With so many businesses partially, if not fully, running on the Cloud, Microsoft’s new Cloud Service Provider (CSP) Program is an enticing offer, even for Microsoft’s most loyal Enterprise Agreement customers. Microsoft offers two CSP options for Microsoft partners who want to get on board, Indirect and Direct. But which of the choices is right for you? Today we’re pitting the two head to head. It’s Direct vs. Indirect CSP.
At MetrixData 360, we want you to transition to your new CSP situation as smoothly as possible and have helped our clients adjust to this new life in the clouds. So today we thought we’d share some of the differences between each of the platforms to help you determine which best fits with your organization.
Direct vs. Indirect CSP
What is Indirect CSP?
With Indirect CSP, the requirements are simple: you will be a reseller of Microsoft products to customers while maintaining a relationship with your indirect provider or distributor. The provider, in turn, will deal with Microsoft.
It is likely to be the far more popular option, as Microsoft expects somewhere between 80% to 90% of its CSP subscribers to become Indirect Partners. Let’s take a look at some of the highlights of being an Indirect CSP Reseller.
Added Services and Support from the Distributor
As a Reseller, your Distributor will provide you with a number of services and support, including:
- Technical training and assistance.
- Marketing products and services.
- Financial and credit terms.
- Microsoft’s API integration to help place incoming orders for Cloud licenses.
- Help transitioning into a cloud model or, if you already are cloud-engaged, your distributor will help you grow your value with your customers such as having a pre-sales consultant joining you on complicated deals.
This arrangement will prove most ideal for smaller organizations who will be able to reap the benefits of having their larger distributor’s resources at their disposal.
Profit Margin
As an Indirect CSP, you will buy your SKU from the distributor and you will be allowed to sell your products to your customers with a margin of profit of your choosing. It should also be taken into consideration that Indirect Resellers can expect recurring revenue as Microsoft moves its market exclusively to the Cloud. While Cloud-only products are their inevitable business plan, Microsoft doesn’t have the staff to fully support this kind of infrastructure, which is where this CSP has come from. It will be the foundation of a budding cloud reselling ecosystem and this is your chance to be a part of that.
Quick and Yet Controlled Process
You can get started quickly with the Indirect CSP partner program and once you’re there, you can evolve your business at a controlled pace, allowing you to focus primarily on your investments. The indirect CSP model will allow you to team up with a larger and more experienced provider while at the same time owning the customer relationship and experience. Considering the few qualifications you need to get started, this represents a relatively low investment for a high return.
Status
Through being an Indirect Reseller, you will begin to earn incentives straight from Microsoft. You will also receive the Partner of Record Status (POR), and you’ll also receive revenue recognition to be put towards your Microsoft Partner Status. This status and recognition will be on par with that of the Direct CSP model.
What Is a Direct CSP?
Unlike with Indirect CSP, in this model you will act as a Distributor, who will deal directly with Microsoft while also maintaining a relationship with your Resellers. This model is best suited for larger and more mature companies who have expertise in customer service. Below are some of the things you’ll have to consider if being a Direct CSP seems like a good fit for you.
Margin and Investment
Distributors can create a margin of profit for Microsoft’s product, sometimes as high as 20%. However, becoming a Direct Partner will require some level of investment, ranging anywhere from $50K to over $1M in investments.
Complicated Process
If you are going solo as a Direct CSP partner, the process can be quite rigorous and complicated, often taking as long as four months. In order to qualify for being a Direct CSP partner, you need to meet the following requirements:
- You need to be an active Microsoft Partner with a Network ID.
- You will need to be capable of providing your customers with 24-hour service.
- You’ll need to purchase a Microsoft support plan and you’ll need to be able to pass a credit check before you can purchase the plan.
- You’ll need to have at least one managed service already, an IP service, or a customer solution application.
- You need to have a solid customer billing structure in place. Manual billing will not cut it.
- You’ll need to maintain at least one Microsoft Gold Productivity Competency.
- As a Direct CSP Distributor, you’ll be expected to manually manage your licenses through the Microsoft Partner Network Center.
Proactive Reductions
Before you begin the long process of applying to Direct CSP, it’s important to note that in most markets Microsoft is actively striving to reduce their number of existing Direct Partners instead of approving more. Although Microsoft recognizes both partner models and provides revenue recognition that is weighted the same, it may be very difficult to become a Direct CSP partner with Microsoft.
Looking for an opportunity to save roughly 20 to30% of your current spend on software licensing? Learn how software asset management can help in our article: Getting Started: Implementing Software Asset Management.
Choose the Right Solution for Your Business
Signing up for Microsoft’s CSP Partner Program can represent a new chapter in the growth of your business. Picking which one is right for you will prevent you from biting off more than you can chew and will allow you to benefit from this new solution.
At MetrixData 360, we have helped our clients through the trickiest of positions in regards to their software licensing when it comes to Microsoft and we can help you transition to this new CSP platform smoothly. If you’d like more information, you can contact us and a Client Success Manager will be in contact with you in under 24 hours.
