What partners need to know as Microsoft takes Azure purchasing direct

Vendor's new Customer Agreement is aimed at snaring SMB customers and providing a 'more efficient' prices to clients. Here are the must-knows about it

Microsoft recently announced changes to the Azure buying process, revealing that SMB customers will transact directly with the vendor.

In a post on its site, the vendor detailed its new Customer Agreement (MCA), which in March will become the "primary" way for SMB customers to buy the public cloud offering - replacing existing agreements.

Partner reaction to the news has been conflicted, with some calling it "sneaky" and others questioning the rationale behind the move.

With partners still not entirely sure how the new process will work, we've pulled together what they need to know.

The buying process for customers will be 'streamlined'

In an FAQ document, the vendor claimed that the new agreement "provides a better buying experience with a fully digital agreement and the ability to customise for specific purchases".

"It will give customers a quick, easy and cost-effective way to buy and consume Azure services," it says.

Microsoft claims that the agreement is open to "eligible customers", though it does not specify what type of customers qualify for eligibility.

The MCA will replace the current licensing agreements that customers currently have in place for their Azure services.

Rich Gibbons, software licensing analyst at The ITAM Review, said that Microsoft has done the right thing by giving customers enough advance warning of these changes.

"I've no idea how many customers will be classed as eligible, but for those that are, any time you have to start using a new contract will throw up changes in your internal processes," he explained.

Gibbons views this as a positive change that benefits customers, but acknowledged that some partners may be extremely concerned by this turn of events.

"Over the last few years, Microsoft has announced things that they have then pushed back or decided not to do at all," he said.

"Sometimes they put these things out there to get an idea of the reaction, and they are much better at listening to feedback than they used to be."

Partners will be kept in the loop - just not at the centre of it

The vendor said that partners will play a "critical role" in this new model, and will continue to support customers with pre-sales and post-sales Azure services.

However, Microsoft representatives will be the "primary contact" for customers under the MCA, and should a customer choose to go the managed services route, they must do so via its Cloud Solution Provider (CSP) programme.

"Based on what we know from the information provided, if a customer is buying Azure from a partner, they will no longer buy it from them - they'll buy it direct from Microsoft," explained Gibbons.

"If they are a partner who has built a big services arm then this will probably not be much of a concern for them, but for partners that are more transactional it will be more of a concern."

Not everybody in the channel shares Gibbons' positive reaction to the news that Microsoft would be selling Azure services directly.

Kelvin Kirby, CEO of Technology Associates, said that the vendor may be seeking to gain the same success as it had when it started selling Office 365 direct, but that Azure is a harder product for an SMB to set up without assistance from a partner.

"The problem with this is that most one-man bands can set up Office 365, but Azure requires much more knowledge to set up - it's a solution," he said.

Kirby added that he has recently felt frustrated at the vendor's treatment of partners, outlining difficulties he has had with the process of making a deal through a CSP.

"They are saying they want partners to sell more of their products but now they are making it harder," he claimed.

"We have to go through a CSP to raise a quote. We then have to get the customer to link to the reseller, so if we are linked to the reseller that's how we get the commission but they have made it so complicated."

Microsoft is gunning for the SMB market

The vendor explicitly stated that it was locking its sights on the SMB market with the MCA and that it would be the primary way for those clients to purchase Azure products.

Chris Bunch, head of EMEA at Cloudreach, hailed the new agreement as a significant change for partners that serve that specific market.

"In this case, Microsoft is making life simpler for customers, and automating some commodity work in the billing space for smaller clients," he said.

"It's not applicable for those that buy via highly customised terms or demand a more advanced offering, but it's a signal of direction generally that those who apply the term "VAR" to their business must really focus on the 'V' for 'Value'."

Technology Assocates' Kirby views the changes in a less positive manner, stating that partners will most likely tolerate the MCA but its SMB target base may well throw up challenges for MSPs.

"There are partners who will embrace it around the services, but that is a harder sell if - as I suspect - the idea behind this is to sell Azure to a smaller customer base," he stated.

"The partners will stay because it is mostly their bread and butter and they will put up with it rather than embrace it."

Microsoft wants partners with strong services capabilities

Last year, the tech giant changed requirements to its CSP programme, raising the threshold for direct partners (those that can buy cloud services straight from Microsoft to sell to the end consumer).

These moves could be viewed as the vendor drawing an unequivocal line in the sand about the direction in which it wants its partners to go.

Analyst Gibbons believes this may be the case.

"I think they are trying to say that they want a specific type of partner - a more service-orientated partner, and that they are doing this not necessarily to get rid of partners but rather to give them a nudge that this is the way things are going," he said.

"This agreement might be showing partners what it thinks a Microsoft partner looks like for the future, and helping partners to do the things they need to do now to make sure they are where they want to be the next five years."

Cloudreach's Bunch agreed with this, adding that this news is an important change for those partners who are just reselling and not adding value to clients.

"This drives the ecosystem to add more value - you cannot stand still, and it's great for customers as a result," he said.