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A Masterclass of Value Cycle Principles in Action

A Masterclass of Value Cycle Principles in Action

Microsoft’s channel evolution over the past ten years is built on one of the most far-reaching visions and transformational visions in the market. And it’s one that fascinates me as a marketer.

From pioneering the CSP program to launching Modern Commerce Experience (MCE), its strategic moves have empowered thousands of partners while driving massive cloud adoption worldwide. 

But this journey hasn’t been random. It closely mirrors the Value Cycle—a structured framework for defining, delivering, optimising, and consolidating business value.

When viewed through this lens, it reveals a masterclass in how Microsoft’s long-term vision and market-moving strategies come together to drive outcomes for its customers, partners and shareholders.

Molly McDiarmid, Head of Marketing, Crayon APAC

 

Wondering what the future holds for you as a partner in the Microsoft ecosystem? Follow the bouncing ball through this article, and Microsoft’s latest changes may become easier to understand – and their next big moves may even be easier to predict!

What is a Value Cycle?

What is a Value Cycle?

A framework for the continuous management of value – from initial definition through to optimisation and final consolidation of all value extracted from existing investments, leading to definition of ways to generate new value.

Value cycles apply at a macro and micro level in any business. They can be used to help define a whole-of-organisation strategy as readily as they are applied to IT strategies.

 

A cyclical graph showing the 7 stages of a Value Cycle from definition to consolidation

Value Cycle Phases Explained.

1. Definition: Defining the value need; objectives, expectations and outcomes. Sets the north star for everything to follow.

2. Delivery: Processes for executing on strategy; projects, solutions and services needed to bring desired value into existence.

3. Creation: Generation of the anticipated new IT/user capabilities, efficiencies, innovations or impact. Bridges the gap between delivery and resulting benefits.

4. Realisation: When the benefits start making a measurable difference to strategic business objectives. Confirms investment is translating into outcomes that matter.

5. Validation: Assessing means to keep realising increased value from investment or course-correct if results are not meeting expectation.

6. Optimising: Enhancing value through process improvement, automation, or scale to increase ROI over time, and ensure value remains relevant as business objectives change.

7. Consolidation: When full value has been extracted, determining removal/refresh or next wave of reinvestment strategy. Embedding learning about value extraction into governance and operating models.

Explore the evolution of Microsoft's channel strategy through a value cycle lens

Explore the evolution of Microsoft's channel strategy through a value cycle lens

Our latest eBook ‘Partners of the Future’ provides a frank and fearless dive into how Microsoft has executed change in its channel strategy over the past decade.

It’s a go-to guide for any partner that is curious about where Microsoft has been, where it’s going and what role your business can play in its vision for the future.

In it, we go into detail through every stage of Microsoft’s strategy, summarised below.

View the Guide

Phase 1: Create a Volume Market for Public Cloud

Phase 1: Create a Volume Market for Public Cloud

In the early 2010s, the company redefined its strategic north star: 

Shift from on-premise software to a cloud-first, subscription-based model. 

Microsoft’s modern channel journey began with a clear ambition: make cloud accessible to all—at scale. 

Phase 2: Build the Channel Infrastructure

With a clear vision in place, Microsoft moved swiftly to operationalise its cloud strategy.

The launch of the Cloud Solution Provider (CSP) program would be instrumental.

With it, Microsoft aimed to the value promise to life reliably, globally, and at scale.

Phase 3: Activate ecosystem scale and innovation

As CSP adoption grew, the anticipated benefits to Microsoft and its partners began to emerge.

MSPs and resellers moved beyond licensing to offer migration, managed services, security, and more. Azure and M365 became foundations for new business models and adoption soared.

Value creation wasn’t theoretical—it was happening in real time, across every customer segment.

Phase 4: Realisation, where the strategy starts paying off.

By ~2019-2021, Microsoft began seeing measurable returns on its cloud and channel investments, as its partner-led scale strategy started to deliver consistent and sustained results across the market.

Cloud was not just creating value through the expected benefits to IT teams or frontline users.

Its full value was being realised as directly contributing to increased net worth for customer businesses.

Phase 5: Validating if the strategy is still fit for purpose.

Post-COVID, (circa 2022-2023) scale for public cloud had really taken hold, yet it coincided with volatile economic pressures.

Continued supply chain disruption, inflation, soaring operational costs, global tech-skills shortages and stock market carnage combined to stretch even the mighty Microsoft’s resources and treasury coffers thin.

Microsoft’s volume strategy was a success, but the laws of decreasing marginal return were kicking in.

Phase 6: Optimising for capability and differentiation.

By 2024, Microsoft was openly signaling a shift from volume to value, and an intent to start evolving its channel strategy.

Higher performance thresholds for Direct Bill CSPs were flagged.  Incentives rebalanced toward advanced specialisation, AI-centric programs and marketplace integration.

The goal: fewer “transactional” partners, more strategic allies focused on differentiated value.

Phase 7: Consolidation prepares for the next cycle.

Microsoft is now throttling up its strategy to ensure its ecosystem is fully geared to compete in the new value generation zones: a future centered on AI, Fabric, security and modern data services.

This includes embedding what’s worked into its governance, tools, and programs after a decade of cloud growth to inform the next chapter.

Rinse and Repeat: A new value definition cycle begins.

With the launch of Microsoft Copilot, Fabric, and deep investment in partner co-innovation models, Microsoft is once again redefining its strategic north star.
This next cycle isn’t about scale—it’s about intelligence, insight, and impact. Microsoft’s partner ecosystem isn’t shrinking; it’s evolving. And for partners willing to align, specialise, and innovate, the opportunity has never been more exciting.

The Partner Takeaway

The Partner Takeaway

Understanding Microsoft’s journey through the Value Cycle gives partners a roadmap for their own alignment.

Bear in mind – the pattern will repeat.

The drive for volume will come around again as emerging technologies and solutions gain maturity, and Microsoft commercialises its higher end offerings down to the mass business markets.

  • Where are you delivering value?
  • What are you measuring to realise and optimise it?
  • How will you prepare to step into the next value cycle with Microsoft?

For now, it is time to shift from transactional to strategic, from volume to value—because Microsoft already has.

View the ‘Partners of the Future’ Guide to Microsoft’s evolving channel strategy today and let’s talk about how we can help you chart course for the next ten years of tech-led growth and innovation!

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