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Microsoft Partners Cheer Move To Retain IUR: 'This Is What Partnerships Should Look Like'

Partners tell CRN that reversing the decision to end internal use rights is a smart move for Microsoft, and shows that the company is listening to partner feedback.

Partners are applauding Microsoft’s decision to reverse course and keep the popular internal use rights benefit for partners intact.

On Friday, Microsoft Channel Chief Gavriella Schuster announced that the company has rescinded its previous decision to stop providing partners with internal use rights (IUR) on its products, which would have taken effect in July 2020. The IUR benefit provides free product licenses for business usage by partners, and the perk has been a staple of Microsoft's partner program for decades.

[Related: Microsoft Rescinds Decision To End Internal Use Rights]

The move to retain IUR "speaks volumes to the value of being a partner, when Microsoft is willing to make these changes based on our feedback," said Kelly Yeh, president of Chantilly, Va.-based Phalanx Technology Group, in an email to CRN. "This is what partnerships should look like."

While Yeh didn’t have any plans to end his company's 15-year partnership with Microsoft as a result of the IUR change, he does believe that retaining IUR “will help us better support our clients and represent Microsoft through our partnership," he said.

Ultimately, “it says a lot that one of the world’s largest vendors is willing to listen to their partners and make the changes we as partners feel best help our companies,” Yeh said.

In a blog post Friday, Schuster said that Microsoft will not move forward with ending IUR.

"Your partnership and trust matters to us. Given your feedback, we have made the decision to roll back all planned changes related to internal use rights and competency timelines that were announced earlier this month," Schuster said. "This means you will experience no material changes this coming fiscal year, and you will not be subject to reduced IUR licenses or increased costs related to those licenses next July as previously announced."

Schuster said the decision was made after hearing feedback from partners in recent days. A Change.org petition criticizing the IUR move had received more than 6,000 signatures. "We listened to you, and we have acted," Schuster said.

The move has also come just ahead of Microsoft’s Inspire 2019 partner conference next week.

Dave Seibert, chief information officer at Irvine, Calif.-based IT Innovators, said that with a company of Microsoft's size that has so many decision makers, there are always going to detours from time to time.

"The thing I respect most is that when they make a decision, and they realize that was not the right way to go, they're willing to step up and say, 'We probably should not have done that, and we're going to change course,'" Seibert told CRN.

In this case, the adjustment in course happened very quickly, over just a few days, he noted.

"I hold a lot of respect for the leadership team because they were willing to come back to the table, and said, 'We heard you, and this is what we're going to do to make it right,'" Seibert said.

Miguel Zamarripa, CIO of Colorado Springs, Colo.-based Simpleworks IT, called it "a great move for Microsoft and its partners."

"I'm very happy to hear they rescinded their stance on this. I have a lot of respect for Gavriella and her genuine care for the partner ecosystem at Microsoft," Zamarripa said in an email to CRN.

Meanwhile, Schuster said in her blog post that Microsoft will strive for better communication and engagement with partners around future changes affecting the channel. "As we move forward, we commit to providing even more advance notice and consultation with our partner community to mitigate concerns and address issues up front," she said.

Zamarripa said he would welcome more exchange between partners and Microsoft stakeholders to discuss partner program changes going forward.

"This would eliminate the shock and awe factor that occurs when major announcements are made without partner input. I would be happy to be part of such a group," Zamarripa said. "Nobody wants to see a partner in a fiscally upside-down situation, but let’s come together, review the facts and come up with a plan that is cohesive and benefits all."

Microsoft had disclosed last week that it will stop offering the IUR benefit starting July 1, 2020. The company had said it would re-purpose the money into other partner investments. Schuster had described the move as crucial for Microsoft's ability to continue funding new channel initiatives.

As Microsoft's products have shifted to being delivered as cloud services, rather than as on-premise software, the cost of covering internal use rights has risen substantially, she said. The bill for IUR had become "really big," Schuster said.

"It really overran my budget this year," she said. "I had to cut back on things that I was going to invest in this year. I had to cut back so that I could pay those bills."

Schuster said the budgetary issue had been exacerbated by the fact that Microsoft has been seeing a massive influx of new partners joining its programs, with an average of 7,000 new partners joining per month over the past year.

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