Why One Of Microsoft's Biggest Partners Doesn't Like The Office 365 Incentive Cuts

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Sources told CRN last week that Microsoft has cut incentive fees for large account resellers, which Microsoft calls Licensing Solution Providers, by 1 to 2 percent for fiscal 2014. This is causing channel conflict, as LARs that previously just handled licensing are now going after other partners' cloud services deals, to make up the lost revenue.

Stephanie Rodriguez, director of channel incentives in Microsoft's Worldwide Partner Group, told CRN last week Microsoft doesn't "want to be a referee in the market" deciding which market segments partners can play in.

But Aldrich said he thinks Microsoft has a responsibility to do something to address the issue. "It's not OK for Microsoft to act like partners should fight it out. If Microsoft doesn't play referee, the partner community that actually influences the sale [of cloud services] will be the ones that suffer," he told CRN.

For some partners, however, Microsoft's Office 365 incentive changes aren't that big of a deal. Chris Hertz, CEO of New Signature, a Washington, D.C.-based Microsoft partner whose Office 365 incentives will be dropping, told CRN he makes most of his money from providing services for Microsoft CRM Online, Office 365 and Windows Azure.

"I could see being upset if you've built your business model around incentive fees. But we don't budget or forecast those dollars into our financials," Hertz said in an interview. "These advisory fees are great icing on the cake, but they're not making or breaking my business."


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