Microsoft: Office 365 Fee Changes Don't Mean We're Cutting Channel Investment

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Not all changes to channel incentives are negative ones. Last year, for example, Microsoft tripled its fees for EA renewals, Microsoft's Rodriguez said.

A spokesperson told CRN that Microsoft invests $2 billion annually in channel incentives, and that cloud incentives are set to double year-over-year in terms of dollars and as a percentage of the overall incentives mix from fiscal 2013 to fiscal 2014, which ends June 30.

Ric Opal, vice president at Peters & Associates, a Microsoft partner in Oakbrook Terrace, Ill., told CRN he's optimistic that Microsoft will continue to make it worthwhile for partners to sell Office 365 and other cloud services.

"I'm hopeful Microsoft will help partners continue to grow their businesses with incentives, training and practice guidance as they have historically done," Opal said in an interview.

However, Office 365 fee cuts aren't the only issue here. Microsoft has also cut its fees for large account resellers, which it now calls licensing solution providers or LSPs, and that's causing them to compete with smaller partners for cloud deals.

As lines blur between partner types, and LSPs start looking more like systems integrators, Microsoft wants to create incentive models that recognize partner capabilities and their value proposition for customers, according to Rodriguez. In other words, Microsoft partners are just going to have to deal with the heightened competition.

"Many traditional licensing partners now have services and consulting businesses. That's expertise we value," Rodriguez said. "We don't want to dictate to a partner the scope of business they can provide to customers. Incentives are ways to recognize true differentiation and quality and excellence. Sometimes, that can be blurry."

While Microsoft's Worldwide Partner Group wants to enable partners to be successful, some channel conflict is inevitable, Rodriguez said. "We certainly don't want to be a referee in the market, deciding which spot they sit in and what customers they can talk to," she said.


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