Microsoft partners reveal what they think about the upcoming changes to Azure offering
From 21 July, all new Azure business in the cloud solution provider programme must be transacted over the new commerce experience via the Azure plan offer
Microsoft partners have largely welcomed the upcoming changes to its Azure offering and purchasing, despite others raising concerns about the impact they will have on some of the vendor's smaller partners.
The tech giant launched its new commerce experience for Azure in the cloud solution provider (CSP) programme back in November 2019, but 21 July marks the first hard deadline for when customers must start using it.
From that date, all new Azure business done by partners in the programme must be transacted over the new commerce platform via the Azure plan offer, Microsoft's pay-as-you-go Azure offering, with the old offer unavailable to new customers and business from then onwards.
It will be followed by a second phase next year where incentives and partner margin opportunity will be removed from the previous Azure offer, before a third phase where any remaining customers on the previous offer must move over.
But what are the changes, and what do they really mean for partners and customers? CRN spoke to several of Microsoft's partners to get the lowdown on how they are dealing with the changes and their thoughts on how they will affect business.
And while optimism has been widely expressed by partners, worries have been voiced over how smaller partners will manage the complexities of moving over, while one partner suggested it is part of a long-term move by Microsoft to take over the transaction process completely.
The changes
Some of the big changes in the new commerce platform are focused on pricing and billing, including a move to monthly billing date alignment and a more consistent, common pricing list and engine which will be based on the US dollar for partners and customers across the globe.
Microsoft says the move to Azure plan in the new commerce platform will "streamline the customer experience" while enabling partners to "broaden their influence and further help customers to digitally transform".
Partners will be able to offer customers "the latest innovations in Azure at the same time they're available through the Microsoft website or through a Microsoft field seller", the company says.
They will also gain access to tools like Azure Cost Management and Azure Lighthouse, Microsoft's multi-tenant management tool which it says provides "higher automation, scalability, and enhanced governance across resources and tenants".
It also adds that some of the biggest opportunities in Azure plan and the new commerce platform are around being able to introduce value added and differentiated services "that meet the changing digital landscape".
The highest margins around added services are in "managed services; specialised business application development and deployment; and projects that require planning, implementation, integration, security, and compliance," Microsoft says.
There are also changes to incentives, with the current transactional margin for Azure in the cloud solution provider programme being replaced by a services managed discount, or partner earned credit, which rewards partners that provide "value-added services that generate sustainable profitability".
It will be given by a discount on the Azure CSP invoice to partners who are billed by Microsoft and is also associated with the customer's CSP Azure estate via admin access, with Microsoft stating that the change will "increase services-based profitability".
Here is what some of Microsoft's partners had to say about the benefits of these changes:
The positives
The changes to billing and pricing under the new commerce platform were lauded by several of the partners CRN spoke to, including Vuzion's managing director Michael Frisby.
"I think the move to whole month billing is really good. That helps us as an indirect provider and for our resellers to simplify the billing model," he said.
"So, we know by the 10th or the 11th of the month what the consumption was for the previous month, and it just makes it easier for those billing cycles into customers to line up. It means you can align your revenues and your costs much more simply as a business."
This is also something echoed by Tracy Stanning, CANCOM's head of alliances and partners, who believes the move to Azure plan and the new commerce experience will provide "lots of additional benefits".
"Customers will no longer have individual Azure subscriptions to manage, which basically means as part of that, that the invoicing that they have now will be all under one invoice," she said.
"From an invoicing and billing perspective, that means it's less administrative for the customer."
She also praised the "flexibility" the move to the new commerce platform provides around adding services and said that the new billing gives customers "an element of control".
SoftwareONE's UK, Ireland, Iceland & Africa services director, Andy Dunbar, spoke highly of the increased focus on value added and differentiated services, claiming the company had long been pushing Microsoft to allow for more flexibility around what partners can offer customers.
He said the changes would mean "more transparency" for customers, adding that the introduction of the Lighthouse tool was a "no brainer".
"That's just given us a lot more control, visibility and transparency across multiple customers, whereas before, you have more than ten (customers) and it's a management challenge," he said.
"Customers want to see the costs of what they're buying, they want to have the flexibility to allow them to scale up and scale down and they want to challenge their providers to make sure that the providers, the MSPs are really driving value for their customers as well.
"We're seeing the potential benefits and from a transparency perspective, it allows us to start looking at looking at layering on some value-added services as well. We genuinely believe this is a good change for our shared customers with Microsoft."
Vuzion's Frisby felt positive about the move to partner earned credit and away from a transactional margin, which he said will "encourage good behaviour" among partners.
"Microsoft's view is if you're not providing any value, why should Microsoft provide margin?" Frisby explained.
"And that's a story they've been telling for many years now around moving into managed services and making sure you're providing a great wrap on top of the Microsoft technology, as opposed to just being a transactional provider."
Jack Watson, Bytes' managing director, was also one of those to support the move to new commerce and Azure plan, claiming it "makes a lot of sense" to move away from open licensing and that lots of the changes "are really good for the customer".
But he and others also highlighted some concerns around the move, particularly for smaller partners…
The concerns
Despite supporting the move to Azure plan and the new commerce platform, Watson was wary that smaller Azure partners, which Bytes is not, could experience difficulty in making the move over.
He believes partners will have to commit a "significant amount of energy" into moving from the old plan to the new one, which will prove more difficult for smaller partners who "might not have the scale and operational agility".
"I think for a lot of partners there's a challenge in terms of, first and foremost, having to manage a legacy Azure, sometimes called global Azure, while also converting or signing up to Azure plan," he said.
"Personally, I think that might end up making more CSP partners and historically, open licencing partners, use more of the scale partners, and actually adopt an indirect CSP model whereby they're coming to the us [Bytes] as aggregators of service and platform providers so they can concentrate more on the end customer and we'll do all that operational legwork."
The potential difficulty for smaller partners is a concern echoed by Kelvin Kirby, CEO of Technology Associates, who went further in his criticism of the vendor and said he was still "in the dark" about the Azure changes, stating that "sufficient clarity" was needed for partners to better understand what they mean.
Kirby said the business is not a "huge partner in terms of transacting Azure business" but his interpretation was that it could be seen as a move "to cut out smaller partners from the transaction process" and believes Microsoft will seek to "take over the transaction process completely" longer term.
"At the end of the day, I'm not sure that's a good move for customers," he said.
"Because you really need to have those customers, or you need to have those partners, to provide the service and the consulting advice that is necessary to go around the adoption of Azure.
"Microsoft keeps coming out and saying they are making it easier for partners to transact stuff, but actually they're not.
"I think Microsoft, generally, is making a move to really put all of their efforts and time and energies into larger partners anyway because, obviously, that's where the licencing revenue is greatest."
Dunbar added that he could "empathise" with some of Microsoft's smaller partners having to manage the switch and that some have gone to SoftwareONE for support in doing so, while Frisby also said he had seen some partners go to Vuzion for help because of their indirect providers "not being on top of Azure plan".
Microsoft did not wish to add further comment in response to these concerns but highlighted this blog post containing more detail on the adoption of Azure plan and the new commerce platform.