The following is a blog post written by Terry Petrzelka, founder and past CEO of Tectura Corporation.
“The Microsoft Cloud Solution Provider program enables partners to directly manage their entire Microsoft cloud customer lifecycle. Partners in this program utilize dedicated in-product tools to directly provision, manage and support their customer subscriptions. Partners can easily package their own tools, products and services, and combine them into one monthly or annual customer bill.” – Microsoft CSP FAQ for Partners
When it launched last year, the Microsoft Cloud Solution Provider (CSP) program completely changed the way Microsoft interacts with most partners on the products that Microsoft considers most strategic to its future — Office 365, Microsoft Azure, Dynamics CRM Online, Enterprise Mobility Suite, Microsoft Intune, and then the inclusion of another Dynamics ERP Solution, AX, a few months back. Then, one adds to this Microsoft’s continued incentives for GP and NAV hosting on Azure, the introduction of NAV Managed Services, and the announcement that Project Madeira will be offered exclusively through the CSP program. As such, Dynamics partners will need to make serious decisions about how to align with the CSP Program and how they will participate. Let me explain.
The Two Tier Approach
CSP providers fall into two categories, Tier 1 and Tier 2. A Tier 1 partner is approved by Microsoft and orders seats on behalf of customers directly from Microsoft. A partner must have a series of capabilities to be considered as a Tier 1 partner. To qualify for Tier 1, a partner must be able to bill, provide 24×7 support, do technical integration and handle customer lifecycle management. Microsoft is also looking for partners with a business model around managed services IP and with broad market reach.
There’s also what Microsoft calls a Tier 2 model. This is where the distributor, or companies that were formerly part of the Microsoft Syndication Partner program, handle the capabilities with Microsoft. Those partners are called Tier 2 distributors, or cloud distributors, and include major distributors like Tech Data, Ingram Micro, and SYNNEX. They in turn work with the bulk of Microsoft partners, who are the Tier 2 resellers. Depending on a given cloud distributor’s offering, those resellers may still have control over customer billing and also may be able to outsource white-labeled support services to the distributor.
Infrastructure partners have always worked through distributors for their software licensing, so the decision and process of moving to a Tier 2 CSP model was obvious and simple. In addition, the massive customer migration from on-premises productivity software to Office 365 as well as the growth of Azure and other IAAS solutions for application hosting has forced them to modify their software sales businesses to a recurring revenue model. However, for Dynamics partners the decision is much more complicated. Dynamics partners have always dealt directly with Microsoft for software and have generally managed their customer lifecycles themselves. Most have business models based on up-front payment on software sales.
Very few Dynamics VAR’s will be able to meet the requirements and make the investments required to become a Tier 1 CSP. This means the typical VAR will have to assess the programs offered by the distributor partners and decide which one offers the best revenue opportunities while still providing the quality needed to meet the end-customers’ expectations. The challenge for Dynamics VARs is that these programs were designed by channel people, who are used to working with IT generalist partners, for those sorts of partners who currently are and will continue to be the vast majority of their business. Dynamics partners simply do not represent a large enough market for any of the mega-distributors to provide an incentive to develop a Dynamics-focused program.
The Microsoft Master VAR Program that was introduced in July 2011 is the same model for Dynamics Partners that it has for infrastructure and CRM Partners. As a matter of fact, Dynamics can do all their cloud ordering through the Master VAR Program provided the Master VAR is a CSP – thus eliminating the need to go through major distributor.
For instance, SBS Group is a Tier 1 CSP partner focused on the Dynamics space. Unlike the distributors, they have designed their Cloud Marketplace to be focused on current and potential Dynamics customers. Rather than hundreds of infrastructure products, SBS has populated their e-commerce portal with top Dynamics ISVs, like Solver, KwikTag, and ClickDimensions, and have created bundled solutions focused on Dynamics GP, SL, NAV, AX, and CRM customers. As mentioned earlier, Tier 1 partners must provide 24×7 support. Since they are focused on Dynamics customers, SBS can provide full support on all Dynamics ERP products in addition to CRM and Office 365. This type of support is unavailable through any traditional distributor.
Bottom Line: Rather than enter into a “self-help” relationship with a distributor who has little experience and knowledge of the Dynamics ERP space, I recommend Dynamics VARs take a serious look at utilizing the Master VAR Program for Dynamics Partners. If you decide to this, I seriously advise you to check out the extremely advanced Dynamics oriented Tier 1 CSP Marketplace available to the SBS Partner Program. By joining their Master VAR program, VAR’s immediately get to leverage the Dynamics-focused CSP Portal and marketplace.
Future posts will continue to elaborate that Dynamics Partners, if they may need to work with a Tier 1 CSP Partner, take a serious look at the Master VAR Program as a means to do this. Then, selecting the Master VAR that best fits your specific requirements is up to you. To start, I would recommend you discuss the SBS Partner Program to see how advanced they are.
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