Microsoft’s new channel programme within Azure Marketplace, Multiparty Private Offer (MPO), will be a $1bn business for the UK channel within three years.
That’s the prediction of the man responsible for the scheme’s launch to 17 UK ‘preview partners’ last week.
Following in the footsteps of AWS’ Channel Partner Private Offers model, Microsoft launched MPO in the US at Inspire last July as a way of enabling channel partners to sell customised deals through Azure marketplace.
As of 8 May, a preview version of the scheme went live in the UK with Accenture UK, boxxe, Bytes, CDW UK, Computacenter, Exclusive Networks, Insight, Logicalis Nephos Technologies, Nordcloud, NTT, Phoenix, SCC, Softcat, Trustmarque, Ultima and ITC Secure. General availability is set for early July.
“This is the first time – outside of the US – that a Microsoft partner can transact an automated solution through Azure marketplace,” Darren Sharpe, Azure Marketplace Services partner lead at Microsoft UK, told IT Channel Oxygen.
“We are mechanically a little bit behind, but actually the capability of the enterprise platform is way beyond what other hyperscalers have built.”
Although Canalys forecasts that almost a third of marketplace procurement will be done via channel partners by 2025, Sharpe predicted the percentage will be flipped on its head as a result of MPO.
“I genuinely believe it will be the other way around when Microsoft rolls out MPO globally – I think that two thirds of marketplace transactions will be partner managed and partner delivered. I think that’s going to happen within the next two years,” he said.
One UK partner has already committed to achieving $250m in ARR ‘build sales’ via MPO by fiscal 2027, Sharpe revealed.
“I fully predict this will be a $1bn business in the UK for the channel within the next three years,” he said.
“We’re being quite careful”
MPO involves three ‘personas’ in the form of the ISV, the channel partner – who plays the role of trusted advisor and cost optimiser – and the end customer, Sharpe explained.
Some 36 ISVs, including Palo Alto Networks, Fortinet, Nutanix, Splunk, Barracuda, Cohesity, Cisco, Veeam, Citrix, Nerdio and Rubrik, are on board for the UK preview.
Partners can use MPO to help customers “burn down” their committed cloud spend (formally ‘Microsoft Azure Consumption Commitments’ – or ‘MACCs’) on Azure Marketplace, which Canalys says has become a major driver of cloud marketplace spending amid the recent deceleration in public cloud growth.
Microsoft is treading carefully before it rolls the scheme to its wider channel, however.
“It involves an ISV with a transactable solution (because it’s all about automation and not about licensing) authorising the partner a wholesale price, and the partner being able to push that onto the customer within Partner Center,” Sharpe explained.
“That should be a super-slick process, once we all get good at that. But the reason we’re being quite careful is because we want to ensure that good experience.”
“Microsoft has got some of the largest enterprise customers, who are maybe already familiar with accepting private offers directly from an ISV. But since my Microsoft journey started every single enterprise customer I get involved in is asking ‘when can we get the partner involved in this process?’” Sharpe added.
“The services partner is absolutely the ecosystem advisory, the professional services deliverer, the cost optimiser. This is the platform for modern partnering. It’s helping those services partners deliver elastic, high-value software solutions very quickly into the customer.”
“This is not about breaking distribution“
Global sales of third-party vendor software and services through cloud marketplaces will hit $45bn by 2025, according to Canalys (with Crowdstrike alone recently announcing it had sold $1bn via AWS Marketplace). That would represent an 84% CAGR.
Despite concerns that their rise will freeze out the channel, marketplaces’ momentum will “increasingly depend on partners”, the analyst claimed.
Talking to IT Channel Oxygen in October, Softcat CEO Graham Charlton billed AWS Marketplace as “more akin to a distributor than a reseller” as he singled out hyperscaler marketplaces as an area of investment.
Sharpe, however, emphasised that Microsoft “will at some point enable the distribution part of private offer transactions”.
“You could see [Azure Marketplace] as digital distribution. However, we see distribution as still being key to the platform,” he said.
“We still need education; we still need technical services. We’re not about to disintermediate distribution. I don’t want to portray the message that this is about breaking distribution business because it is very much an incremental net new software modernisation business and is only about cloud software. I see it creating some friction while distribution works out how we can jointly add value here.”
“Huge incremental margin opportunity”
Sharpe – who helped AWS develop its marketplace channel offering before joining Microsoft two years ago – has created a marketplace practice builder to help partners understand the business process change required with MPO.
“It’s not a traditional buying and selling relationship, because whatever cloud marketplace you’re using the hyperscaler is the billing agent. [For a partner], it’s 100% profitability effectively, which is perfect for EBTIDA – but it does require operational process change,” he said.
Sharpe said he has run 34 channel events with ISVs and services partners over the last two months. More services and ISV partners are set to join the MPO preview in the coming weeks, he emphasised.
“Partners have chosen to come on this journey with Microsoft because they believe it’s going to be a huge incremental margin opportunity,” he said.
Softcat’s slant
The launch of MPO will enable Microsoft to “stay ahead of the game”, Amber King, Cloud Marketplace Lead at Softcat, told IT Channel Oxygen.
“Customers see the benefits of getting those cloud commitments from hyperscalers to unlock those discounts to help with their cloud transformation journey, and this is just another part of the puzzle,” she said.
“Darren has done a great job of working with the vendors to get them into a position that their offerings are listed on the marketplace so that now the MPO is live we can work with the vendors we already have a great relationship with.”
Softcat has for the last four years been building a specialist team to support private offers in AWS Marketplace.
“It’s a different way of working for the customer,” King said.
“But we have a really strong operational team in the background that have been working on APIs and automation to make sure it’s as smooth as possible for us and the customer. MPO is going to be the same for us, so we’re excited to be able to show our customers what we can do.”
“In terms of our vendor relationships, nothing changes. We still get access to the same level of discounts,” King added.
“Vendors will put their listing on the marketplace and then, if a customer has a cloud commitment they want to retire, we’ll work with that vendor, they’ll share the offer onto us, and we’ll make sure we’re adding the best pricing for our customer and that it’s tailored with invoice dates and all that good stuff.
“We will share that onto the customer via a link and they can access that tech straight away. From the AWS side, we’ve seen that process be really smooth, and we can only imagine the process is going to be really smooth from an Azure perspective.”
The buzz at Bytes
Talking to IT Channel Oxygen, Bytes Software Services Managing Director Jack Watson said that Marketplace is “in the main about burn down of increasing MACCs”.
“Bytes have been delivering private offers via the AWS marketplace for a while now and we’ve helped use cloud marketplaces to bring a steady improvement to simplify tactical and manual transactions for our customers. We can streamline contract processes and bring a better quality of reporting on optimal spend,” he said.
“I understand there have been some concerns in some quarters around a zero-tier channel and the threat of disintermediation for distribution and channel partners. The reality is clients need trusted partners to navigate a hugely diversified landscape of vendor technology.”
Doug Woodburn is editor of IT Channel Oxygen
