Important changes to partner margin for Azure reservations coming in 2023

[lawtonma]

A joke, surely?

Who in Microsoft comes up with these ideas? I they trying to completely disintermediate the partner channel?

These benefits will change so that partners will continue to receive the Azure incentive but will no longer receive margin pricing

And love the cheesy sign off - tongue in cheek surely?

Let’s do great work together.

Your Microsoft Operations Team

Am I the only one to think that we have embrace RI's with our customers to reduce price but also secure long term commitment, and now being penalised for it?

[Anna_V]

@lawtonma I'm new to this world and trying to understand the possible impact  - is this margin going away only for legacy reservations? Seems that there is no margin for NCE ones, or do I get it wrong? Thanks!

[JanoschUlmer]

@Anna_V The margin is removed for all new Azure reservations sold áfter Jan. 1, legacy and NCE - though selling legacy reservations would imply customer still has legacy Azure subscription, for which you would not get any margin nor incentives at all since Feb. 2022, so those should be converted to Azure Plan/NCE anyway.

[sbeckett]

Can we take this to mean that Microsoft no longer need us to sell Azure any more? Or do they think, as with M365, that no one has a choice? We're actively looking at other things not because they're better (which they're probably not) or we make more margin (which we probably won't). We're doing it because the clients are watching Microsoft's current behaviour and asking us if there's anything non Microsoft they can use. 2023 will be very interesting to see what happens to M365 and Azure growth in the SME market.

[JanoschUlmer]

@sbeckett : No, this obviously not the intention. Though it is of course true that customer generally have the choice on how to buy Azure - via a Partner, via Microsoft Account team, Online via Credit card. As a Partner you can associate yourself with the Azure consumption in all three options and get incentives - and most incentives are granted for CSP Partners, and within CSP highest rate is for  selling Azure reservations (or Azure savings plan, for which there is the same incentive rate). 

What exactly do you refer to by the behaviour the customer are watching?

[sbeckett · Accepted solution]

Hi Janosch. Thanks for continuing to engage, I know a lot of what we (well I) say can be quite negative, and I don't like to take my frustration out on anyone. 

The price increases, the reduction in the flexibility to decrease license commitments without paying even more money, the 12 month commitment they see as an unnecessary burden and it generates more admin for them and us. The fact that as their CSP provider we are also on the hook for 12 month commitments even if a customer stops paying us they think is unfair, especially as we can't even move those licenses to another client.

Add to this the alignment with $ rates that's likely coming this year which means that the cost of M365 and Azure will not be predictable and may change every 6 months, so clients who have staff in just one territory (i.e. 99% of the clients that small partners look after) will have to make allowances for that change, for something _no other UK cloud supplier does_, at least to my knowledge. It just seems unnecessary.

And before we start talking about incentives, we should note that in order to receive incentives after next year we will have to, more or less, meet the equivalent requirements of Gold partner membership, and pay the Gold partner rate which is approx 3 times the silver rate that many small partners are on. This will not be viable for a lot of small partners, who will be unwilling to spend time and money on a programme that can change every year to something else.

Small partners have driven massive adoption of M365, and now because our client bases tend not to need so much in the way of Azure and Dynamics as in the main it doesn't fit their requirements, which are entirely met by M365, we are surplus to requirements and get cut off at the knees. Which is totally understandable, Microsoft have too many partners and they're going to want to get rid of the ones that don't benefit them as much any more. I just wish Microsoft were honest about it. If they genuinely don't understand how these changes adversely affect any partners other than those who are fully invested in simply selling Microsoft services (as opposed to those thousands of MSPs and consultants who support these businesses in using Microsoft's software) then frankly that's on them, because we're here, for 15 years we've tried to have some dialogue and input but sadly big partners talk louder for longer than we can.

Kind regards,

Simon

[gavinnixon]

I couldn't agree more @sbeckett. A partner eco-system where they simply don't care about all the SMB based partners that have enabled the adoption of cloud tech over the last 10 years. Microsoft keep standing up and telling us how important SMB is for them, and then their next move is to completely trample on SMB partners. The new SMB Biz Apps solutions partner designation only counts a point towards deployments when a deal has 125 seats of D365 Sales. That could be a business with 5,000 staff, and they think that is SMB.

Being a Microsoft partner is really becoming a joke. I sincerely hope that people from Microsoft are reading these comments; problem is, I really don't think they care.

Like you say, if Microsoft were more honest about their intentions, I could take it better!

[sbeckett]

Unfortunately hardly anyone comes here let alone any decision makers at Microsoft. In fact the only Microsoft person I've seen posting here is Janosch, which is appreciated but this isn't a technical issue, it's a fundamental board level issue.

We've been Silver partners for nearly 10 years and every year, every Inspire, every Future Decoded, have tried to work out how to communicate with the senior team at Microsoft but there simply isn't a way to do it. So we've tried to explain via our indirect CSP providers but from discreet conversations recently I've found they're not getting anywhere either.

We might be better off on twitter or in their own back garden on LinkedIn but washing your suppliers dirty underwear on social media isn't especially professional...

Simon

[lawtonma]

Simon

I have to take my hat off to you - that is absolutely a heartfelt, concise summary of the key issues we are all seeing with our Microsoft relationships. 

I feel your pain. But I am sure that Microsoft do not really care - I think they have their swagger back and I am not sure that is a good thing for partners.  Maybe we need to look elsewhere……..

[sbeckett]

I agree, I feel like an old man shaking his fist at the (Microsoft) clouds. They no longer need us so they no longer care what we think.

But where to go? Are any of the others any better? We can't even go back to on-prem unless we go open source because the licensing of on-prem MS products is a hot mess too, particularly around Remote Desktop Servers, on which we will no longer be able to run M365 soon.

I'm very tempted to just get clients to drop a credit card on their tenant, and go back to consultancy services, allowing the clients to simply choose what they want to use, and us supporting them. It's old school for sure but I'm glad we didn't go all in with cloud first and virtual desktop etc. and lose the skills necessary to switch back. 

[lawtonma]

Honestly, as an ex Microsoft Partner Manager I find it incredibly sad that Microsoft clearly only care about scale partners, and are not really interested in the small-midmarket partners that are driving innovative solutions with customers. It is not the organisation I worked for 5 years ago. They certainly no longer have a partner survey that is acted upon - when I was there it was part of our scorecard! 

By moving more of the % to incentives it gives microsoft more control over what they want partners to sell..............

[gavinnixon]

No, don't worry, it's also the Biz Apps partners (like us) that are also in that same camp. It really is clear that when Microsoft stand up every year at Inspire and tell us all that their partners are the most important thing, it's simply not true. They are becoming like politicians!

All the recent changes are just too much to handle in such a short space of time for partners. It's clear that they want less partners and want all partners to be enterprise focussed. I just wish they'd be honest and tell us that.

[SimonBeckett]

The thing is they don't even seem to be dressing it up any more. Ever since they acknowledged they just had too many partners and wanted to get rid of some, it's been one seemingly misguided thing after another. It _has_ to be deliberate, they can't be that unaware of the effect it's having? At least the NCE stuff they took a stab at the whole "it will make your customers more sticky, allow you to forward plan, allow us to develop new tools etc." Now they're just kinda going "prices up, margin down, if you don't like it, we're really not that fussed cos there's someone else that can sell our products to your customers"

"Our partners are the most important thing to us" **

** For the next two days after which we will take everything they've told us and do whatever the latest trend requires as long as it suits our short term shareholder goals

[gavinnixon]

I couldn't agree more. The most important thing in all this is our end customers. That's who we put at the heart of everything. Now everything that Microsoft is trying to drive does not benefit the end customer at all. They just want us to sell more seats and deliver no professional services. It just doesn't work like that. End customers need their partners to become trusted advisors, not just licence sellers. The best partners are not just those that sell more licences, they are the ones that put the customer first, and operate with real integrity. It's a shame that's no longer sought after by Microsoft. As long as you're adding net new customers and selling licences, you're the best partner. It's just nonsense!

[SimonBeckett]

Quite right, we've never sold to our customers, especially in return for some sort of short term incentive. They trust us to have their best interest at heart, and working to incentive plans to increase seats, sell extra services, go for more expensive hardware or something not quite right because it's on offer, would leave us with fewer customers, and the ones who were left would just consider us no better than sharp salespeople tying them into long contracts and adding no value at all. Not about to start doing that now, so even if by some quirk we do end up meeting any of these requirements, Microsoft will this year get their way, this is the last year Dynacom, their partner for 16 years in one guise or another, will be a MS partner. I don't think they're worried and I wonder if I'm just wasting my time typing this, but it's always better to vent, without the unseemliness of depositing it on Twitter/LinkedIn etc 

[SimonBeckett]

And there was me thinking it was just the modern workplace partners that Microsoft are no longer bothered about.

I wonder if a large number of partners have decided not to go for the azure competencies and just settle for making margin, so to "encourage" them Microsoft are putting everything into the incentives?