IT'S GOING TO BE A WILD RIDE IN 2007. That's how Jim Townsend, president of solution provider Information Strategies, describes what VARs can expect this year with the roll-out of Microsoft Windows® Vista™ and Microsoft® Office 2007. "This is the biggest year for new product introductions in Microsoft's history," he says. "It's going to be a big year for Microsoft and also for those of us in the channel."

Revenue opportunities will depend on the type of customers, the state of their hardware, their level of technical savvy and how quickly they want to adopt the new software. But Vista will be particularly attractive because of its increased security features, such as BitLocker™ encryption, user account control mode and the protected mode in Internet Explorer® 7, according to Jodi Honore, vice president of vendor management for software at Ingram Micro. Vista will also provide many opportunities for VARs to upsell and cross-sell both new hardware and new software.

A recent study by IDC commissioned by Microsoft reports that for every dollar of Windows Vista sales, there will be $18 in additional revenue for the partner. "I haven't seen this kind of partner revenue multiplier effect since Windows 95," says Robert Doi, Microsoft's group partner marketing manager for Vista.

Most solution providers expect to spend the first part of this year educating customers, assessing their needs and planning a strategy for deploying the products at client sites. Then, over the next 18 to 24 months, VARs will sell lots of hardware and installation services as customers buy new Vista-ready PCs and/or upgrade older PCs so they can run the new OS. Hardware sales alone will be substantial. According to a study last fall by VAR Softchoice, 74 percent of business PCs don't meet the memory requirement for the premium version of Vista.

Long term, however, the biggest opportunities may lie in the workgroup and collaboration capabilities of the new software. Many solution providers see a burgeoning business in helping small and midsize companies leverage all the new or improved capabilities of the software to dramatically improve productivity and lower costs.

A Tactical Sale
Although customers are interested, VARs don't see an immediate stampede to Vista. In fact, unlike previous OS upgrades, which were routine because people were so dissatisfied with their current OS, Vista acceptance may be more gradual, says Arlin Sorensen, CEO and president of Heartland Technology Solutions, a solution provider and managed services provider. With Vista, he says, "the hurdle is going to be that XP and Office 2003 are good enough for most people."

That means Vista requires a more tactical sale. "We as Microsoft partners have to really understand the products so we can educate the client base on why they matter," he says. "It's going to require more finesse and more targeted education, where we point out how certain capabilities will benefit certain clients." And that can be different from one client to the next. "It also means we need to be running those products ourselves so we can demonstrate the value and share the impact it has had on our own company."

Many VARs report higher customer interest in Office 2007 than in Vista. In fact, Sorensen thinks that VARs can leverage interest in Office to sell Vista, even though Vista isn't required to run it. "Partners need to talk about the 'better together' story," Sorensen says. "When you sell them together, that's when you give customers the most bang for their buck."

Office 2007 is more intuitive and easier to use, with a "ribbon" bar that makes many features immediately accessible. One of the biggest attractions is that Office 2007 also better supports and integrates with other new products and with new versions of server products, which have been somewhat overshadowed.

"This is like the perfect storm of new product releases," says Townsend of Information Strategies. "You have the big fish in Vista and Office, which affect lots of users. But they are pulling behind them all these major revisions of server products," many now more tightly integrated with Office. In fact, certain applications and features of Office work only when used with the Office System servers.

Office Communications Server 2007, for example, will allow workers to initiate a phone call from Office 2007 applications, such as Word, Outlook or Office Communicator, by clicking on a colleague's name to determine his or her availability. "The whole unified communications process will start to take hold in 2007," Sorensen believes.

Better Collaboration
VARs see a lot of opportunity in helping SMBs use these collaborative tools to better their bottom line.

"Realtors can do things like using InfoPath and a tablet PC to get signatures on documents while they are in the field," Sorenson says. "Customers will pay for that. If they are able to sell a house in a matter of hours instead of a matter of days, that makes a difference."

The tool that has VARs most excited is Microsoft Office SharePoint Server 2007, which enables document sharing and workflow collaboration. Although SharePoint is far from new, in the new version Microsoft has more closely integrated it with Office. The combination of the two provides comprehensive content management, enter prise search and coordination of business processes.

"SharePoint is, in my opinion, the greatest piece of work done by Microsoft in a long time, and it's particularly under-used by small and medium businesses," Sorenson says.

Nathan Hiscock, practice leader for Microsoft technologies at INRANGE Consulting, also sees a lot of opportunities. "Office 2007 takes Office from a stand-alone productivity tool to an enterprise application, with things like SharePoint and PerformancePoint. All of a sudden you can share info, and you have all these great products that are highly integrated with Office." Once customers move to Office 2007, there is a great opportunity for cross-selling. "This allows us to walk in and provide a business intelligence solution."

Such solutions will be particularly attractive to businesses that must document business processes and workflows carefully, such as legal firms or medical offices, Hiscock says.

SMBs in particular are starting to ask for integrated products like SharePoint that will improve their productivity, says Keith Sheppard, technical director, NT Concepts. "Every office is trying to find new ways to centralize and share information," he says. "We actually did a lot of prototyping using the beta release of SharePoint."

Townsend has had the same experience. "We had SMB customers who contacted us six months ago and said they want to adopt SharePoint, but wanted to wait for the new 2007 releases of Office and SharePoint," he says. The VAR had some projects deployed to customer sites within two weeks after the 2007 products started shipping. Says Townsend, "That's serious uptake."

Getting Up to Speed
Whether customers want to upgrade to Vista and Office 2007 in two months or two years, they need to understand the products' capabilities and potential to improve their business operations.

"There's an interesting challenge in helping our clients sort out what to do with this new Microsoft technology road map," Townsend says.

Indeed, there are five different editions of Vista (including one for small business) and eight different suites of Office 2007 offering 14 desktop applications. So clients will look to VARs to help them decide which packages to buy and how to deploy them, says Ed Becker, president, BeckITSystems.

Some of the server technologies, such as SharePoint® and InfoPath,® have been available for years, but the average user doesn't know they exist. VARs "have done a poor job of educating businesses about these capabilities," says Sorensen. But Office 2007 and the new versions of the server technologies give solution providers a golden opportunity to show clients their combined power.

It's an opportunity to have strategic discussions with customers about what the new software can do and how they can use it to improve their businesses, says Darren Bibby, senior analyst of global software sales channels at IDC. He calls it "the thin edge of the wedge." The door is open for solution providers to come in and satisfy the curiosity of businesses about all the new products.

Customers may also need someone to assess their current hardware and software, and help them prepare for migrating their desktops to Windows Vista. "The key for the partner is to make sure the customers understand the business value of upgrading and feel comfortable making that move. Assessing their hardware and software compatibility is an important step in that evaluation." says Microsoft's Doi. "Once they reach that level of comfort, there's a big opportunity not only to sell Windows Vista, but to offer other products and services that complement it."