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

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

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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 Models

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, it also takes into picture the level of investment a partner can make to support his cloud business.

A direct provider must make a significant investment to grow his CSP business that includes 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 providing 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 getting ROI.

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.

Let’s look at the new requirements enforced by Microsoft:

1. Provide at least one managed service or IP

Microsoft always tells its direct CSPs to offer at least one managed service, unique IP or any customer application built around Microsoft cloud services to add value. Microsoft has been recommending partners to offer value add instead of just reselling the service. So, no selling ‘as is’ solutions now as Microsoft will be strictly enforcing added value.

2. Increase in purchase volume

Microsoft will increase the revenue threshold of partners and might be increasing it further in future. However, the amount may still vary depending upon the region, size of the market etc. Direct CSPs can now expect an increased purchase volume every year, even if they are just starting as CSP direct partner.

3. Active Support contract with Microsoft

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.

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

  • Microsoft Advanced Support for Partners
  • Microsoft Premier Support for Partners

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.

4. Monthly growth and revenue assessment

Those who are currently the Direct CSP partners and will be continuing as one, need to prepare themselves for monthly assessment on performance reports. The performance criteria may include consumption, usage, customer growth, customer satisfaction etc. Direct CSPs must share the steps and activities undertaken monthly to reach targets or to improve the service.

5. Automated billing and customer management infrastructure

Earlier also, Microsoft had advised its partners to use automation and service provisioning platforms to manage billing, management and customer support.

This means Direct CSPs either must build an automation platform themselves or buy cloud automation platforms like RackNap, to manage all business processes with end-to-end automation.

Suggested reading: MSP and CSP best practices guide – How to grow a profitable cloud business?

6. Offer ITIL support

Direct CSPs will be expected to offer a standard ITIL level of support to the customers. This way, Microsoft expects its direct CSPs to solve maximum user queries at their own level. For other issues, they can contact Microsoft, but only if they own an active support contract.

When will Microsoft implement new requirements for Direct CSP partners?

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.

For the current Direct CSPs, they have time till their next anniversary date. For Ex: If your anniversary date is in July, then you must meet the new criterion by June 2019. You can simply check the anniversary date in your Microsoft Partner Center account.

New direct CSP aspirants must wait till August 31st. For them, the new requirement will go into effect as soon as they join.

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 empowering its partners and improving the experience of buying and using Microsoft products and services. In May 2018, Microsoft had announced the availability of Azure Reserved Virtual Machine Instances (RI) through its Cloud Solution Provider (CSP) program. Two months later, the tech giant also brought Windows Server and SQL Server subscriptions under the CSP program. This opened a path to new opportunities for Microsoft CSP partners. Read more here.

The updated partnership terms of the Tier1 CSPs is one more step towards meeting this objective. It would be interesting to see how the partners react to this newfound direct CSP requirement set.

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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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