Microsoft set to revamp Office 365 channel set-up

Sources indicate partners will now be asked to work through distribution, with end-user support also backed off to the channel's middlemen

Microsoft is set to shake up the way its Office 365 cloud suite is bought and sold through the channel, with distributors to be handed a sales and support remit, ChannelWeb understands.

At the moment, end users buying Office 365 outside of an existing Enterprise Agreement effectively purchase the software direct from Microsoft, with the vendor providing billing and support. Resellers attain margin – an 18 per cent upfront rebate for the first year and six per cent for each year thereafter – by being cited as the Partner of Record by end-user customers.

Under the new system, ChannelWeb understands VARs can work through distribution, essentially buying and selling Office 365 as if it were a standard on-premise SKU. Distributors will also now have to provide support, sources say, but Microsoft will retain responsibility for billing.

Full details of the shift are expected to be unveiled at the software giant's Worldwide Partner Conference in Toronto in July.

Channel onlookers spoken to by ChannelWeb gave the proposed move a decidedly mixed reaction, with some claiming it will reduce the complexity of the current arrangement and increase the level of engagement channel partners have with end users. Others harboured concerns about margin retention and questioned the wisdom of devolving more power to distributors.

Microsoft declined to comment.