Microsoft Starts Clueing In MBS Partners On ERP Discounts

As CRN reported last month, Microsoft will continue to put its Great Plains, Axapta and Navision financial applications out through the smaller authorized MBS channel, and is extending those Solution Provider Agreements (SPAs) to up to 23 months. Previously, the SPAs lasted from three to 12 months.

That gives MBS-authorized channel partners some breathing room. Many had worried that the comparatively margin-rich ERP applications would follow Microsoft CRM into the broader volume channel. In that case, the software would be available through all of Microsoft's volume license options, including Enterprise Agreements (EAs), and sourced through distribution or large account resellers (LARs). The result was that MBS partners, who had sourced product directly from Microsoft, started getting lower margins on CRM sales than they anticipated. (See related story.)

There are currently about 2,700 authorized MBS partners in the United States, a small fraction of the 300,000 total U.S. partners Microsoft claims. And those MBS partners have guarded their access to Great Plains, Solomon and, more recently, Axapta and Navision product lines jealously. Recently, MBS COO Orlando Ayala told CRN that the company could always open up distribution on those products but such a decision is not in the cards, despite Ayala's own contention that Microsoft must move much more MBS volume to succeed.

"Let me be very, very clear. I don't believe the technology in ERP is where you can go to the open channel. It's just too complicated. [There are] a lot of presales issues. It would be suicidal," Ayala said.

The various segments of the Microsoft channel bicker among themselves on the issue.

One partner executive whose company is in both the MBS and Microsoft "classic" camp, says Microsoft's need to drive more MBS revenue means that it will probably have to face up to big distribution changes even in ERP.

"I'm not saying all of ERP products will start going through EAs--some may, some may not. I'm saying maybe there'll be another flavor of EA for these offerings. If I'm in an enterprise selling MBS products, it doesn't seem like a big step for me to start helping them with their EAs as well," he noted.

Of course, that shift would put increased pressure on the dozen or so LARs that made their names selling software in volume and helping companies with software asset management, licensing and support issues.

Microsoft executives will talk more about channel plans and the melding-in-process of the MBS and classic partner programs at its annual partner conference in Toronto later this month.