by Dann Anthony Maurno, Assistant Editor
Microsoft launched the Cloud Solution Provider (CSP) program in mid-2014 for the sale of Office 365 by channel partners, then a year later included Azure, Dynamics CRM Online, and the Enterprise Mobility Suite in the offerings. The new Microsoft Dynamics AX 7 is slated for inclusion once it is in general availability.
And while Microsoft expects big things from CSP as a means of selling its core cloud offerings, this is not a Tupperware party. CSP isn’t about simply reselling Microsoft cloud products and cashing the checks. Microsoft requires much more from CSPs, who are expected to bring their unique strengths to bear in creating unique offerings around Microsoft’s cloud products.
Of the two tiers of entry – 1-Tier and 2-Tier – 1-Tier requires the greater commitment. 1-Tier are direct resellers, and as Microsoft defines it, 1-Tier is the “program of choice” for partners looking to provide an end-to-end customer experience, including customer support. This program requires partners to have “high capability standards to provide a great customer experience” – after all, they provide the support that Microsoft used to, and Microsoft risks being damned for abandoning its customers.
The real opportunity for 1-Tier partners is to sell integrated offers and services – unique experiences that they build. 1-Tier CSPs can:
Introduce service offers across each stage of the customer lifecycle
Include their own tools, products, or services in one integrated sales motion
Increase upsell opportunities with greater customer touch points
2-Tier is an indirect sales model, designed for resellers to work with 2-Tier distribution partners to sell Microsoft cloud services. The distribution partner provides reseller and customer support, so, there is less investment by the CSP. Microsoft expects most partners to participate as 2-Tier resellers.
Two 1-Tier partners, both of which market offerings around Dynamics CRM, shared their experience with MSDynamicsWorld. They are John Seeds, senior marketing director with Webfortis; and Cecilie Svensgaard, CSP director with PowerObjects.
Both made clear that the opportunity is a good one. But they also both advised that to whom much is given, much is expected.
MSDW: The 1-Tier leap looks like it could require hiring sales talent, billing staff, contract administration, trainers – what was your experience?
JS: You would need everything you talked about, plus there’s a technology overlay on top of that.
Sales is the first thing, but you need sales anyway, though with the CSP model you have a number of things you have to account for that you don’t have to otherwise.
The second is the operations piece of it.
A third piece is the support component, and that’s the biggest piece. It’s something Microsoft has pushed onto the partners that you have to address: You will not maintain CSP customers without the ability to support them.
CS: I oversee the CSP program and they created that position specifically to run the program. We hired two additional inside sales SMB team members to focus on recurring subscriptions that we’d receive from the CSP program.
There’s a greater burden on support with the CSP program. I know our support team is getting an increase in number of tickets, but it’s a great opportunity to learn, and with CRM sitting inside of Office 365, we were very well equipped to handle it.
But there’s a lot of managing along with it. You’ll manage selling directly to the client and need to understand how Microsoft bills you and how you’ll turn around and bill the client and reporting back to Microsoft in that Partner Center Portal. We’re actually using Microsoft API to integrate into the Partner Center Portal, where we purchase subscriptions on a client’s behalf as a CSP. And we manage licenses and such in our CRM. So it definitely takes work, being able to manage all the pieces.
Microsoft emphasizes that CSPs must craft a unique solution – what does yours look like?
JS: It’s a unique solution. The concept of CSP is that nobody buys CRM anymore, they buy point solutions. It’s our goal to get point solutions out in the market that provide value.
We do one thing and that’s Dynamics CRM, so the unique package we offer is not technology. Technology is easy. CRM, BI, Office 365, anyone can offer. We offer a very discrete and very specific solution loaded into CRM, and that’s what people are buying in CSP, and that’s why it’s compelling. We’ve got public records management, grants management, resource and utilities, and that’s the package they’re buying.
CS: PowerObjects focuses on Microsoft Dynamics CRM inside an Office 365 portal. Most of our clients purchase CRM then additional Office 365 subscriptions.
By purchasing licensing from PowerObjects, they get PowerPack Add-Ons [Dynamics CRM enhancements in marketing automation and productivity] at no additional charge, it’s unlimited credit. They also get a percent off of education we offer, with lots of different bootcamps, onsite training, webinars.
And we’ve bundled licenses with some other offerings like the PowerSuccess program, a monthly [subscription service]; and a PowerSuccess engineer helps you build out your CRM over 12 months. You set goals, and instead of typical time and material, you pay for this engineer per user per month. If you have 20 people, you really know what you’ll be spending.
What returns have you seen, or do you expect?
JS: [Webfortis is] relatively new in the field of CSP. The CRM partners got CSP back in July 2015, so it’s been like eight months. CSP started for Office 365 much before that.
The return has been compelling; it has allowed us to own the customer relationship from beginning to end, and through the life of the customer, which is a unique model. Prior to that they would pay Microsoft for the service and Webfortis for customization and training. Now they get a single bill. So the ability to accrue that, build up that kind of volume, is where we think we will see great returns.
CS: [PowerObjects’] goal is to generate $30,000 in recurring subscriptions per month. We’re basing it more on revenue number than license numbers of CRM and Office 365. That’s more realistic as opposed to saying we need 100 CRM licenses and 50 Office 365, because customers have variable needs. So we’re aiming for revenue numbers versus number of seats.
The benefits sound compelling – why wouldn’t a partner become a CSP?
JS: I think it’s not for everybody. You’re going to really have some challenges with regard to your existing support model unless you have the ability to monetize it.
Customers expect support at free or low cost because that’s what they’ve been getting. We expect in our society for things to just work. Compare it to the app store in iPhone; how often do you contact the manufacturer? Smaller partners without mature support teams will suffer, they won’t necessarily be able to charge per incident.
Not to say customers won’t pay. But if you’re not able to monetize it, combine that with prices being driven down by competitive CSP partners and your margins become thin and become thinner as time goes on.
It really requires the ability to have solutions you can turn on again and again, with very little maintenance and support, to really make money at it.
CS: I believe it’s important for partners to understand that getting into the program is not for the weak hearted. You have to think through various pieces that you can manage in a realistic way.
How has Microsoft support been?
CS: It’s been really great. There’s a Yammer group right now for people to post questions, and I feel Microsoft is really reacting well to feedback. They offer education sites for partners, webinars around the CSP program, and we’ve been in touch with the program manager who’s been really supportive and useful. As big a company that Microsoft is, they’re providing pretty good support.
About Dann Anthony Maurno
Dann Anthony Maurno is a seasoned business journalist who began his career as International Marketing Manager with Lilly Software, then moved on as a freelancer to write for such prestigious clients as CFO Magazine; Compliance Week;Manufacturing Business Technology; Decision Resources, Inc.; The Economist Intelligence Unit; and corporate clients such as Iron Mountain, Microsoft and SAP. He is the co-author of Thin Air: How Wireless Technology Supports Lean Initiatives(CRC/Productivity Press, 2010).
Dann can be reached at [email protected].