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Microsoft introduces new set of requirements for Microsoft Tier-1 CSP partners focused on billing and performance

Microsoft introduces new set of requirements for Microsoft Tier-1 CSP partners focused on billing and performance
  • “Forty-seven percent of CEOs said they are being challenged by the board of directors to make progress in digital business, and this enterprise-wide focus on digital is also being felt by CIOs across industries,” said Jan-Martin Lowendahl, research vice president at Gartner during his session at the Gartner Symposium/ITxpo 2018 in Dubai. *
  • Of the 11 of the 15 industries participating, CIOs ranked digital business/digital transformation among the top three business priorities for 2018. “This shows an increasing digital urgency across industries.” – he added. *

Digital Transformation is becoming a crucial part of every company’s overall business strategy. The digitalization wave is no doubt bringing a lot of change in how an organization and customers interact and do business. Tech giant Microsoft, keeping in mind the growing needs of digital businesses, has updated enrollment requirements for direct billing partners in its Cloud Solution Provider (CSP) program.  They have introduced a new set of requirements for Microsoft Tier-1 CSP partners.

Before we get on to understand these requirements, let’s quickly review few basics.

What is Microsoft CSP Program?

Microsoft CSP program is a platform of opportunity and growth via a recurring revenue model. Microsoft partners can increase their profitability by selling Microsoft products and services like Office 365, Azure, Dynamics 365 and many others.

Here, Microsoft’s huge cloud market opportunity and growth potential are the main drivers of partner participation in the CSP program. The recent reports of Microsoft becoming world’s third-most valuable company in the market is another indicator of its growth.

A partner can choose to be a Microsoft CSP direct partner or an indirect provider based on its ability to meet the requirements of each model. The partners who engage in the CSP program can benefit from five key value tenets.

Microsoft CSP Direct Vs Indirect

A partner participating in the CSP program can either choose to be a Direct CSP or an Indirect CSP. While in Microsoft Direct CSP model, the partner has a direct relationship with Microsoft, in the Indirect model, the partner deals with a Microsoft distributor.

Overall, the CSP program is not just about direct or indirect selling, rather it takes into the picture the level of investment each partner makes in support of their CSP business.

Here, the Direct provider must make significant investments to grow their CSP model that include building own IP (Intellectual Property), automated service delivery provisioning, providing managed services, first level customer support and software.

Here’s a quick look at the requirements of both the models:

Direct CSP Model:

  • Partners need to invest in billing and provisioning systems along with the first level support.
  • Here, MSPs with billing and support systems already in place along with white-labeled marketplace have an edge over others. They can simply use Microsoft APIs to integrate the products in the backend.
  • Direct providers have higher margins as compared to the indirect providers, though it takes considerable time to start earning ROIs.

Indirect CSP Model:

  • They have no infrastructure investment requirements; however, they must have the ability to sell cloud solutions.
  • They have to depend upon the resources of the distributor like a white-labeled marketplace, sales training, automated billing systems and sometimes support too.
  • They focus more on the product license margin but can develop their own IP too.

The new set of requirements for Microsoft Tier-1 CSP partners

Microsoft, via an email, sent on 10th May, has informed its direct CSPs about – the new set of requirements for Microsoft Tier-1 CSP partners to participate in the direct model and the rise in the associated costs.

Under the new partnering model, Direct CSPs beginning from September 1st will need to buy one of the two levels of support contracts with Microsoft – Advanced Support for Partners or Premier Support for Partners. Per the industry reports, Microsoft will be soon instituting revenue thresholds as well.

1st Tier CSPs will be required to demonstrate some key capabilities like at least one managed service, IP service or customer solution application. This also means that the direct CSPs must maintain their billing and provisioning to manage the customers in the cloud.

With this move, Microsoft advises Tier-1 partners who have the capabilities to meet the new requirement, stay in the business while encourages others who have the scale to invest time in Tier 1. They can do it by building their own IP and a good billing structure.

During this time i.e. till August 31st, Microsoft will not be adding any new Tier-1 partner into its CSP program, per the trade analysts.

The support plan options per the new set of requirements for Microsoft Tier-1 CSP partners are:

The Advanced plan will include features like – response time of less than an hour for critical issues of Microsoft Office 365, Microsoft Azure, and Microsoft Dynamics 365; service account managers acting as support advisors; ability to manage support incidents on customer’ behalf and proactive training.

The Premier Support plan will be a comprehensive support program with end-to-end managed support across the entire Microsoft platform. This includes fastest and prioritized response times; dedicated technical account manager; onsite training and workshops for the development of new technical capabilities; proactive services to attract new customers; new cloud-enabled services to explore potential growth areas.

Below is the full text of the email that Microsoft sent to its Direct CSPs:

Direct CSPs

Bottom Line:

Microsoft has been continuously focusing on improving the experience of buying and using Microsoft products and services. The updated partnership terms of the Tier1 CSPs is another step towards meeting this objective, not to forget the fact that it will be empowering for the partners too.

It would be interesting to see how the partners react to this newfound direct CSP requirement set.

Direct CSPs have time till August 31st to review and meet the new set of requirements for Microsoft Tier-1 CSP partners.


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