Microsoft to let partners bill for Office 365

Microsoft Office 365TORONTO – The loudest applause of the first day of Microsoft’s Worldwide Partner Conference here came from a simple, but profound announcement – for the first time, Microsoft is going to allow its partners to own the billing relationship around its flagship cloud offering Office 365.

Worldwide channel chief Jon Roskill told attendees here that and open license arrangement for Office 365 has been the most frequent partner request since he took the job two years ago. But that only tells part of the story – actually, the ability to “own the customer relationship” around the company’s Microsoft-hosted Exchange solutions has been a sought-after offering since the introduction of Business Productivity Online Suite (BPOS), the forebear of Office 365.

Along with the new Office 365 Open model, the software titan will also continue to support a number of other resale scenarios for Office 365, including the agent/fee model, and enterprise and service provider license agreements.

But it’s Open that got the applause, because it allows solution providers to make Office 365 part of their monthly bill to their customers. Darren Bibby, vice president for software and alliances research at IDC, suggested the open model would bring a lot of new solution providers into the Office 365 camp.

“A lot of partners think that having the billing relationship is having the relationship,” Bibby said. “Some partners have figured out an approach with partners to work around it, but this is going to get a whole new bunch of partners interested in selling Office 365, those for whom there weren’t economics in the past.”

Carl Fransen, president of Calgary-based CTECH Group, said that by opening up Office 365 for inclusion in monthly bills, Microsoft “is saying to MSPs that they are serious about this product,” and that he felt under the previous resale scenarios “Microsoft was essentially excluding value added resellers (IT firms) from wanting to add this product to their portfolio.”

“Being a MSP, we can now easily include the Office 365 into our everyday product offering,” he said via e-mail. “CTECH can now offer a complete software desktop solution, wrap our 7/24 hour – 90 second support guarantee around it, and offer it at one set price per month.”

But the decision to open up Office 365 in the way Microsoft has may not be good news for all of its partner constituents. For many other (non-Microsoft) hosted Exchange providers, one of their big differentiators in front of solution providers against Office 365 was the ability of solution providers to own the billing relationship. With that gone, other hosted Exchange providers may have to find another point of differentiation, particularly as Microsoft has presented all of its partners – including its hosting partners – with instructions to lead Office 365 in all circumstances.

Bibby said that message was delivered loud an clear at its Hosting Summit event earlier this year, with the logic being that a rising tide floats all boats.

“If you need something more custom, then start talking about going [third party] hosted, or going on-prem, but it all starts with Office 365,” Bibby said.

The company has not forgotten its other resale models for Office 365 in introducing Office 365 Open. Details were scant, but the company has announced an incentive program whereby partners who resell more than 150 seats of Office 365 will be eligible for 23 per cent of the first-year revenues of its accounts, 10 points higher than the usual first-year revenues for Office 365.

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