Industry Insights

Worried About the New Microsoft Direct CSP Requirements? Here’s What You Need to Do Next

By Ideas @ AppDirect / Jul 27, 2018

Last week at its annual Inspire conference, Microsoft highlighted significant changes to its Cloud Service Provider (CSP) program—and a looming deadline to meet new billing, provisioning, and support requirements. Whether excited or worried about these changes, many CSPs feel a strong sense of uncertainty. How can they meet these new requirements, and even more importantly, is it worth it? 

Here we take a closer look at the requirements, what CSPs need to meet them, and why now is no time to panic.

New Requirements for Direct Bill Microsoft CSPs

Before digging any deeper, it helps to understand the specific changes that Microsoft is making. Starting on August 31st, 2018, Direct CSP partners must meet the following requirements before their CSP onboarding anniversary date:

  • Services: Have their own billing and invoicing capabilities
  • Services: Have at least one related managed service offering
  • Support: Purchase either Advanced Support for Partners or Premier Support for Partners packages from Microsoft, requiring a minimum $15,000 annual commitment, and offer end customer support
  • Performance: Meet a minimum annual revenue threshold that has yet to be disclosed
Source: Microsoft Inspire 2018

In a statement, Microsoft said that the changes are “essential to help grow cloud businesses and achieve more active, satisfied customers.” Reading between the lines, the company’s aim seems to be driving consistency and efficiency in its channel model by streamlining its Direct CSP partnerships. 

What CSPs Need to Meet the New Requirements

AppDirect was on the ground at Inspire, and based on the conversations we had, it’s clear that Tier 1 CSPs are actively searching for options to meet the new requirements. The solutions that CSPs will need going forward—billing, provisioning, etc.—are clear, but the specific features are still an open question for some CSPs. Here are three key areas to consider.

Tier 1 CSPs are actively searching for options to meet the new requirements.

A Strategic Approach to Billing
 
CSPs need flexible, automated billing that will allow them to stay focused on serving the business needs of their customers. The sheer volume of SKUs in the Microsoft catalog demands automation and flexibility that legacy Tier 1 CSP systems, manual processes, and spreadsheets can’t handle accurately, much less in real time. Given the dynamic nature of pricing and SKU changes with the Microsoft portfolio, partners are vulnerable to escalating margin and revenue losses from incorrect pricing or invoicing without robust automation capabilities.  
 
A Single Platform
 
Microsoft is obviously the focus of Inspire, but many CSPs are also managed service providers (MSPs) that offer other third-party software solutions and services to complement their Microsoft offerings. In fact, Direct CSPs are required to have at least one managed service, IP service, customer solution, or application. 

These CSP/MSPs manage and deliver this diverse portfolio using several different partner or customer portals, each with a different login, merchandising format, checkout and billing process, and overall user experience. MSPs may also have a different platform for offering their own services or applications. This not only makes it difficult to create bundles, but the overall complexity of so many portals is a huge obstacle. To reduce operating costs and improve customer satisfaction, CSPs need a single platform to deliver a consistent end-to-end experience across all of their offerings.

CSPs need a single platform to deliver a consistent end-to-end experience across all of their offerings.

Maximum Flexibility
 
There are thousands of Microsoft CSPs, and competitive differentiation is a real concern. When launching a cloud service marketplace, the more flexibility CSPs have to add modules and configure settings beyond what many out-of-the-box offerings can provide, the better. This can not only help CSPs showcase their unique brands, but also provide a better customer experience.
 
Finally, to maximize flexibility, CSPs also need a truly cloud-native environment, one where they’re guaranteed to have access to the latest technology and capabilities without the burden of hosting and managing a platform that they need to learn how to customize.

With Change Comes Opportunity

Some platform providers are ringing the alarm over the August 31st deadline, urging Direct CSPs to simply go indirect. However, there are still considerable advantages to being a Direct CSP, including better margins and incentives, greater operational efficiencies and flexibility, as well as more control over the customer experience.
 
The bottom line is that the changes to the Microsoft CSP program are an opportunity for CSPs to think long term about their business models. How can you best market, manage, and monetize services and recurring revenue streams from Microsoft, as well as the other cloud solutions you offer?

Microsoft CSP program changes are an opportunity for CSPs to think long term about their business model.

Next Steps: Questions to Ask

Clearly, adding automated billing and provisioning capabilities are the most critical for meeting the new CSP requirements. However, that decision should be made in the context of adopting a unified platform approach for digital commerce.  

As you consider your investment choices, here are three key questions to ask:

  • Can my billing engine handle the dynamics of pricing, provisioning and invoicing, not just from Microsoft, but my other offerings?
  • Can I deliver a consistent end-to-end commerce experience—including billing and provisioning—across my portfolio of solutions and value-added services?
  • How much flexibility do I have to brand and merchandise my offerings?

If you’re wrestling with any of these questions, want to learn more about your options, or need help navigating the new requirements, please contact us. We’re here to help.

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