Microsoft Plans to Cut Back on Working with Top Partners and Cloud Solution Providers
Microsoft is steering its focus towards the Cloud Solution Provider (CSP) segment, signalling a future expansion in this area and the potential for larger budgets. This shift has caught the attention of various distributors and Value-Added Distributors (VADs) across Europe.
One such distributor, Cloud Factory, based in Denmark, is experiencing a surge in interest from partners seeking alternatives to a direct relationship with Microsoft. The company sees this as an opportunity, particularly in light of Microsoft's aim for process automation.
Similarly, Climb Channel Solutions, a US VAD, is eyeing "enormous opportunities for organic growth and growth through acquisitions" in the DACH region and throughout Europe. They view the changes as a chance to capitalise on the growing demand for CSP services.
The changes reflect Microsoft's efforts to transition from license sales to subscription models, a trend that is resonating throughout the software industry. However, these shifts are causing ripples among direct resellers, who are questioning the viability of their business models due to increasing requirements. Heiko Lossau, Head of Business Unit Microsoft and Cloud Marketplace at ADN, echoes this sentiment.
Partners are feeling the heat as end customers demand more flexibility and easy handling of subscriptions. Microsoft is responding by increasing the requirements for direct partners, particularly for Tier-1 partners, with higher sales limits and increased expectations regarding availability and response times.
This move by Microsoft is aimed at reducing the number of troublesome, high-maintenance "small" direct partners. The company is pursuing a course to make the software business less personal, affecting both Tier-1 partners and CSPs.
ADN, one of the largest Microsoft indirect providers, is positioning itself as an interface between partners and Microsoft. The company facilitates dialogue as needed and takes responsibility for opening up new opportunities and sales channels for partners.
The renaming of the partner category Indirect Provider to Microsoft Distributor and the simultaneous raising of the sales limit for distributors to 30 million dollars is causing significant market unrest. Thousands of partners in Europe could face difficulties due to these changes, even those with sales of five to fifteen million dollars.
However, Heiko Lossau sees this as a "huge opportunity" for growth in the CSP segment. He encourages partners to adapt and seek new business models. Wortmann, a German Microsoft CSP, is preparing for the higher requirements for CSPs by collaborating with affected distributors and offering support to partners.
Wortmann, with its Tier-1 and Tier-2 status and software development capabilities, is well-prepared to help affected houses continue their CSP business with minimal impact. Gerard Brophy, CRO at Climb Channel Solutions, also sees potential for consolidation in the CSP area due to Microsoft's latest announcement.
ADN is capitalising on the raised revenue thresholds by offering partners various information offerings, such as webinars and live streams, to discuss current changes in the Microsoft context. The company sees opportunities for significant increase in the consulting business due to these changes.
The Danish distributor Cloud Factory, expanding in Germany, already established in Scandinavia and the Netherlands, who sees the Microsoft changes as an opportunity is not named in the provided search results. However, it is clear that the landscape of the software industry is shifting, and partners must adapt to survive and thrive in this new environment.
