Microsoft turns UK channel over AGAIN

'Direction of travel is looking nasty'

If there's one thing channel partners hate, it's frequent change: but that's exactly what enterprise resellers sitting at Microsoft's top table are facing once again - another massive renovation of the deal reg fees system.

The new lot will be introduced on 1 October, 16 months since the last overhaul, and though Microsoft talked up the benefits of the changes, Licensing Solutions Partners (LSPs) - formerly known as Large Account Resellers - are nervously modelling the potential impact.

Talking to The Channel, Janet Gibbons, director of partner programmes and strategy at Microsoft UK, told us the move was in response to partner feedback that the nearly two-year-old system was "confusing".

Back in autumn 2011, Microsoft chopped the fees that LSPs made on Enterprise Agreements in major accounts - multi-national corporate customers and large public sector bodies - and pushed more money towards partners that ply a trade in the mid-market.

The problem, said Gibbons, was that LSPs were often engaged with subsidiaries of major accounts and so the cash made on EAs in those instances was less than they were expecting.

"Going forward and I think LSPs are delighted about this," she said, "there is one programme and it pays the same irrespective of the customer segments."

Asked if partners would potentially earn more or less from October, Microsoft said it was dependent on the sales mix of each one whether it be renewals, new business, cloud, true-ups or hosting licenses.

"These percentage changes are only for new contracts going forward, all existing rates for all the deals they have sold, and EAs in the last three years, those legacy rates remain," Gibbons claimed.

Channel partners, as vendor execs tend to remember every so often, like consistency and predictability to be able to plan investment and direction for the medium term.

One LSP has been left feeling aggrieved by this upheaval arriving "at the whim of people in Redmond [Microsoft HQ]...this is a major change for Microsoft 16 months after the last one. It is bull shit that Microsoft thinks partners will keep changing their business to play to its tune".

Under the revamped structure, LSPs will make a quarter of a per cent on EAs with major accounts - 12,000 seats and above - that are deal registered with Microsoft, whereas they previously made nada, say our moles.

On the flip side, our sources reckon the fees for deals registered with mid-market corporate accounts are to reduce in value by 50 per cent, and anyone selling in public sector will lose the "credit and collection" fee for transacting EAs.

Microsoft will pay more for renewals, true-ups and a lot more for LSPs that punt its cloud services. It will also stump up fees for sales of Surface, when it goes beyond pilot phase into the wider channel.

"Microsoft do what they need to do, they are trying to drive behaviour, my issue is if I [made] changes to my processes with customers [as frequently] - how we engage, how we charge them - we would go out of business rapidly," said an LSP.

The fees overhaul has not yet been locked down and fine details are subject to further change, but one warned "the direction of travel is looking nasty".

The concern among some is that in another 18 months to two years further sweeping changes will be implemented as Microsoft develops a bigger cloudy biz. ®

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