Partners will be able to resell Microsoft Azure in Open Licensing per August 1
May 22, 2014 Leave a comment
Microsoft customers wanting to use Microsoft Azure services currently have two options for purchasing:
1. Register for Azure and submit creditcard details. Microsoft will charge on pay-as-you go. For enterprises using a creditcard it is very difficult to manage costs and perform chargeback to internal departments.
2. Buy Azure credits as part of an Enterprise Agreement. Enterprise Agreements are sold exclusively by Microsoft Licensing Solution Providers (LSP , the new name for Large Account Reseller). The disadvantage of purchasing Azure in Enterprise Agreement is the customer needs to buy up-front credits. Those credits last for one year. If not consumed the remaining credit is lost.
The current model was not very attractive for system integrators (SIs) and value-added resellers (VARs). When they help customers onboarding to Microsoft Azure they get a kickback fee lasting two years while Microsoft does the billing. The registration of leads by the partner and receiving the kickback free is a rather complex and lengthy process.
Especially System Integrators selling hardware like storage would hesitate to onboard a customer to Microsoft Azure. It could turn out to a shoot in the own foot as they start to loss the revenue of selling hardware as well as the relationship with the customer.
Microsoft is now enabling selling of Azure more easily.
Starting August 1 Microsoft Azure becomes available in Open Licensing. Open License is a two year agreement with Microsoft for buying software licenses. Targeted at organizations having 5 to max 250 devices. Customers pay up-front.
Microsoft Partners will be able to purchase tokens from a distributor. The partner resells tokens to their customer. Reselling is actually adding the tokens (each worth $ 100,-) to the Azure subscription of the customer. This enables a billing relationship between the Microsoft partner and the customer consuming Azure resources. It also ensures recurring revenue for the partner. Mind the credit is only valid for 1 year. Remaining credit does not roll over to the next year!
Aidan Finn wrote a blogpost about this news here. As usual his opinions are just a little bit biased. His quote below is incorrect.
Microsoft certainly does not have a unique selling point here. VMware has a hybrid cloud offer as well. Not only VMware itself offers a public IaaS service (VMware vCloud Hybrid Service or vCHS owned by VMware) which connects seamless to on-premises vSphere infrastructures. There are also many vCloud Providers offering public IaaS with excellent connectivity to on-premises owned datacenters.
Microsoft is not the only cloud vendor with a partner-enabling model. VMware vCHS is sold the same way as on-premise VMware licenses with a standard SKU and partners can retain the billing relationship with their customers.
Amazon has a Channel Reseller Programm for quite some time now.