Microsoft's UK partner boss on CSP growth and transforming traditional resellers

Joe Macri says the vendor saw 20 per cent of its UK growth come from its Cloud Solution Provider programme last year

Microsoft saw 20 per cent of its UK growth come via its Cloud Solution Provider (CSP) programme last year, according to UK partner boss Joe Macri.

Speaking to CRN, Macri (pictured) said that the CSP programme is becoming increasingly important to Microsoft's wider business, and now accounts for around 12 per cent of commercial revenue for the UK business.

"It is growing the fastest," he said. "The partners that embrace it find it more profitable.

"For us it is a growth driver. CSP is more than licensing - it is around the subscription engine as well as the support engine.

"We continue to have enterprise agreements, but most other licensing types are going away."

Macri said that the growth in CSP is proof of the importance of traditional partners transforming their business and adopting as-a-service models - something he said Microsoft is actively pushing in its channel community.

He explained that Microsoft is looking to engage with new partners, highlighting digital marketing agencies as a new route to market, but also helping current partners adopt the types of solutions that end users are demanding.

"On one hand we have this new focus on new partner types, and on the other hand we have this wonderful ecosystem of partners that we want to transform, and so our customers are encouraging our partners to do that," he said.

"The way I would characterise this is our customers want, and we want, to move away from a transactional engagement."

Specifically, he said, Microsoft is seeing three key trends in its customer base.

"We are hearing three things from our customers," he said. "One is that their industries are being disrupted one by one - it's significant disruption.

"That creates the opportunity for digital transformation. The second thing we have seen is the impact of artificial intelligence as an opportunity. There is a lot of talk around the potential issues with AI, but we can also talk about the positives.

"The third key trend is one that is an inhibitor, not an opportunity, and that is the digital skills gap."

Not for everyone

Macri said that around half of Microsoft's UK partners hold cloud competencies with the vendor.

He claimed that Microsoft is not looking to stop working with these partners, but added that the firm is fully aware that margins in traditional areas are stretched.

"We are seeing the consolidation of fulfilment services, so more and more channel partners are merging, acquiring, and that is heavily consolidating," Macri explained.

"Profit margins are pretty tight in that business model. We see the shift from large, complex outsource contracts to a much more agile outcome-based, cloud-based managed services business. And so coming back to our number one priority of growing our partners' business, it's about how we help them with that transformation.

"About 55 per cent of our competencies and our certified partners are in the cloud. They have embraced this new world, but that means 45 per cent have not.

"We continue to work with them; ultimately there is still an on-prem business out there. A lot of the partner ecosystem you can characterise as lifestyle businesses and so for them the model isn't about growth, they just want to serve their customers in their local area."