Microsoft tightens up Office 365 funding for partners

Microsoft has raised the hurdle for partners to secure funding for Office 365 deployments.

The software giant has made no secret of the fact it wants partners to ensure customers are making full use of its products, and these changes seem designed with this end in mind.

"Office 365 active usage requirements have also been adjusted from 15 percent to 30 percent to better align with cloud adoption and usage goals," according to the vendor.

Microsoft defines "active usage" as a person utilising at least one cloud workload, such as Exchange Online, SharePoint, Yammer, Lync or the ProPlus suite, which includes Word, PowerPoint, Excel and Outlook.

Microsoft provides funding for customers to spend with partners on deployment services. The latest changes mean that if a partner sold, say, 300 seats of Office 365, the partner would only get access to funding if at least 90 seats were activated, rather than 45 previously.

It is not the first time Microsoft has tightened up access to Office 365 funding.

Microsoft used to pay out funding in a single sum depending on licence types, from US$5,000 for 150-249 seats, up to US$20,000 for more than 1000 seats.

Midway through last financial year, Microsoft added the active usage requirement and changed funding to US$15 per seat for the first 150-1000 seats, then US$5 per seat thereafter, capped at US$60,000 per customer.

The vendor faced considerable backlash over the change, and will no doubt feel the wrath of partners with this latest increase to 30 percent active usage.

A senior executive of an Australian Microsoft partner, who asked not to be named, told CRN there was a catch-22 in raising the active usage requirements: availability of funding motivates customers to kick off Office 365 projects and proof-of-concepts, but Microsoft's high demands for seat activations mean many projects and PoCs won't actually achieve the requisite usage threshold, and hence aren't eligible for the funding.

It is not the only change ahead of the vendor's Worldwide Partner Conference (WPC) next week in Orlando: Microsoft has also expanded the FastTrack migration service – which some partners see as a competitor – to accelerate cloud adoption and consumption.

It's understandable why Microsoft is so fixated on active usage. It is in a fierce battle for cloud market share against rivals such as AWS and Google, which offers its own cheaper, pared-back productivity software. Getting customers to make the most of their investment is crucial for Microsoft's mission.

This is driving Microsoft's approach not only to funding, but also around certifications.

Speaking to CRN Australia at last year's 2014 World Partner Conference (WPC), Microsoft Australia director of partner business Phil Goldie said: "Typically, competency attainment has been based on revenue performance, customer deployments and case studies, and training. One of the major changes has been thinking less about pure revenue and more about consumption.

"The competencies will focus more on how effective partners have been in getting customers to use the services they have paid for: not just selling the service but making sure customers are getting maximum value."

Read more: Microsoft expands free migrations beyond Office 365