Some 70% of Microsoft’s total partner incentive pot is now geared to partners serving the SME space, the software giant claimed as it unveiled a raft of new goodies – and raised eligibility and authorisation requirements – for Cloud Solution Provider (CSP) partners.
In a move analysts say helped spur the union of two of its biggest partners, Microsoft on 1 January aggressively chopped the incentives available to its Licensing Solution Providers (LSPs) on Enterprise Agreements (EAs).
At the same time, the world’s second most-valuable company is moving incentives towards its CSP partners, who it sees as the “hero motion” for accelerating AI in the SME space.
Large LSP partners IT Channel Oxygen has spoken to, including Softcat, Bytes Technology Group and Trustmarque, have characterised the changes as minimal or net neutral, while the likes of Advania claim the changes will play into their hands (see a good overview of its spin on the changes here).
Sweetening the pot
Now, Microsoft has unveiled a raft of goodies designed to help CSP partners drive more renewals and upgrades, retain customers, upsell, and scale their businesses.
This includes introducing three-year subscription terms in CSP (thereby mimicking EAs), Microsoft Chief Partner Officer Nicole Dezen revealed in a blog post on Thursday.
More specifically, Microsoft will launch three-year subscription terms for Microsoft 365 E3 and E5, with or without Teams, as well as Teams Enterprise licenses in CSP, on June 1, 2025. In addition, effective July 1, 2025, a three-year subscription for Microsoft 365 E5 Security and E5 Compliance mini suites will also be available.
To sweeten the pot for on-premises customers, Microsoft is also launching a 10% discount for new-to-E3 or new-to-E5 customers on the CSP three-year subscription terms (available from 9 June).
In addition, Microsoft is also:
- Simplifying renewals and upgrades
- Introducing net paid seat adds in Partner Center
- Launching (from 1 October) new authorisation requirements for direct bill partners, distributors (formerly indirect providers) and indirect resellers.
On this front, Direct bill partners will now have a trailing 12 months (TTM) revenue requirement of $1m at the partner global account level, up from $300,000 year on year. They must also now hold at least one Solutions Partner Designation, among other things (see more here). Distributors must have now have a TTM of $30m per authorised region, while indirect resellers will continue to have a TTM requirement of $1,000.
Hey, big SME spender
The changes are aligned to Microsoft’s five strategic priorities (Copilot on every device across every role; AI design wins with every customer; securing the cyber foundation of every customer; migrations, migrations, migrations; and Microsoft 365 core execution), Dezen said.
Microsoft has now dedicated 70% of its total partner incentives to partners that serve the small and medium enterprise customer segments, she added.
On an earnings call on Thursday, Insight CEO Joyce Mullen claimed the global LSP is “managing through” the changes “quite effectively”.
Insight’s mitigation actions are “primarily around ensuring we transition enterprise agreements in the small and medium business and corporate space into CSP agreements”, she said.
“And that activity has been underway for quite some time, and our plan is to accelerate that activity. We’ve seen a lot of great support from Microsoft recently around making CSP the hero motion for that segment of business. They are very much digging into that and doubling down with us,” she said.
