Mixed response to Microsoft rebate shift
Decision to shift rebates towards renewals could hurt margins but also make things simpler, claim LAR partners
Microsoft's recent changes to its Large Account Reseller (LAR) rebate structure have met a mixed response from the channel, with some claiming that it will cost them "significant" amounts of money and others welcoming the changes.
The rebate funding shift was announced on Thursday at its Inside Track partner event, and will see the money it sets aside for Management and Deployment LAR rebates shifted towards Renewal and True Up fees.
The new rule is understood to only apply to new contracts as of January 2013.
Microsoft claimed in a statement that it made the decision "based on feedback from LAR and Enterprise Agreement (EA) Direct Advisor partners", but Mandi Nicholson, sales director at LAR Bytes, said that this was not the case.
She said: "We were disappointed not to have been consulted on this, and we were not given a chance to feed back", adding that the projected shortfall would be "significant".
She said: "It will make a big difference to us. Microsoft's priority is to get [existing] agreements renewed, but nothing is there to generate new business... They pitched it to us as a way of lowering monthly overheads, but we thought that the rebates were good all along."
However, SoftwareONE's managing director Zak Virdi said that monthly invoicing on rebates was problematic, and for this reason, welcomed the change.
He said: "Broadly speaking, it is a good thing when you think about simplicity. We used to get monthly fees but that meant needing finance and logistical overheads to do the invoices every month. We have been feeding back [consistently] and... they are listening."
LARs contacted by ChannelWeb said that the new rebate funding shift will drive behavioural change in LARs by encouraging them to renew contracts, but Kelway's head of software Gareth Johnson said that this could be hard for some LARs.
He said: "As Kelway has a well-established solution and SAM practice, I feel our engagement with our customers, driving renewals, compliance and deployment will ensure we can redeem the new fees. Any LARs which do not have this capability will find the new structure quite difficult."
Pierre Hall, solutions director at LAR Computacenter, said that the change in rebate structure aligns well with his firm's corporate strategy, but said that frustration exists around the time it takes Microsoft to make its changes.
He said: "There is a lot of trial and error on these incentives, and it is difficult for us to plan around it. On balance, we see what Microsoft is trying to do; it is just taking its time in doing it."