Microsoft Office 365 Open Lets VARs Control Billing, Revenue


Another benefit, no less important to Strategic SaaS' MacNeil, is the expected increased profitability that the Open program brings to long-term relationships.

"The first year will be slightly lower, but subsequent years will be higher. That's very good for us. Our business model is designed to have recurring revenue. In the current model, there's very little opportunity for long-term support for partners," he said. "We've been waiting for this for a long time. This is where we needed to be two years ago. We're excited to see how it plays out in the market."

Microsoft hopes to double the number of VARs selling Office 365 to 40,000 by July, when its Worldwide Partner Conference takes place in Houston, Microsoft's Roskill said.

"We're at a point where we are ready to scale this. The data centers are ready to scale. The distribution mechanisms are ready to scale," he said.

"Very clearly a set of partners are saying they want to control billing and recognize top-line revenue and do a single bill. We don't know what number it is, but a number of partners have said 'We're not selling Microsoft cloud offerings until you give us that capability.' The Advisor model has done quite well, so [resistance] has not been a monumental blocker, but we want to fit into a partner's business model, not the other way around.

Many VARs were reluctant to sell Office 365 because it didn't fit well into the compensation models they have for their sales force, Synnex's Moyer said.

"Now it's very aligned to Open licensing. You have a one-year SKU and it gives you more flexibility. It's not quite monthly [billing] but it's not a huge leap to understand it. It's a slight business model change," Synnex's Moyer said. "I applaud Microsoft. This was a tough one for them I know. It took time, but they did listen to the channel."

PUBLISHED FEB. 27, 2013