The Partner Opportunity For Microsoft Modern Work

Opportunity Overview

The themes discussed above resulted in increased revenues across all solution areas in FY 2024, both in terms of total revenue potential (the portfolio of services and solutions a partner is offering) and the expected revenue associated with the likely bundles of services and solutions customers are buying (attach rates applied to the portfolio). The expected revenue opportunity grew by 16% for an enterprise customer on a three-year journey. Although Microsoft has a mature partner ecosystem, partners indicated that everything was in a state of accelerated change because of generative AI. The two solution areas with the largest generative-AI-related growth, outside of direct Copilot for Microsoft 365 opportunity, were SharePoint Premium and Teamwork and Collaboration.

Forrester also broke out the expected revenue opportunity across four service areas: deployment, advisory, solutions development, and managed services.

• Deployment opportunities grew by 21%. Deployments are the typical entry point for new customer engagements. Pilots and POCs are included in this category, which saw large growth because of Microsoft’s move from funding workshops to funding early-stage activation projects. Win rates to progress from a pilot/proof of concept to a full deployment were up significantly from the previous year. The largest growth was in Microsoft Teams Rooms, Microsoft Teams Phone, and SharePoint Premium.
• Advisory services grew by 32%. Advisory services are becoming increasingly important as business processes are more impacted by Microsoft Modern Work solutions, and increased readiness and change management are required to become a high-performing AI organization. The largest areas of growth were SharePoint Premium, Employee Experience, and Teams Phone. Despite advisory’s importance, customers often try to minimize advisory services spend. Many partners are making some level of advisory services mandatory.
• Solutions development grew by 6%. Solutions development includes the resalable IP that partners are creating (either as standalone solutions for sale or used to make deployments and managed services more efficient), custom solutions development, and advanced integration work. Within this category, advanced integration work showed the fastest growth. ISV partners see almost all of their growth in the form of IP creation. The solution areas with the largest growth were Microsoft Teams Rooms, Teams Phone, and SharePoint Premium.
• Managed services grew by 14%. Partners are increasingly focusing on their managed services in order to scale their business and drive predictable revenues. Managed services attach better at the lower end of the enterprise segment because larger customers are more likely to have enough in-house resources, and the pricing can become prohibitively high. The solution areas that grew the most were Microsoft Teams Rooms, Microsoft Teams Phone, and Modern Work Security.

Copilot For Microsoft 365 And Role-Based Copilots

All of the partner interviews took place within the first few months of Copilot for Microsoft 365 becoming generally available. This means that most initial deployments were close to the 300-user EAP minimum, with a few partners doing larger deployments. However, none of the deployments were close to the expected full rollout potential, which Forrester and interviewees estimate to be 40% of knowledge workers. Additionally, Copilot for Sales and Copilot for Service were very new to market, and Copilot for Finance was not available at the time partner interviews were conducted. (Interviewees with experience in the role-based Copilots believe there will be large services opportunities here because of the substantial need for business process transformation.) Therefore, the numbers included in the analysis are based on very early wins around initial deployments and becoming AI-ready. Given how fast the generative AI space and Microsoft’s products are evolving, both partners and Forrester expect the revenue opportunities to evolve and grow very quickly. Future opportunities will also include solutions development and managed services.

Partners are more excited about how generative AI and Microsoft’s Copilot solutions can drive growth than anything else partners discussed with Forrester since the launch of Microsoft 365. This excitement is for both the direct opportunities tied to Copilot for Microsoft 365, including the role-based Copilots that sit on top of it, and for the ways Copilot for Microsoft 365 increases revenue opportunities across the other solution areas. The core partner opportunity model includes the smaller, initial direct-Copilot opportunities, but Forrester also calculated Copilot’s to-date impact on revenue growth in other solution areas.

• Upfront workshops proceed to initial deployments 90% of the time. Partners reported exceptional success using workshops to proceed to proofs of concept and initial deployments. Workshops typically cost upward of $20,000, with little difference because of customer size. These workshops focus on identifying the most compelling use cases and creating the associated business case. Partners expect that a full deployment will be worth 10x the value of a phase one deployment project. Some partners noted that opportunities with very large enterprises (VLEs) have been smaller than expected because these companies have multiyear budgeting cycles, and they did not account for Copilot in their prior years’ planning. Partners expect large growth in this sector in the next budget year. One partner said: “I’ve worked in the Modern Work space for many years, and I’ve never seen anything like this before. A project might start with a cost of a few hundred thousand dollars and quickly grow to millions of dollars — and that’s before we start complex integrations into other systems.”
• Advisory services are absolutely critical to Copilot success. Partners all stressed that readiness and change management are more important for generative AI than almost anything else they have ever done. Because of the $30-per-user Copilot for Microsoft 365 license cost, customers are keen to ensure their users are actually maximizing the solution’s potential. This is reflected in the high advisory attach rates and the fact that customers, at this early point, are spending more on advisory than deployment. Data compliance review, planning, and governance work are necessary in order to safely use generative AI and unlock its value. As discussed earlier, many partners are moving into this space to round out their Copilot services portfolio in order to win more deals. Another area where partners are providing advisory services is prompt training for individual users and for centers of excellence. This is seen as a huge opportunity because unlocking generative AI’s potential depends on users writing good prompts. As one partner explained: “Advisory is the entry point for large Copilot deals in order to assess maturity and readiness. That leads to work across all of Modern Work, including security, compliance, SharePoint migrations, and Windows 11 endpoints.”
• It is early days for solutions development, but this is where partners expect to see huge growth in FY 2025. Some partners are currently undertaking a lot of AI solutions development work with customers, but these opportunities are more tied to Azure Open AI than Copilot for Microsoft 365. A few partners are doing early extensibility projects between Copilot for Microsoft 365 and other systems. All partners expect extensibility to grow considerably as Copilot Studio capabilities expand and customers seek to unlock more value from Copilot for Microsoft 365. Partners also expect there will be a great deal of custom development work and business process automation. Because the solutions development opportunity is so new and because the interviewed partners’ experiences are so varied, this opportunity was not included in the financial model. Looking to the future, a partner said: “There is going to be a lot more custom development and extensibility work than people think. Some of this will be partner-led, and some of this will be customer-led with partner support. At a financial services customer, we are currently training 600 people to do no-code/low-code development for their own Copilot extensions.”
• Managed services opportunities will develop over the next year, but partners are uncertain as to the revenue opportunity. In any solution area, managed services are typically the last to be developed. Partners all said that existing managed services around platform and user support will be extended to cover Copilot for Microsoft 365. However, there was a mix of opinions about how much they can increase these basic managed service contract prices, ranging from no increase in price to a 20% increase. Partners are more excited about value-added managed services such as ongoing chatbot creation and management, user prompt training, and data governance and compliance. One European partner is offering all of its advisory and deployment services as part of an ongoing service billed as monthly recurring revenue (MRR), in effect making all of the work they do for customers a managed service. A US partner has had early success selling managed services around Copilot for Sales, building upon its offerings from when this was part of Microsoft Viva. As with the solutions development opportunity, the managed services opportunity was excluded from this year’s financial model because it is so new and has limited data points.

The numbers shown in the above chart reflect the very early success partners are having in making customers Copilot-ready and completing early-stage deployments. These Copilot-direct opportunities are growing, as previously discussed. Additionally, Copilot for Microsoft 365 is contributing to growth in the other Modern Work solutions areas. Across all the solution areas, Copilot for Microsoft 365 is responsible for $6.45 of the $17.00 in overall expected-revenue Modern Work opportunity growth.

SharePoint Premium

SharePoint Premium is the next solution area discussed because so many of the features are AI-related and because of the value SharePoint Premium creates by making documents usable by Copilot for Microsoft 365. The SharePoint Premium opportunity grew by 19% in terms of the total revenue opportunity because of its expanded scope from the previous Microsoft Syntex iteration. Expected revenue grew by 47% and is attaching at higher rates because of greater overall interest in applying AI technologies and because of its connection to Copilot for Microsoft 365. Partners did note that the revenue opportunity for SharePoint Premium is less tied to a customer’s employee count than the number of document types, data size, and workflows included. Therefore, the per-user per-month calculations used throughout this study are less relevant than in other solution areas. Partners should take into consideration the number of document types and use cases at their customers when evaluating the revenue potential.

• Partners are seeing more pilots/POCs transition to full deployments. SharePoint Premium roadmaps almost always begin with a narrowly focused pilot/POC looking at no more than three document types. Two-thirds of these projects (up from 50% the previous year) progress into multiyear programs that increasingly roll out SharePoint Premium to more document types and parts of a customer’s organization. A pilot usually costs around $100,000, and follow-on projects can cost as much as $300,000. One interviewee said: “We typically start with a small pilot to prove the value of SharePoint. This almost always transitions to follow-on projects, with four or more projects ranging in size from $150,000 to $300,000 over the next three years.” Partners also said that there is an increase in migrations from competitive solutions to Syntex, which can be worth $100,000.
• Advisory services represent a 33% uplift on deployment services. Advisory is becoming more important as content management and AI become more integral to business operations. Initial advisory services are part of almost every initiative because of the impacts on workflows and people. One partner estimated: “Approximately 30% of all project work can be classified as advisory. This includes upfront planning and analysis, process redesign, and user training.”
• Solutions development is where partners expect to see much growth. The prior year’s study described the new custom integration work and repeatable-IP partner opportunities. This year, partners expanded their solutions development offerings and were particularly excited about extensibility and plugin opportunities. Some partners are creating repeatable IP that sits on top of SharePoint Premium and is sold in an ISV model. The expected revenue opportunity for solutions development is up 18% from the previous year, and partners expect the growth to accelerate in FY 2025 because of AI extensibility. With regard to the repeatable-IP opportunity, one partner said: “We are developing a product that sits on Syntex to identify and approve inbound documents. We are finalizing pricing but expect there to be a lot of customer interest.”
• This is the first year that managed services are included in the financial analysis. The expanded capabilities of SharePoint Premium and its wider usage mean that partners can now offer managed services. Some of the services are relate to keeping the lights on, but partners are more excited about helping customers roll out new use cases. Rolling out new use cases is usually a mix of teaching customers how to do it themselves with some external support and more complex use cases that are partner-led. Attach rates are still low at 20%, but partners expect much more uptake on managed services in FY 2025. A partner explained: “Managed services for SharePoint Premium is different from what we used to do with other content management vendors. Instead of keeping-the-lights-on activities, we are doing ongoing work to identify and deliver new use cases, make necessary changes in Purview, and protect against configuration drift as new features within SharePoint Premium get released.”

Employee Experience

Employee Experience is the partner opportunity associated with the Microsoft Viva suite and individual apps, using both seeded and premium capabilities. Partners continue to express mixed opinions on the direct value of partner opportunities to their organizations in terms of revenue contribution, but people-centric consulting partners see Viva as a catalyst and enabler of large people-transformation initiatives. Perhaps more importantly, interviewees are excited about Viva’s potential to be the measurement and transformation platform for creating high-performing AI organizations. With regard to frontline workers, most opportunities are built on the seeded Viva Connections and Viva Engage capabilities. Overall expected revenue growth was 7% this year, but partners are optimistic that growth will be larger next year.

• Partners are working more closely with Microsoft to sell initial deployments. Selling Employee Experience increasingly requires talking to both IT and business buyers. Partners said that co-selling and co-marketing with Microsoft help land the right messaging and meetings across a customer’s organization. Partners also said that Microsoft funding mechanisms such as End Customer Investment Funds (ECIF) are very important for getting early pilot/POC wins using premium features that can translate into large, multiyear initiatives. The most common early deployments were a combination of Viva Connections, Viva Engage, and Viva Amplify, which make up the Microsoft Viva Employee Communications and Communities mini-bundle. SharePoint Online migrations are still a large driver of deployments, and the additional value that Viva Connections brings to an intranet improves win rates for SharePoint Online migrations. One partner said: “We are still doing a lot of migrations, although the growth has slowed down a bit. When Connections is part of the opportunity, the revenue opportunity is 2x a standard lift-and-shift project.”
• Advisory was the fastest-growing service area. Partners reported that advisory services, as a percentage of the total project opportunity, have nearly doubled in the past year. Prior-study advisory services included upfront strategy work, app-specific change management, content creation, and end-user training. This year’s study also includes advisory services for the use of Viva as the Copilot measurement platform. With regard to growth, a partner said: “Advisory makes up anywhere from 20% to 40% of a project’s revenue. This is up substantially from last year’s 10% to 20%. Advisory is growing because of increased solution complexity and organizational impacts, which requires more enablement work.”
• Advanced integrations are worth 35% on top of deployment services. The various Viva apps can connect into many systems and information repositories, which can require custom integration and development. Partners are also integrating disparate data sources into Viva Insights. An increased number of partners are creating repeatable IP that they sell to customers. Examples of this include intranet-in-a-box, learning content, and internal communication tools. One partner shared an example of repeatable IP, saying it was “built on top of SharePoint that goes way beyond a Viva Connections intranet.” The price of this solution is around $5.40 per user per month.
• Managed services grew some but are still uncommon. Partners are still exploring ways to attach more managed services to Employee Experience. Partners shared some examples of managed services, including evergreen support, user help desk, and content management for Connections and Learning. Partners also offer keep-the-lights on services. If and when the overall Employee Experience space takes off, partners expect managed services to grow quickly because there are so many parts of the solution. One partner said about managed services: “We are trying to embed managed Viva Insights into our offerings to help with ongoing change management and transformation. We see good annuity opportunities here with high win rates. The future opportunity is to tie this into Copilot.”

Teamwork And Collaboration

Teamwork and Collaboration continues to be central to Modern Work and where partners deliver their services. Often, this involves bringing in all of the other Modern Work solution areas as well as Power Platform. In large part, this is because the concept of accessing everything within the flow of work resonates stronger than ever. However, some partners felt that service opportunities in this solution area are starting to slow because of market maturity. That said, partners expect Teamwork and Collaboration growth to be reinvigorated because of Copilot for Microsoft 365. Partners also said that security services are becoming more important in support of hybrid working models. Partners also shared more examples of frontline worker opportunities than in past years, and they described increased interest in upgrading to the F3 SKU. Microsoft recently announced the decoupling of Teams from the Microsoft 365 SKUs. Partners do not believe that this will change their opportunities to attach services since Teams adoption is so embedded into how their customers work.

• Teamwork and Collaboration deployments are still the most common starting point for a Modern Work customer journey. The Modern Work journey almost always begins with a Teamwork and Collaboration workshop, looking at Teams as the hub for getting work done and how all the other solution areas connect. Nearly all of these proceed to at least a POC. Partners are increasingly conducting workshops, POC, and first-stage deployments to frontline workers. This is often based on Microsoft’s predefined frontline-worker pilot methodology with a set price of $30,000 that looks at two or three use cases. The phase one follow-up deployment to roll out these first use cases is worth around $7 per user. With regard to the frontline worker opportunity, a partner said: “[We] see big potential because Microsoft is pushing the purchase and usage of F-SKUs. How far we can take this remains to be seen.”
• Advisory services attach rates have increased and typically add 20% to deployment revenues. Because Teamwork and Collaboration is the starting point for Modern Work, upfront planning and strategy advisory services are almost always included. Nine times out of 10, these programs also contain change management, user training, and Teams governance work. As part of the expansion into frontline workers, partners are extending their advisory capabilities and treating frontline as one or more new use cases. Per-user spending in the frontline worker space is considerably less than that of knowledge workers, but because there are so many more frontline workers, it is still a good opportunity. “Customers need to think about business transformation when adopting Teamwork and Collaboration solutions, not just a lift and shift from what they were doing before,” said one partner. “That is how you get to real results and attach a lot of advisory services.”
• An increasing number of partners are productizing their IP. Custom development and integration work is the bread and butter of solutions development. Partners shared more examples of how they are converting their custom work into repeatable IP that they can sell to other customers. In most cases, these are applications that are often made available in Microsoft’s online marketplaces. Some partners are also productizing their change management capabilities, such as learning content, digital champion methodologies, and center of excellence formation and management. To achieve all of this, partners are making increased use of Power Platform and investing in dedicated development teams. One larger partner described: “[We have a] modern applications development team responsible for delivering $250 million in revenue. It is increasingly focusing on frontline worker apps.”
• More than 40% of customers are now buying Managed Services. Partners continue to develop more managed services and actively promote them to customers. The largest single category of managed service is end-user support. Other common offerings include technical platform management and ongoing roadmap and governance support. Partners with security capabilities are increasingly adding a security component to their managed services for customers with the E5 SKU (this last category is discussed in the Modern Work Security solution area below). Partners continued to report better margins on managed services than project work, and that is starting to improve more as partners reach economies of scale. A partner explained: “[Our] end-to-end managed service includes tenant management, break-fix, user and change management support, and analyses using productivity score and secure score. Our managed services are also becoming much more proactive.”

Microsoft Teams Phone

Forrester interviewed a mix of representatives from telcos and more generalized Modern Work partners that are delivering Microsoft Teams Phone services to customers. Regardless of partner type, every partner reported large growth and is excited about the future growth potential. For the partner-opportunity model, expected revenue was up 31%. Growth drivers include many traditional PBX systems reaching the end of life, more complex hybrid-working requirements, and the desire for cost reduction/vendor consolidation. Additionally, Copilot for Microsoft 365 brings online features such as transcription and call summary to PSTN voice calling. Partners described pricing as competitive with pure-play voice vendors and said that although some feature gaps still exist, they are not an impediment to winning deals. FY 2024 saw increased deployments of Teams Phone Mobile, although it is still early days, and partners are increasingly interested in using Operator Connect rather than Direct Routing because of easier account management.

• Partners try to keep deployment costs as low as possible in order to win recurring revenue services and calling plan deals. The main variable determining deployment pricing is the number of physical locations rather than the number of employees. Deployments usually begin with a workshop, and they move forward to deployment more than two-thirds of the time. Partners have improved automation to streamline deployments, which has enabled partners focused on large enterprises to sell to smaller enterprises and SMCs profitably. With regard to trying to keep deployment costs low in order to get the future recurring revenue opportunity, one partner said: “We try to keep presales and workshop costs as close to zero as possible. Deployment pricing is 1x the monthly [average revenue per user].”
• The increased complexity of integrating voice into other systems and accommodating hybrid working means more advisory-service revenues. The expected revenue opportunity has increased by 21%, with attach rates increasing by eight percentage points. The largest component is persona-based user adoption training. Fortunately, most of this is now delivered online rather than walking the floor, which is much more profitable. Teams Phone Mobile is expected to increase advisory revenues because it is a new platform and incorporates many new use cases and personas. With regard to the total advisory services opportunity, one partner said, “Advisory services can be worth as much as 80% of the deployment opportunity.”
• The opportunity is increasing for system integration and selling one’s own repeatable IP. Solutions development expected-revenue opportunities were up by 25%, mainly because of increased attach rates rather than creating new offerings or increasing prices. More partners are creating their own IP to fill feature gaps and facilitate processes like moves/adds/changes/deletes (MACD). Partners also continue to integrate other-vendor solutions for things such as contact center, although they expect these third-party integration opportunities to decrease at some point in the future as Microsoft closes the remaining feature holes. One interviewee listed examples of IP as “a user and number management portal that sits in front of Teams Admin Center, a system and call quality performance portal integrating data from Microsoft and the SBC, and an online training portal.”
• Recurring revenue from managed services and calling plans is the goal of most voice partners. Partners offer a range of managed services from reactive reporting all the way to fully outsourced end-user, system, and quality of service (QoS) management. Customers increasingly want to get out of delivering these services in-house because voice requires a different skill set from traditional IT and is viewed as noncore to a company’s mission. Accelerating this skills gap is the integration of telephony into the ICT stack. With regard to the value placed on managed services, a global telecom partner said: “We can position ourselves as a telco or as a managed services provider. I don’t necessarily care about getting the voice contract every time. I want to do the upfront engineering work and get the managed services contract.”

Microsoft Teams Rooms

The Microsoft Teams Room opportunity doubled in FY 2024 in terms of expected revenue. This was because partners brought many more services to market and because attach rates increased by 50%. The driver of growth in the first half of FY 2024 was the need to build out spaces that create better experiences for all participants, which is typically a mix of in-room and remote participants. More recently, growth was driven by customers beginning their AI journeys and the need to equip both people and meeting rooms. Partners are showing customers how to leverage Copilot for Microsoft 365 in physical meeting rooms in conjunction with Teams online meetings, and they expect this to increase adoption. Vendor consolidation sales motion is also in play here. Partners reported that Microsoft Teams Rooms projects very often lead to Microsoft Teams Phone opportunities if a customer is not already using that solution.

• Growing market demand for intelligent meeting spaces increases deployment revenue. Companies are upgrading their meeting rooms, from the smallest huddle room to the fanciest boardroom, to support hybrid working and to improve audio-video quality. This results in increased services and hardware revenues. It also means that customers are increasingly moving away from bring-your-own-device (BYOD) meeting rooms because traditional rooms are of limited value. This is good news for partners since they estimate that a BYOD room is only worth 50% in terms of hardware and services revenues compared to a native Microsoft Teams Room solution. With regard to per-room opportunities, a partner explained: “People said the average sales value of a room would go down with huddle rooms. It is now going up because people are adding second cameras, improving camera and microphone quality, and installing higher-end monitors to see data on the screen.”
• Advisory can add 50% onto a deployment project’s revenue opportunity. Partners reported an increase in advisory services opportunities because of hybrid working, more complex rooms, and the impending use of generative AI. Partners offer a range of levels of advisory services, in no small part because customers don’t like to spend on change management despite it being critical to success. Partners estimate that 10% of customers buy the top-level advisory/change management offering. One partner reported: “[We’ve experienced] a lot of traction in selling an adoption and change management framework we created. This covers the ingredients for successful meetings, how to plan and budget for success, and all the in-room signage and usage guides.”
• Partners investing in IP for meeting room management are seeing more growth. Recognizing the opportunity and need for meeting room monitoring and management, some partners created their own IP that works with Teams Rooms Pro Management service to enable partners to offer a comprehensive end-to-end management solution. One partner said that they charge $175 per room per year for their management portal. Another partner has created a portal that includes the above-mentioned management and integration tools, as well as user-ticket management and support. That can sell for $175 per room per month. “Historically, it has been a struggle to convince people of the value of our platform,” said one partner. “Now people say, ‘Wow, we need this.’ Rooms just need to work. Our solution proactively and remotely checks all of the rooms.”
• Managed services attach rates increased by 50%. Every partner said that customer interest in managed services is growing because meeting rooms are more critical to business success in the era of hybrid work and because IT wants to get out of their management. These opportunities more often include proactive and/or onsite support rather than solely reactive break-fix contracts. Pricing considerations include the number and complexity of rooms, the number of locations (especially international), the SLA, and whether there is an onsite support component. Some partners are pre-positioning spare components for their important customers. With managed services being the goal for most partners, one said: “From the very beginning of a deployment, we begin to position our managed services. Customers often think they won’t want our services, but by the time they go live, they change their mind.”

As a rule of thumb, Microsoft estimates that there is one meeting room per 25 knowledge workers. Therefore, the per-room revenue opportunity shown in the chart below is calculated by multiplying the per-user per-month opportunity by 25.

Cloud Endpoints

Device management using Intune continues to be the bedrock of the Cloud Endpoints solution area. Partners are excited about the additional opportunities Intune Suite will bring, although they generally felt that it only recently became mature enough to sell widely. One partner estimated that the expanded capabilities within Intune Suite will increase deployment and managed services pricing by 10%. Both Windows 365 and AVD opportunities are growing, in part because other vendors’ VDI deployments are approaching the end of life. Customers have an increased interest in Windows 365 for certain use cases, such as for frontline workers in healthcare and manufacturing. Windows 11 deployments are increasing, but only at the pace of natural refresh cycles. Partners said that there are not huge revenue opportunities here because the move from Windows 10 to Windows 11 is pretty straightforward.

• Cloud Endpoints is a broad set of tools that can be deployed based on a customer’s most urgent needs. The Cloud Endpoint journey has many starting points, but it almost always turns into a multiyear program rolling out a range of solutions. Often, this involves a migration from another vendor’s solution(s), which can open the door for other Modern Work solutions areas. Partners said that in this solution area, Microsoft-funded projects are especially important for creating and winning large deployment opportunities. With regard to Windows 365 deployment success, one partner explained: “[We] use MCI program funding to prove out the technology, security, and usability for a prospect. More than half of these turn into full rollouts. Companies like the predictable cost and that three workers on different shifts can use the same license. These projects usually expand to more personas and can require some custom development work.”
• Advisory is increasingly focused on what the future workplace should be like and how to deploy technologies in support of it. Partners are still doing the more traditional change management work, but they said that customers are increasingly interested in how Cloud Endpoints intersects with the future of work. All advisory work, tactical or strategic, leans heavily on defining personas and mapping tools and processes onto them. Advisory services are delivered both at the start of a project and throughout a multiyear journey. Upfront advisory work adds 40% onto the price of a deployment and attaches at 85%. One partner said they “map all the users to different personas that they define at a customer. The great thing is that we have existing configurations for those personas that will cover 80% to 95% of the user requirements. That makes both advisory and deployments easier.”
• Partners are creating and selling repeatable IP to augment Microsoft’s capabilities and streamline their own internal operations. For the most part, the IP that partners charge for is about reducing cost and effort for a partner’s internal operations. Some are creating ISV-type models to sell their IP, although the attach rates are relatively low. Partners are also doing custom integration work for customers with more complex, multivendor environments. One partner described how creating their own IP helps reduce internal delivery costs and also delight customers: “[We] have created IP for automated scripts, which means we can deliver all of our services using Microsoft standard technologies rather than integrating third-party software. This makes things much easier for us, and if a customer wants to leave us for another partner, it is easier for them to do so.”
• Cloud Endpoints managed services is a very large opportunity because this is where broader end-user support contracts often attach. For nearly all partners, the goal of Cloud Endpoints is to attach managed services — both the core device management piece and the broader Modern Work L2 through L3 technical support and/or L1 user helpdesk opportunity. Partners also see good managed services revenues for AVD. Partners that provide managed services to frontline workers said that they can charge 25% of the knowledge worker per-user per-month price. These managed services contracts can expand as partners add more Modern Work solutions. One partner explained: “We usually start with a narrowly focused Intune managed-services contract and then add on the whole help desk piece. We then look at moving into backup, server, and networking managed services.”

Modern Work Security

Forrester conducted a separate security partner profitability study that looked at the opportunities for Microsoft 365 Security, Multicloud Security Compliance, Identity And Access Management (IdAM), and extended detection and response (XDR).¹⁰ Of these, a more generalist Modern Work partner moving more into security can expect revenue opportunities around Microsoft 365 Security, information protection-related Compliance, and IdAM. Typically, this expansion into more security and compliance builds upon existing device and identity security work completed as part of a Cloud Endpoints offering.

Modern Work partners are increasingly able to build practices and deliver services in some of these solution areas because the features included in the E5 SKU make it easier for partners to build the necessary competencies, be credible in front of customers, and actually help customers with their security and compliance needs. Furthermore, Modern Work partners feel the need to increase their data security and data governance skills and offerings to support generative AI readiness and adoption projects. Readers interested in the Modern Work Security partner opportunity are encouraged to read that study.