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Microsoft Partners At A Crossroads: Radical Changes Rattling The Channel

Wade Tyler Millward

Recent changes to Microsoft’s partner program -- NCE and the upcoming Partner Capability Score -- are rattling some solution providers in Microsoft’s 400,000-strong channel ecosystem. Is the tech giant listening?

It only took one month for Guardian Computer President Jean Prejean to discover one of the biggest problems with Microsoft’s new rules for how customers buy and renew commercial software subscriptions with partners.

In April—one month after Microsoft began enforcing changes rolled out under its New Commerce Experience, or NCE, banner—Prejean brought on a new customer for her Metairie, La.-based MSP business.

What should have been a purely celebratory occasion for Guardian Computer, a member of CRN’s 2022 MSP 500, came with a catch.

[RELATED: 5 Major Microsoft Partner Program Changes In 2022]

Because the customer had already signed an annual commitment with its former MSP under NCE—and because, under NCE, Microsoft does not allow partners to transfer licenses after seven days—Prejean was forced to work with the old provider.

“There is nothing we can do,” Prejean told CRN in an interview. “It’s hard to tell a new client, ‘Hey, but you’ve got to still deal with your old MSP for another 10 months.’ … Sometimes, there is bad blood in there.”

In the end, Prejean and her staff of 13 employees promised to provide support to the new customer while the old MSP collects revenue until the contract ends next year.

“We’re a Microsoft shop,” she said. “We wouldn’t be who we are without Microsoft. And some of these changes have been disheartening.”

Prejean is among the hundreds of thousands of partners that now have to decide how to adjust to the new costs and requirements of doing business with Microsoft.

There’s no question that the partner program changes Microsoft is making are taking their toll.

Microsoft said in its most recent earnings call that “partner transition work” had a negative effect on growth with small- and midsize-business customers.

During the question-and-answer portion of the call Microsoft CFO Amy Hood said that the company saw “some weakness in new deals, particularly in the SMB segments,” noting that licenses aimed at SMB customers are primarily sold through partners.

“We’ll keep executing that through partners. We’re in the middle of that transition we talked about last quarter, and we’re still working on it,” she said during the call.

The changes Microsoft is making are some of the biggest to hit Microsoft partners since the Microsoft Certified Solution Provider program launched 30 years ago.

The diversity and size of Microsoft’s program can be an asset—400,000 partners with a mix of partners less than half Guardian’s size and partners exponentially larger with hundreds of employees pulling in tens of billions of dollars in revenue.

But that diversity makes it hard for program-wide changes to satisfy all partner sizes and business models—and former Microsoft channel employees tell CRN that businesses such as Prejean’s represent most of the partner program population.

CRN has reached out to Microsoft for comment on this article but the company would not make members of its channel team available.

Twenty-three percent of 160 Microsoft partners polled by CRN in July said they are more dissatisfied with Microsoft as a partner than they were a year ago. An additional 4 percent, meanwhile, said they were significantly more dissatisfied than a year ago.

Furthermore, 27 percent of partners polled by CRN said they are dissatisfied or very dissatisfied with the new partner program requirements, NCE and changes in partner incentives.

“Microsoft has dramatically increased the difficulty in doing business with them,” said one partner participating in the survey. “Ease of doing business with Microsoft is non-existent at this point. [I’ve] grown very tired and frustrated with their never-ending, confusing partner program changes, clunky partner systems, multiple portals [and] lack of being able to speak to real people.”

“I don’t like the change from the CSP program to the NCE program. It was a win for Microsoft and a loss for partners,” said another surveyed partner.

“The change in requirements for partners to the ‘point’ system is too much with not enough time to meet them,” said yet another partner. “Microsoft seems to assume we can have engineering resources stop their normal job function and focus solely on the new requirements.”

 
Wade Tyler Millward

Wade Tyler Millward is an associate editor covering cloud computing and the channel partner programs of Microsoft, IBM, Red Hat, Oracle, Salesforce, Citrix and other cloud vendors. He can be reached at wmillward@thechannelcompany.com.

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