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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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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CSP by its nature is designed to provide different licensing and support options for the channel. In this post, I want to highlight a couple of those options and how you can partner with other CSP providers to satisfy your end customer.
According to the Microsoft Cloud Solution Program Guide, the CSP direct partner must invoice the licenses directly to the end-user. That’s fine in many instances, but what happens if you have customers globally, but only authorized in the USA? In other words, if you are authorized in US, but have a customer in Australia, how can you resell CSP to that end user? In walks our friend ‘Multi-Channel”.
Option 1: The end customer in Australia could set up shop in the US and use an US address to receive licenses leveraging your CSP USA authorization . The problem with this (especially in Australia) is latency issues and billing. The address on the invoice is where the datacenter location will be but the users will still be in Australia.
Option 2: The CSP authorized reseller in the USA could partner with a CSP reseller in Australia to procure the licenses. In this model, the USA CSP partner would provide all the support for their Australian customer, but another partner would provide the licenses.
I like option two the best. Most MSP’s and other solution providers do not make money from the licensing, they make money from supporting the solution. Leveraging another partner will take care of the customer and both parties will be happy. What do you think? Is Multi-Channel a good idea?
Thanks for reading,
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?
Thanks for reading,
I think the acronym, “MSP” is the new “Cloud”. From the beginning of the century and carrying on through today, the term “cloud” was thrown around faster than a Nolan Ryan fastball (horrible). “You have to get in the cloud! “Hybrid Cloud!” “We need more Cloud!”
Why is “MSP” the new cloud? For one, everyone wants to be a managed service provider. If you really want to upset a reseller, call them a reseller. What is a managed service provider according to Microsoft? I am not sure it is clearly defined, but I’ll give it my best shot. A managed service provider is an organization that performs three primary functions as it relates to helping end users migrate workloads from an on premise solution to another data center provider (cloud). The three functions are:
- Cloud Assessments – help end users determine how ready they are to offload workloads and determine which workloads they can even migrate. This includes ROI analysis, training, and perhaps even SAM. (Software Asset Management)
- Cloud Enablement – perform Proof of Concepts (POC), System Integration, and compliance.
- Cloud Operations – Network monitoring, bandwidth, backup, security, and assist with troubleshooting.
This is exactly what Microsoft is looking for in a CSP partner. MSP’s bridge the gap between the end-user and the data center provider (either Azure, Office 365, AWS, or some other 3rd party hosting partner). One unspoken function of a MSP is not just migrating customers to the cloud, but moving them back from the cloud. You can argue that the three functions mentioned can help customers migrate from the cloud back to on premise. Just replace “cloud” with “on premise”and you get the picture.
Another trend is how the cloud partner ecosystem has also evolved to include the MSP. MSP’s are partnering with other MSP’s to provide a fluid customer experience; it’s the same with CSP. A service provider, who perhaps has the customer relationship, can partner with a CSP Tier 2 partner to perform those three functions on their behalf. To Microsoft, they don’t care how a customer migrates, just that they migrate and have the support to help them manage it.
I remember when BPOS (the old Office 365) was first launched. The Microsoft account teams had a huge quota to have customers sign up for BPOS. It didn’t matter if they actually consumed it, as long as they signed up for it. Microsoft had thousands of end users sign up for BPOS, but very few actually deployed it. (very few knew they even signed up for it). Microsoft learned a lesson from that initial project – it doesn’t matter who signed up, it’s who’s consuming it that matters. In walks are friend Mr. MSP.
The days of being a transactional reseller are over, if you are not in the MSP game, find someone who is…and fast!