Microsoft hands partners Office 365 "sniper rifle"

Partners reckon new promotion will allow them to pick off larger customers wedded to on-premise software

Microsoft is offering its UK partners a $2-per-seat bonus for converting its base of sceptical mid- to large-sized customers to Office 365.

The incentive is applicable to any of Microsoft's 2,700 UK managed customers and comes on top of the Office 365 margin boosts unveiled last month at the vendor's Worldwide Partner Conference (WPC).

Managed customers tend to have between 250 and 5,000 seats, a market where Office 365 penetration is at its lowest, according to Conor Callanan, chief executive of Microsoft partner Core.

"There is a big penetration at the top and bottom ends but some of these [mid-sized] customers do not want to let go of their IT infrastructures," he said. "The incentive will allow a lot more sniper shooting of these customers rather than the previous breadth approach."

Callanan said Core sold 10,000 seats of Microsoft's cloud productivity suite last year, a number it expects to at least double this time around.

"This will mean we get at least $20,000 (£12,800) in additional revenue," he said.

Martin Neale, managing director of ICS Solutions, also welcomed the promotion, saying it would enable his firm to increase its investment in the early stages of the sales cycle.

"This can be quite time-intensive for a supplier and the promotion will allow us to invest a little more," he said.

Running until the end of Microsoft's fiscal year ending 30 June 2013, the UK promotion comes on top of the global hike in Office 365 margins announced in Toronto.

This saw the recurring management lowered from six to four per cent. But Microsoft added that two per cent difference to the front-end discount, which it hoisted from 12 to up to 23 per cent.

Office 365 partners will also soon have the option of taking control of billing, which Neale said would come as a welcome relief for some.

"This is a big deal, particularly if you are supplying a complex managed service, of which Office 365 is a part, and you want a single point of billing. This was not possible before," he said.

In a statement, Microsoft said: "The managed customer base is incredibly important to Microsoft and also presents a primary market for sale of partner services. However, Microsoft recognises that partners are investing up front in the sales process for Office 365 and wants to reward this effort."