and planning activities. Planning activities include visioning,

technical readiness, people readiness, measurement architecture, road map development, business case

creation, change management planning, etc. Where a program begins depends on what business needs are

being solved for. Partners are seeing an increase in new initiatives that are heavily focused on firstline workers.

For collaboration solutions, partners shared the following thoughts:

› “Setting up Teams is similar to Skype for Business, but honestly, it isn’t too complex. It is the

configuration of everything else that ties into Teams that is far more complex.”

› “To make sure Teams delivers a good experience, we do some basic network planning. That is the only

voice-related work we do. If it is more complex than that, we bring in a more specialized partner.”

› “We spend a lot of time doing persona-driven design work at the beginning. It is much heavier in the

teamwork space than security and compliance or modern desktop.”

Other activities such as creating custom workflows and solutions may take place in parallel to deployment, but

they are discussed in the Business Solutions section below.

For meetings, deployment begins with understanding how users currently use meeting rooms, what is working,

and where the problems are. Solution design includes detailed network analysis and also creating a meeting

room experience that integrates with Teams-based meetings so users can seamlessly move from one meeting

modality to another. As much as possible, customers want to reuse existing hardware, and this means a lot of

effort goes into migrating existing rooms into the Microsoft 365 meeting solutions. There can also be the need to

design new meeting rooms, which can vary in size from large training halls down to boardrooms and huddle

spaces. A solution can also include implementing a room reservation system and tools to monitor usage and

performance. The average cost to outfit a new conference room, including services and hardware, is around

$10,000, and an additional $1,250 is spent each year to upgrade equipment and replace broken components.

Calling solutions are similar to meeting solutions in that most partners in the space have very specialized skills,

and there is a very heavy networking analysis and design component. Partners shared the following calling

deployment examples:

› “One of the first things we do is understand the networking requirements and compare that to an

assessment of what is in place. We then build out recommendations on what needs to be done along


with the migration plan and deliver all of the work. There is often a lot of custom development work

required.”

› “We do everything from network assessments to replacing existing

solutions. Consolidations and migrations are a very big business, and

we also do call center integrations.”

› “We are moving a lot of people with on-prem calling solutions to

Teams.”

› “Digital transformation projects often include a voice component to

replace traditional PBX solutions. The total value for an organization

with more than 1,000 users can be $3 million over a couple of years.

Deployment and onboarding can cost around $300,000, and change

management around $150,000.”

› “The initial voice migration for a single site with 1,000 users and

nothing complex like a call center can cost $85,000 to $100,000. Adoption and change management is

on top of that.”

› “We had a direct routing project with six locations around the world and 2,000 users. The total

opportunity to consolidate multiple calling systems onto the new one was around $1.5 million. It started

with a $100,000 PoC (proof of concept).”

Advisory And Adoption Services

Advisory and adoption services are a growing area for partners with both enterprise and SMB customers.

Teamwork involves changing how people work and how they collaborate in terms of processes and tools. That

means a lot of upfront work has to go into creating a change management program and educating users, and

there are a lot of ongoing opportunities to continue to train on solutions, monitor usage, and adapt how solutions

are deployed to deliver better user experiences and improve collaboration and productivity.

Change management is especially important in the calling space because of the change to how people

traditionally talked to each other. One partner explained: “It is incredibly important to evangelize and explain to

people what it means to move from a traditional phone solution to a collaboration environment with voice

attached. Customers really value the training we provide, and we customize it to their unique requirements and

different personas. We hold sessions in their offices, provide online training, and have a lot of people onsite on

launch day to make sure it goes smoothly.”

Partners provided the following examples around teamwork adoption and advisory services:

› “The biggest problems people shared at our customer forum was that new technologies were not being

used by end users. This illustrates the importance of adoption and change management and why it has

to be in all of our offerings.”

› “An initial [change management] project for 30,000 users can be

$500,000 with margins between 40% and 45%.”

› “Anytime Microsoft rolls out a new solution, we make sure our

adoption program is aligned to it. We do ongoing monitoring of

customers’ usage and set targets for each workload. We then

provide coaching on how to increase usage.”

› “The first six months of change management consulting at a large

enterprise customer costs $300,000 to $375,000. It generally continues for another year, and the total

lifetime value is up to more than $1 million.”

› “For Teams, we do a lot of change management consulting. For a 1,000-user organization, this usually

means six to eight consultants for five months. For very large companies, we can have a team there for

1.5 years.”

› “How we deliver our services is closely aligned to each customer’s culture. We focus on how teamwork

can improve business processes and outcomes. It includes lunch-and-learn sessions, formal training,

“User training is a big

opportunity for Microsoft

Teams, and we have a very

strong practice here. Our

training solutions attach at

80%.”

Sr. product manager

“We transform existing PBX

solutions, whether on-prem or

in a private cloud, so that they

seamlessly work with Teams

using direct routing. It can

include contact centers. This is

all done based on current use

cases for Teams and how they

expect to use Teams in the

future.”

Sr. product manager


and ongoing monitoring.”

› “For our SMB customers, our offering includes training on the new solutions. We do that as part of the

launch and also on an ongoing basis. It’s not a lot of work, but it is very important for the overall success

of the project.”

› “One-billion-dollar-plus companies buy a lot of change management services, and it is baked into the

initial planning activities. They are stretched too thin to do it themselves.”

Business Solutions

Business solutions take several forms. They include custom development work and integration into other

systems as well as repeatable IP that partners create to either add features and templates on top of Microsoft

365 solutions or to streamline internal delivery of deployment and managed services. Integrations and custom

development often include building on Azure and creating custom workflows and apps using PowerApps and

Microsoft Flow. For repeatable IP, there is often a strong industry best practices component, and they are a

source of high gross margin revenue. For internal tools, they bring down delivery costs, which improves gross

margins. Across all areas, there is a rapidly growing opportunity for partners working with enterprise and SMB

customers.

Business solutions are also important in the meeting and calling space. A good meeting room experience

requires scheduling solutions, usage- and trouble-monitoring solutions, meeting room design, and custom

development to create seamless experiences when moving from the meeting room to Teams on a mobile phone.

Partners shared the following examples:

› “We have created 50 standard teamwork workflows that we have

integrated into Microsoft 365. They include things like leave

requests and expense report approvals.”

› “We have a unified communication monitoring solution to improve

uptime and performance. It takes a feed from Microsoft Graph. It helps us differentiate and is a good

source of revenue.”

› “We do integration work between Surface Hub and the network infrastructure. This is a much higher-

margin business than other hardware-related work we do.”

› “When there are thousands of teams within Teams, finding relevant information is very hard, and getting

access to it can be difficult. We built a templating and governance layer that sits on top of Teams. Right

now, it is project based and 60% margin. Our plan is to convert it into a pure software offering. Unique IP

like this helps us win new customers.”

› “We are creating a lot of reusable vertical solutions. Our biggest

industries are healthcare, manufacturing, and finance.”

› “We have created some bots that we have integrated into Teams.

We plan to do much more of this in the future.”

› “We have created components that plug into Teams. They include

better ways to schedule, invite people to meetings, and storing and

retrieving notes. Users can select templates that pull everything

into one place.”

› “The $1 billion+ companies require a lot of custom integration work.

It can easily range from $500,000 to $4,000,000 to transform the

modern workplace over multiple years. We are also creating a lot of

custom mobile applications. All of this creates change management

consulting opportunities too.”

› “We have built a lot of IP on top of various vendor calling solutions in the Microsoft ecosystem. Twenty

percent of our revenues are nonrecurring doing the initial custom development, and 80% is recurring

revenue from ongoing usage fees.”

“IP is the key. Its the only way

to succeed in the teamwork

space.”

VP of technology

“IP-related revenues increased

from 10% to 32% of recurring

revenues and should be 45%

next year. It is mostly

subscription-based IP around

Teams — including automated

provisioning, library document

assignments, and so on. We

are also building industry-

specific apps using PowerApps

and Flow.”

Co-founder and CCO


› “We do a lot of work on top of Microsoft’s APIs. Examples include a custom timesheet application,

integrating a scheduling and invoicing system, and a messaging bot for consultants.”

Managed Services

Managed services opportunities have grown for partners in both the SMB and enterprise spaces. This can

include anything from basic user support to outsourced IT management of Microsoft technologies and partner-

built solutions to white-glove meeting room management services. Advisory and adoption ongoing services were

explored above. As discussed earlier, this is becoming more important as

many partners move to an XaaS model and attempt to create longer-lasting,

more strategic relationships with customers. Managed services can provide

better margins than project-based work once scale is achieved. It also delivers

predictable, recurring revenues, which make it easier to invest in the business.

Meeting and calling managed services apply to enterprise customers. These

services can include full outsourcing of meeting/conference room

management and managing calling infrastructure such as SIP trunks. Some

partners, and not only telcos, are selling calling plans. Especially in the calling

area, this still tends to be the purview of specialized partners. Other Microsoft

partners are starting to enter the space either in conjunction with specialized

partners or investing in new practice development and/or acquisition of

meeting and calling partners. Some partners are restructuring to include their meeting and calling practice within

their core collaboration practices. The reason for this is to provide a seamless user experience across mobile,

Teams-based PC meetings and voice, and dedicated meeting rooms.

Interviewed partners shared the following examples:

› “A lot of customers realize they have no interest in managing their Teams environment. During

deployment they ask, ‘Can you just operate the whole thing for me?’”

› “We provide the most basic level of help desk support, things like password reset, for $2 to $4 per user

per month depending on the help desk hours. Margins are high on this.”

› “Our premium teamwork outsourcing includes tier 1 through 3 support, usage monitoring and

recommendations, and solution upgrades. We sell that for $45 per month.”

› “We often sell managed services as part of a meeting room rollout. We manage the hardware and

monitor room utilization and system performance. This is done as per-room pricing depending on the

size and nature of the room, and margins are in the 40% to 50% range. If something breaks, we charge

additional fees to fix it.”

› “We have a strong practice around unified communications. There used to be a large on-prem

component, but a lot of this is moving to cloud-based managed services. We are still figuring it out.”

› “Our enterprise voice administration managed services are new, so we have low attach rates. We are

starting to see rapid growth.”

› “We are very strong in delivering calling plans for our customers. We are a registered carrier in 25

countries. We also provide contact center support and managed services around experience quality. A

lot of the quality issues involve hardware such as softphones, headsets, endpoints, and room devices,

so we support those as part of ongoing managed services.”

› “Telephony managed services are big. We provide a managed SIP trunk solution for $20 per trunk per

month. It is not high margin, but it adds up.”

› “Our managed service includes quarterly reviews of what’s new in the teamwork space and how to roll it

out to users.”

› “Our managed services are a menu of services, each priced separately. They are all building blocks that

can be mixed and matched. This includes everything from user support to managing communication

network infrastructure.”

“Managed services are

becoming more important for

partners because the age of

large upgrades is over. This

requires a different cadence

and commercial model in order

to stay engaged with

customers.”

EVP, global managed services


Financial Examples

The preceding sections included many examples of partners’ deployment, advisory and adoption services,

business solutions, and managed services offerings. For both the SMB and enterprise opportunities, Forrester

built out financial examples of what this can look like. They include a typical mix of offerings instead of including

absolutely everything that is possible. The total price of all offerings, whether or not they are priced on a per-user

basis, was converted to a per-user price spread out over 36 months — a typical teamwork transformation journey

timeframe.

Forrester multiplied a likely, current attach rate against the offering sales price to determine a likely revenue

outcome. Attach rates were slightly higher than last year for existing offerings such as user support. Attach rates

for offerings tied to new products or for offerings that are new to many partners, e.g., meeting and calling, are

much lower. This is because it takes time to ramp up sales and delivery and because new offerings may only

appeal to early adopters at the beginning. Partners expect attach rates for these offering to increase in the next

year and to recoup their investments.

SMB Opportunity

Meeting room and calling opportunities are excluded in the SMB opportunity model. The deployment opportunity

was the slowest growing at 7%. It includes setting up Teams and migrating some SharePoint sites. This cost $95

per user and attached at very high rates. There is also an opportunity to do enhanced work around Teams

experiences, although this attached at a much lower rate. The overall attach rate was 57%, and the per-user,

per-month price came out to $3.50.

Advisory and adoption services increased by 18% from the previous year. They include selling some training

days and providing a training portal where users could learn more about how to use the Microsoft technologies

and the solutions that partners are building on top. Attach rates were 60%, and this was worth $2.00 per user per

month.

Business solutions increased by 16%. This includes partner-created IP to make Microsoft 365 more impactful

and easier to use. A couple of examples include image and signature management solutions and Teams room

templates. The attach rate was 25% and was worth $1.00 per user per month.

Managed services grew the fastest at 19%. It includes help desk support for users and IT that cost $4 and

attached at 60%. Ten percent of customers bought a Teams management solution that included outsourced

management for $8. This resulted in an overall attach rate of 27% and $3.00 per user per month.

Overall, the total revenue opportunity for a three-year road map of likely offerings came out to $9.50 per user per

month. This represents a 14% year-on-year increase. Partners expect attach rates to improve over the next year,

which should further increase revenues.

Collaboration

Partner Service $/User/Month YoY Change

Deployment $ 3.50 ↑ 7%

Advisory and adoption services $ 2.00 ↑ 18%

Business solutions $ 1.00 ↑ 16%

Managed services $ 3.00 ↑ 19%

Total: $ 9.50 ↑ 14%

Enterprise Opportunity

Two views were created for the enterprise teamwork opportunity — collaboration as a standalone offering and

collaboration with meeting and calling. Both scenarios saw strong growth from the previous year. Furthermore,

Forrester calculated the meeting and calling opportunity using current attach rates as well as likely attach rates in

the next 12 to 18 months as the solutions move beyond earlier adopters.

The deployment opportunity around collaboration saw a modest decrease. This is consistent with deployment

opportunities in other maturing areas of Microsoft 365 like modern desktop. The increased opportunity around


Teams was offset by related decreases in Skype for Business and SharePoint deployments. The rollout of a

Teams-centric solution and migrations from other solutions was worth $66 per user. A combination of meeting

and voice migrations cost $75 per user but attached at a much lower rate. The meeting and calling opportunity is

a big increase from last year, and this contributed to an overall 2% year-on-year increase in deployment. The

attach rate across all deployment services was 58%, and the total opportunity came out to $2.00 per user per

month.

There was a large increase in advisory and adoption services revenue in both the collaboration and meeting and

calling areas. Initial advisory and adoption services to support the rollout of Teams and other collaboration

solutions were worth $83 per user. There was also an ongoing opportunity that included monitoring and assisting

in increasing adoption of existing and new solutions. The overall attach rate was 50% and was worth $4.00 per

user per month.

Business solutions was the largest area of growth in the collaboration-only area, even though attach rates

remain the lowest. Solutions include partner-created IP to improve the functionality and usability of Teams and

other collaboration solutions. This consisted of management and governance tools, templates and industry best

practices, and specific feature additions. All of the IP was worth $24.50 per user per month. There was also

custom development work to integrate various systems together and create custom capabilities, and a pricing

rule of thumb is $50 per user (for a company with between 1,000 and 5,000 users). Business solutions also

include custom development work around meeting and calling, and a cost rule of thumb is $37.50 per user.

Overall, business solutions attached at 16% and were worth $4.00 per user per month.

The final, and largest, opportunity in the model is managed services. There was strong growth in both the

collaboration and meeting and calling areas. The included collaboration managed service was a teamwork

outsourcing offering, which includes tier 1 through 3 support, usage monitoring and recommendations, and

solution upgrades support and cost $45 per user per month. There was also a meeting room managed service,

which included scheduling solutions, usage and performance monitoring, and break-fix services. This cost

$1,500 per meeting room per year on average. SIP trunk management of $20 was included as an example of the

growing opportunity in calling infrastructure management. Overall, the attach rate for managed services,

including meeting and calling, was 29% and worth $16.00 per user per month.

Collaboration Collaboration + Meeting & Calling

Partner Service $/User/Month YoY Change $/User/Month YoY Change

Deployment $ 2.00 ↓ 7% $ 2.00 ↑ 2%

Advisory and adoption services

$ 2.00 ↑ 21% $ 4.00 ↑ 44%

Business solutions $ 4.00 ↑ 55% $ 4.00 ↑ 36%

Managed services $ 14.00 ↑ 10% $ 16.00 ↑ 23%

Total: $ 22.00 ↑ 19% $ 26.00 ↑ 20%

The $4.00 per-user, per-month incremental meeting and calling opportunity shown in the above table is based on

low, early-adopter attach rates. Partners expect attach rates to increase significantly over the next 12 to 18

months as their sales and delivery capabilities improve and as these solutions move beyond early adopters.

Forrester expects attach rates to approach those of the more established collaboration solutions, and that would

result in an incremental partner opportunity of approximately $8.00 per user per month.

Go-To-Market Best Practices And Investments Each year, Forrester asks partners what is new that makes them successful in terms of best practices and

investment areas. This year, much of the conversation of what made them successful in the teamwork area

centered on moving companies to Teams and moving to an everything-as-a-service model. Best practices

included:

› Recognizing when a prospect or customer is ready to consider new solutions. This means getting

away from a one-size-fits-all sales and marketing model and appreciating the change management

component. One partner said that only 10% of its customers are truly ready to look beyond out-of-the-


box Team’s functionality and embark on a full teamwork transformation journey. Calling migration is

another area where understanding customer acceptance is very important. Trying to take a customer to

a place where they are not ready or comfortable was a waste of sales time and could damage the

relationship.

› Using persona-driven delivery. Partners are creating customized experiences for different user groups

and bringing in industry norms and best practices. This is especially important for meeting and calling,

where it is important to understand how different types of employees work most effectively and who may

be very set in their ways. A mix of observing how employees currently work and being prescriptive with

regards to Microsoft solution best practices made for the best outcomes and adoption.

› Moving as much as possible to a subscription model. Many partners were working to redefine all of

their teamwork offerings to align with subscription models. One SI shifted its development model from

large projects to set price two-week sprints. CSPs, MSPs, and other similarly structured partners were

already more used to this approach and pushing the envelope even further.

› Concentrating on identity as the foundation. With the addition of more solutions — both Microsoft

and partner created — identity is more important than ever for provisioning solutions, collaborating, and

ensuring this all happens securely. Partners that focus on SMB customers said that this core component

was often not fully in place and needed to be implemented at existing and new customers.

› Focusing on consumption. Partners are spending more time looking at how and how much the

solutions are being used. This could range from weekly to quarterly and tied into business review

sessions. They then recommend changes to how solutions are being used and specific activities to boost

adoption. Higher consumption increased customer satisfaction and the addition of other collaboration,

meeting, and calling solutions and associated revenues.

› Making managed services compulsory. Many partners have made the managed services

conversation a required piece of every sales proposal even if a customer removes it from the contract.

Some partners have decided that with very few exceptions, they will not take on a new customer if it

does not include some aspect of recurring managed services. This resulted in much higher attach rates.

› Adapting sales compensation models. The move from one-off, large projects to recurring

services have affected sales compensation models. Most new models are based on billed gross

margin, and compensation rates ranged from 4% to 10% in the first year. Beyond the first year,

there was a variety of approaches to ongoing compensation. Larger partners typically phased out

compensation on previous sales and only paid out on additional sales that resulted in incremental

gross margin. Smaller partners would sometimes continue to pay out at a lower rate to keep sales

involved because they also fulfill an account management/customer success manager role.

Accelerators were very common to align the sales organization with strategic priorities.

Investments fall into four broad areas: people, IP, delivery tools and methodologies, and sales and marketing.

Partners continue to invest more in all aspects of their Microsoft 365 teamwork practice. As with best practices,

new investment areas were tied to new solutions and the transition to a services-based model.

In the people area, partners are investing heavily in training to reskill existing employees around the world of

collaboration and meeting and calling solutions that are now tied to Teams. Whenever possible, partners prefer

to upskill existing employees because it is less expensive and new hires are becoming harder to find. Sometimes

partners are buying another Microsoft partner, and anecdotally there seems to be more activity here.

We discussed IP investments earlier in the business solutions section. Additionally, many partners are investing

in solutions around Azure and tying those into their Microsoft 365 practices. A common theme was the tighter

integration of Microsoft 365 and Azure practices in order to provide customers full-cloud competencies and to

expand in existing accounts.

Delivery tools is another form of IP that partners are investing heavily in. To succeed in this new XaaS model,

partners said that they need to routinize and automate what they do. New methodological models were also

deployed to improve agility and help customers on their cloud journeys.

We discussed sales and marketing in the go-to-market section above. Partners are redirecting marketing spend

from other areas to the Microsoft 365 space, and messaging is more focused on new ways to collaborate and

transform how people work. There is also an investment in training sales organizations on new solutions offered


by Microsoft or built by the partner and how to sell related services.

Conclusions In the second year since the announcement of Microsoft 365, partner opportunities continued to grow, and

teamwork was the largest area. A major driver of this is Teams — from both the product and services

perspectives. The growth of meeting and calling offerings has also contributed to this year’s increases. Partners

starting to move to an XaaS model and an increase in IP-led business solutions are additional contributing

factors. Year-on-year revenue growth with a typical enterprise customer grew 20% per user, and it was 14% per

user in the SMB space.

Partners have realized many benefits in addition to increasing revenue from investing in their teamwork

practices. These include:

› Growing and more predictable recurring-revenue streams from managed services and business

solutions.

› Differentiating from other partners that have not shifted to delivering teamwork in a customized way

based on personas and industry.

› Selling more to line-of-business buyers (in addition to corporate IT), which can increase the share of

wallet.

› Creating more strategic and longer lasting relationships with customers.

The past year has been one of great change in the Microsoft 365 teamwork arena, and partners are early in their

adaptation of solutions and business models. Even so, there was healthy revenue growth from the previous year.

Partners are continuing to make investments and to innovate, especially in developing their own teamwork IP to

both bring down delivery costs and to increase the value of Microsoft 365. Forrester expects these opportunities

to continue to grow in terms of number of deals, revenue per user, and attach rates, and that the Microsoft 365

partner network focused on teamwork will continue to strengthen.


Appendix A: Meeting And Calling Technographics Forrester asked 3,867 telecommunication decision makers, “For your next provisioning cycle, what type of voice

and video service provider will your firm use?” Network operators or telcos were the single largest response, but

the absolute opportunity was larger for other partner types combined.

For your next provisioning cycle, what type of voice and video service provider will your firm use?

500+ User Organizations Network

operator/telco Other

partners*

VoIP 24% 55%



Managed or hosted IP conferencing services, systems (audio, web, video) 19% 58%

Unified communications 19% 58%

*Systems integrator (SI) or IT outsourcer, independent specialist or reseller, colocation provider, cloud provider

Base: 3,867 Telecommunications decision-makers Source: Forrester Analytics Business Technographics Global Networks and Telecommunications Survey, 2019

For your next provisioning cycle, what type of voice and video service provider will your firm use?

<500 User Organizations Network

operator/telco Other

partners*

VoIP 19% 61%



Managed or hosted IP conferencing services, systems (audio, web, video) 18% 62%

Unified communications 17% 62%

*Systems integrator (SI) or IT outsourcer, independent specialist or reseller, colocation provider, cloud provider

Base: 3,867 Telecommunications decision-makers Source: Forrester Analytics Business Technographics Global Networks and Telecommunications Survey, 2019

Appendix B: Endnotes

1 Sources: “The Microsoft 365 Partner Opportunity”. Forrester Consulting report prepared for Microsoft, July 2019, and “The Partner Opportunity For Managed Services,” Forrester Consulting report prepared for Microsoft, July 2019.

2 Source: “Effective Enterprise Collaboration Grows Your Bottom Line,” Forrester Research, Inc., March 21, 2019.

3 Source: “Knowing The Enterprise Collaboration Landscape Is Essential To Digital Transformation,” Forrester Research, Inc., January 29, 2019.

4 Source: Forrester Analytics Business Technographics Global Priorities And Journey Survey, 2019.

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