Partners See Major Azure Windfall As Microsoft Scraps Pay-As-You-Go Policy

Microsoft solution providers say a major licensing shift that goes into effect Feb. 1 could open the door to increased Azure cloud sales momentum for the channel.

Beginning Feb. 1, Microsoft is canning its pay-as-you-go Azure direct sales policy. New Microsoft Products & Services Agreement (MPSA) customers purchasing Azure will be "guided to" Cloud Solution Providers instead.

Jason Rook, vice president of customer and partner success for 10th Magnitude, Chicago, one of the fastest-growing Microsoft Azure strategic service providers, said he sees the licensing shift as a game changer for the entire Microsoft channel ecosystem.

[Related: Partners Cheer Massive Microsoft Reorganization, New 'One Commercial Partner' Unit As Key To Accelerating Sales]

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"Microsoft’s decision to push MPSA licensing more towards CSP is an indicator that they realize the value of having a larger ecosystem participating in the Azure transaction opportunity," said Rook. "This is really good for the entire channel. At 10th Magnitude we are quite pleased with the investment they are making to simplify but yet provide flexibility. Customers can now purchase Azure through any of the three models, CSP, EA (Enterprise Agreement), MOSP (Microsoft Online Subscription Agreement) and we can profit through any of those models."

Chris Pyle, president and CEO of Champion Solutions Group Boca Raton, Fla., one of the top Microsoft partners in the country, No. 224 on the CRN SP500, said he sees the licensing change as a "telltale sign that Microsoft is putting more and more emphasis on the CSP model."

"It's great for the channel," said Pyle. "The way you are going to procure and do business with Microsoft is through the channel. This shows Microsoft is going to be really leveraging partners and the CSP model.

Jeff Tench, the CEO of New Signature, a perennial Microsoft partner of the year and one of the top cloud solution providers in the country, said he sees the change as another step by Microsoft to get partners to provide both professional and managed services, along with licensing, in a business outcome-based solution for customers.

"This completes the ability for us to own the customer relationship in a much more meaningful and unified way," said Tench. "It allows us to own more of the transaction and to compete more effectively and fairly both across the partner community and with Microsoft. Frankly, it reduces the unintended competitive dynamic that existed between Microsoft partners and Microsoft itself. We are really pleased to see that. It is a real reflection of Microsoft's dedication to the partner community."

Though it will take some time for the licensing change to be put into practice in the field, Tench said the amount of work the Washington D.C.-based New Signature will do under the CSP program will "certainly directionally" increase. "The ability for us to seamlessly bundle the licensing of products and services from Microsoft with our own services is only improved from this," he said.

"I think Microsoft is trying to make sure that as customers enter into the journey, they will be set up with the partner community to have a successful experience," said Ric Opal, senior director at Oak Brook, Ill.-based Microsoft partner SWC Technology Partners. "Partners are trained to look at their customers' business models as it relates to their intentions in the cloud."

Richard Smith, general manager of Commercial Licensing at Microsoft, said in a blog post that Microsoft’s licensing change stems from the company "consolidating and concentrating" its investments in the "partner-value added, self-serve web, and the Microsoft-assisted ways that best meet customers' needs."

"Many organizations want to incorporate intelligent technology into their products for predictive maintenance and better customer service or other scenarios: they’re looking for the value-added services of a Microsoft partner to assist or contribute IP to help them innovate quickly," he said in the post.

Beyond its new licensing policy transition, Microsoft is making an array of other changes starting Feb. 1. The company is creating a new "One Commercial Partner" business to combine its ISV, Enterprise Partner and Worldwide Partner Group teams, as well as a new unit, Microsoft Digital, to incent partners to sell its cloud services.

The changes come months after Judson Althoff took the reins as the new leader of Microsoft's Worldwide Commercial Business Group, following the departure of chief operating officer Kevin Turner.