The Partner Opportunity For Creating Microsoft Teams Applications

Reaching New Customers

• Evidence and data.

  Interviewees said building apps for Microsoft Teams helped their organizations add new customers. In large part, this was driven by partners’ access to an increased TAM with the 300-million-plus MAU. Interviewees also said that their organizations expanded their sales channels beyond in-house sales and marketing and incorporated Microsoft’s commercial marketplace, Microsoft’s 90,000 cloud solution provider (CSP) partners, co-selling motions with Microsoft, and more into their strategies.

  • To start, interviewees recognized that by building an app for Teams, they could reach a much larger TAM. The director of product partnerships for an Australian ISV explained the vast opportunity: “With 300-million-plus MAU, we are scratching the surface on what’s possible in terms of customer growth and user growth from Microsoft. We see that as a large opportunity that we’re starting to realize.”
  • To take advantage of the increased TAM, interviewees detailed how their organizations collaborated with Microsoft on programmatic joint go-to-market activities. The group product marketing manager for a North American ISV attributed many of their organization’s deals to co-selling and lead sharing, “We have a long list of deals that have been closed in partnership with Microsoft with some very specifically attributed back to introductions or partnership.”
  • Additionally, the associate vice president of strategic partnerships for a North American ISV said co-selling helped win more of those deals, “We’re going to close at a better rate than if we were going it alone.” Their colleague, the senior manager of strategic partnerships added, “Our ability to close at a higher rate is because we’re built on Azure, and we get access to a program called IP Co-Sell, which gives us the ability to request to sell with the Microsoft account team.”
  • With the Microsoft partnership, interviewees discussed the revenue impact of selling through additional channels. The CEO of a North American ISV indicated that 20% of their deals could be attributed to Microsoft and of that 20%, it could be split “80-20 CSP versus AppSource and the Teams store.” The vice president of technology partnerships and ecosystem for a European ISV said: “I remember two or three large enterprise deals we booked working together with Microsoft. There is about 30% of deals that Microsoft is involved in.”
  • The president and CEO of a North American ISV documented the success their organization has seen working with a Microsoft CSP partner, saying: “We got a big, giant bump from a partner just by going through them. … It’s been very significant as far as the amount of business we’ve gotten by working with the distributors specifically.” They added, “For the licenses we transacted through Microsoft, we saw a 105% increase over a two-month period. It was a huge burst, and we’re able to leverage it.”

• Modeling and assumptions.

  Forrester documented a range of partner outcomes based on conversations with interviewees and categorized these outcomes into non-Teams, low, medium, and high scenarios.

• Scenario variables.

  This revenue benefit and the corresponding scenario may vary based on:

  • How well the app complements existing Teams functionality and solves new use cases/problems.
  • The amount of effort that the partner puts into sales and marketing, both on its own and in conjunction with Microsoft.
  • The install base for other versions of the app, as well as the partner’s global reach.

• Results.

  Forrester documented an increased number of deals impact of up to 300% additional revenue. This consists of an increased TAM impact of up to 240%, additional revenue, and an additional channels impact of up to 60% additional revenue.

Selling Larger Deals

• Evidence and data.

  In addition to selling more deals to more customers, interviewees also said deals were larger. They explained that with Teams, they were able to increasingly sell to enterprises and sell to more users within enterprises beyond specific departments or use cases.

  • According to interviewees, building for Teams enabled them to sell into enterprises, meeting client needs and expectations for security, functionality, and ease of use. The president and CEO of a North American ISV said: “For smaller firms, many of them would still move forward with us if we didn’t have a Teams product. For enterprises, if they didn’t see the potential to expand into Teams, they wouldn’t be considering us to the same degree. For the larger organizations, it’s almost a requirement that we have Teams.”
  • The CEO of a North American ISV explained how their organization realized increased deal sizes, reaching larger organizations with channel partners, saying, “The only people that buy our enterprise version are Microsoft customers because they need the more sophisticated level of functionality and integrations.”
  • Similarly, the senior manager of strategic partnerships for a North American ISV shared how being able to sell to Microsoft customers led to larger deals: “The deals that we close where they are Microsoft customers tend to be drastically higher … orders of three times higher than the average deal size or more.”
  • The president and CEO of a North American ISV noted how their larger deals were 10 to 20 to 40 times bigger than before now that they could sell to larger businesses.
  • The vice president of technology partnerships and ecosystem for a European ISV explained how their organization gained access to new users and departments: “We see it as an accelerator of growth and the operational side is at least three times bigger than the IT side. It is a substantial new base we’re tapping into.”
  • Building on that opportunity, the vice president of technology partnerships and ecosystem for a European ISV explained: “The biggest success last year was the upsell within enterprises, and that’s where Teams comes in. The ability to commercialize this as an offer and as an add-on helped upsell. We’re also seeing that it reduces the churn of the customers.”

• Modeling and assumptions.

  Forrester documented a range of partner outcomes based on conversations with interviewees and categorized these outcomes into non-Teams, low, medium, and high scenarios.

• Scenario variables.

  This revenue benefit and the corresponding scenario may vary based on:

  • Whether or not a partner is already selling enterprise deals.
  • How well a partner’s app applies to all users/solves enterprise use cases.
  • The amount of joint go-to-market activities taking place with Microsoft.
  • The ability to add enterprise features to the Teams version of existing apps.

• Results.

  Forrester documented an increased deal size impact of up to 650% additional revenue.

Accelerating Sales Cycles

• Evidence and data.

  On top of selling to more customers and selling to larger enterprise customers, interviewees told Forrester that sales were also quicker when partnering with Microsoft. Interviewees highlighted both the logistical impact of the Microsoft commercial marketplace and the security and trust that comes with Microsoft.

  • The president and CEO of a North American ISV detailed: “Selling through the commercial marketplace has been an extremely important aspect of our business and growth because, especially with larger organizations, Microsoft’s an approved vendor. So, because we’re selling [through Microsoft’s Marketplace storefront], we don’t have to go through that vendor approval process that we would otherwise have to do.” As a result, they added: “It’s enabled us to close deals with huge firms in a couple of weeks, which in the past would have been over a year.”

  • With the power of the Microsoft brand and the trust of customers, the CEO of a North American ISV explained: “The cycle of decision-making has shrunk from a month to a couple of weeks because we’re integrated with tools customers trust. … When you’re minimizing that whole trust factor and when you’re getting recommended by others, it’s so much easier to sell.”

    They further elaborated on the logistical benefit: “By integrating with Microsoft, all we have to do is talk to CSPs about the value add we provide to them. We’re not having to deal with the business aspects of the contract or the integration, which saves months of time and energy. It has absolutely accelerated our business to Microsoft customers by being in the commercial marketplace … and getting access to customers looking for a solution like ours.”

• Modeling and assumptions.

  Forrester documented a range of partner outcomes based on conversations with interviewees and categorized these outcomes into non-Teams, low, medium, and high scenarios.

• Scenario variables.

  This revenue benefit and the corresponding scenario may vary based on:

  • The length of a partner’s sales cycle beforehand.
  • How effectively a partner can improve their sales processes and whether it transacts on the commercial marketplace.

• Results.

  Forrester documented a faster time to close impact of up to 24% additional revenue driven by up to 50% shorter sales cycles.

Nonquantified benefits.

Interviewees mentioned the following additional benefits that their partner organizations experienced but were not able to quantify which contributed to the previously quantified benefits:

• Improved value proposition and competitive differentiation.

  Interviewees told Forrester that building with Microsoft Teams improved the value proposition of their apps for customers and helped them differentiate from competitors. They highlighted the unique and advanced features they were able to incorporate in their Teams apps, providing a more useful and collaborative experience across platforms.

  The executive vice president of business development for a European ISV detailed how Teams helped deliver client value: “We use some of the advanced features of Teams. … We also have augmented reality calls through Teams.”

  The Microsoft brand, support, and programs, including the Microsoft Azure Consumption Commitment (MACC), also helped partners differentiate, according to interviewees. The CEO of a North American ISV shared, “By being a recommended product by Microsoft, being integrated with their solutions, being recommended by their resellers, and being pushed by their distributors, it’s really a huge benefit to an ISV like us.”

• Better usage, customer stickiness, and increased lifetime value (LTV).

  When speaking with Forrester, interviewees discussed how combining their organizations’ IP with Teams’ unique features allowed them to solve for unique problems and scenarios and increase usage. Interviewees also saw opportunities to reduce friction and increase app use by meeting users where they work day-to-day in Teams. Furthermore, by increasing usage and delivering more value for users, interviewees observed improved customer retention and LTV.

  The associate vice president of strategic partnerships for a North American ISV said: “When we think about customer value and why we tried to make our app deeply integrated into Teams, one of the biggest things we think about is that notion of this toggle tax. This brings our app where people, especially in big enterprises, spend their day working and collaborating.”

  The also added, “The more we encourage our customers to take advantage of the two platforms as a better together solution, the more likely we are to see that usage retain, maintain, and then grow over time.” They concluded, “We see a 20% increase in retention when customers use the two platforms together.”

  The vice president of technology partnerships and ecosystem explained the value to integrating with Teams, “Once they use your tool so deeply, and you’re included in the processes of how people collaborate, that creates stickiness.”

• Reduced development and delivery costs.

  In addition to highlighting the revenue growth opportunities with Teams, some interviewees also noted cost reduction benefits, both for building their apps and ongoing maintenance. These savings could be driven by capabilities built into Teams and the Microsoft Cloud, economies-of-scale benefits, lower customer acquisition costs, and lower transaction costs with Microsoft’s commercial marketplace.

  Looking ahead, the group product marketing manager said, “We stay very close with their engineering teams on understanding how they’re developing Teams as a platform to be the app framework for multiple apps and bringing services like Teams, Outlook, and the Microsoft 365 web app together, which should reduce our engineering burden."