As if 2020 wasn’t hard enough for service providers and MSPs, Microsoft is making new eligibility requirements for CSP Direct partners starting January, 2021. This was announced to all partners earlier this week.
What are the new eligibility requirements?
New revenue target of 300K (USD) in CSP sales during the preceding twelve months is one of the major changes. CSP partners will need to meet this new requirement at the anniversary date of their support plan. In other words, if you have a support plan coming up for renewal soon and do not meet this requirement, you must put on your selling shoes and get to work or look at other alternatives. Active support plan (Premiere Support as an example) is also another requirement.
I think it is important to understand your options. If you don’t meet the requirements you must move to the CSP Indirect program. If you are close to hitting your 300k in sales, start looking at CSP perpetual licenses as a new revenue stream. Open licensing is going away, maybe perpetual licenses could be an option?
If you are CSP Direct authorized for the QMTH program only, this change will be significant. As part of QMTH, you must be CSP Direct authorized.
If you have questions on how this change will impact you, please email firstname.lastname@example.org
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Microsoft announced a new way for traditional enterprise clients the ability to purchase perpetual based licensing through the CSP program.
Historically, perpetual licensing fell into the Open Licensing or Enterprise Agreement bucket in which customers were offered volume discounts and software assurance benefits for Microsoft software they purchased. A customer can still purchase under these programs, but it is clear Microsoft is heading towards CSP across all licensing programs. You can read about it here (you will need a Microsoft account to sign in) https://partner.microsoft.com/en-us/resources/collection/software-in-csp#/
Is this a good thing? I think it provides flexibility regarding who you purchase from and options for products you cannot move to the cloud. This opens the door for VARs to sell into enterprise accounts that traditionally were only sold through the larger LSP resellers. In addition, there’s no partner incentives or support included when an enterprise customer purchases licenses through an Enterprise Agreement or Open program like there is with CSP. In a lot of ways, CSP makes a lot of sense. So what are things that you should watch out for when looking at CSP over an EA?
CSP perpetual licenses are sold without Software Assurance (SA). SA is a key ingredient if you want to move workloads to the cloud. With CSP perpetual, this is an on premise solution as oppose to cloud. That being said, under the same CSP agreement, you could buy Office 365 or Windows Server subscriptions which will allow flexibility for hybrid type environments.
The other thing to consider is upfront payments. With traditional CSP, you are buying a subscription versus buying perpetual. With CSP perpetual, you are paying upfront and you own that license. There’s no minimum requirement and of course no maximum. In short, this means there are no volume discounts.
There’s a lot more information coming with this new announcement. We will certainly keep you updated. I will be curious on your thoughts! Drop us a note or leave a comment below.
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Have an EA up for renewal and don’t know what to do? Listed below is a brief breakdown of what you can get. I like CSP Direct over an EA for a lot of reasons, the main being flexibility. CSP Direct is like an a la carte model; you do not pay upfront for the whole year.
- 1 – year commitment
- Pay as you go versus yearly.
- Minimum 20 seats
- Ability to fluctuate user counts
- Account support – Partner provide support as well as leverage their Premiere Support agreement with Microsoft at no additional costs.
- Decrease user counts
- Increase user counts
- Products – all cloud subscription licenses
- Self – Service – Partner (LAR) will provide a platform to manage your subscriptions
- 500 seat requirement
- 3 – year commitments (annual billing)
- Annual true ups
- Microsoft credits
- Support – basic support (additional for premium)
- Decrease – once per year. Cannot decrease perpetual products or reduce your O365 subscriptions below your original commitment
- Increase user count – Anytime
- Products – All Microsoft Products.
- Self -Service – O365 portal and VLSC
If you are under SPLA, CSP Indirect may make the most sense to reduce your costs. Check out www.mscloudlicensing.com to learn more or www.splalicensing.com
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Licensing is always confusing, ensuring you receive incentives can be just as complex. You are already selling the Microsoft Cloud, you should get credit for it. Below is a list of terms you should be aware of and understand what each one means.
Digital Partner of Record (DPOR) associates servicing partners to a Microsoft cloud
subscription. It is an on-line capability to attach a partner to a customer’s Microsoft online subscription. Partners can qualify for competencies and incentives by being the
DPOR and enables them to help customers optimize their usage for desired business
Partner Admin Link (PAL) enables Microsoft to identify and recognize partners who
drive Azure customer success. Optimized for managed services where your organization is acting on behalf of the customer, PAL allows you to associate your MPN ID with the credentials that you use to deliver services within the customer’s Azure tenant. Microsoft can attribute influence and Azure consumed revenue to your organization.
Claimed Partner of Record (CPOR) Online Services Usage Incentive program (OSUM365)
for Microsoft 365. CPOR enables you to create customer associations,
measure your impact, and get rewarded for successfully driving usage with your
Cloud Solution Provider Indirect Reseller Incentive
Designed to reward indirect reseller partners for driving Cloud Solution Provider
revenue to end customers, with a focus on customer adds and strategic cloud
products and solutions.
• Active MPN ID
• CSP Indirect Reseller
• Silver or Gold: Cloud Platform, Cloud Productivity, Small & Midmarket cloud solutions,
• 11 Competencies qualify for the CSP indirect reseller incentive
• Bank & Tax profiles
• 4% on O365, M365 & Azure billed revenue
• 6% on D365 billed revenue
• 10% on Azure Reserved VM Instances (RIs) consumption
• 1.25% on Software in CSP subscription billed revenue
• 6% on Strategic Software in CSP subscription billed revenue
For more information see the FY20 CSP Indirect Reseller Incentive Guide
Disclosure – There are always updates and revisions to every licensing program. This blog is for educational purposes and will update accordingly.
CSP is one of the few programs (outside of SPLA) in which end customers have access to Microsoft technologies but really don’t know how they are licensed. In the end, that’s one of the values of outsourcing your IT management to a CSP provider. If a CSP provider is doing their job, the end customer shouldn’t know that they are buying CSP. All they should know is they are buying a managed service. The rest is on you, the CSP provider, and with every other Microsoft program, there are rules you must follow to maintain compliance and make CSP as seamless as possible. In this article, we will look at how billing works internationally.
The first thing to remember is you can only sell to customers in your region/market. The good news? There are several countries per region. In other words, if you (as a CSP partner) have an account in a country, you could use the account for every country in that region. As an example, if you have an office in the UK, you can transact with a customer in Italy because by Microsoft’s definition, Italy and UK are in the same region. What happens if you are not authorized in your customer’s region?
Let’s provide an example. Manage IT Services is CSP indirect authorized provider in the US. They have an end customer who wants to switch from their current provider in Australia. The existing domain is attached to the customer’s local physical address in Australia. How can the Manage IT Services support this customer?
They have three options:
- If they are CSP authorized in Australia, they can manage it from their Australia office. CSP is regionally authorized, so a transaction via the partner portal (in country) would be required. The customer’s invoice location listed on the AU tenant would also mean the CSP partner would also have to be listed as a CSP provider in region.
- If they are not CSP authorized in Australia, they can partner with another CSP partner in AU. The CSP partner would provide the licenses, Manage IT Services would provide the support. This is not a very viable solution for several reasons (explanation further in this article).
- Have the end customer use a physical US address (if they have one). CSP is a monthly contract, so they could discontinue the AU tenant and start a new one in the new location. They would have to prove to Microsoft they in fact do have a US location. The problem remains that they are in Australia. There would be concerns over latency issues and support due to challenging time differences.
To sell into different markets outside of your own, your organization must create multiple accounts. Like other Microsoft programs, they require a physical address. In the case of CSP, the physical address must be attached to each domain. In the example above, the end customer has a domain tied to their AU location, making it very challenging for the US provider to transact CSP. If you are a service provider who operates globally, you might want to consider becoming CSP authorized in other regions.
I mentioned earlier that a CSP provider in the US can partner with another CSP partner in Australia to manage the licenses. There would be a two-step process for resolution support. The local partner in Australia would have to be listed as an additional delegated admin on the end customers tenant to be able to escalate to Microsoft for support. The bigger issue is latency and time challenges. To add another layer to this complex solution, the customer would receive multiple bills (CSP and you the MSP). Sounds fun, doesn’t it?
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