[Update: See comments by analysts about the CSP changes.]
Microsoft has announced significant upcoming changes to its Cloud Solution Provider (CSP) program, including updates to CSP authorisation requirements requiring FY26 direct bill partners to have minimum US$1 million in CSP billed trailing twelve months (TTM) revenue – up from USD$300,000 in FY25.
The changes to CSP authorisation requirements also include a minimum of USD$30 million TTM billed CSP revenue per authorised region for Distributors in FY26.
The changes to Microsoft's CSP program for FY26, announced overnight by Chief Partner Officer and Corporate Vice President, Global Partner Solutions, Nicole Dezen, include new authorisation requirements for CSP partners that will apply to direct bill partners, distributors (formerly indirect providers), and indirect resellers.
The changes, which also include new FY26 Microsoft CSP incentive eligibility requirements, go into effect on October 1, 2025.
In addition to the USD$1 million TTM revenue minimum, FY26 direct bill partners will require “complete business vetting”, an annual assessment, CSP authorisation and at least one solutions partner designation for solution areas.
FY26 direct bill partners will also need to pass an automated assessment that measures operational capabilities, including billing, provisioning, compliance, customer support, and security.
They will also need to complete the mandatory requirements of the Partner Center security score, amongst other requirements.
FY26 indirect resellers will have to pass “complete business vetting”, have a minimum of USD$1,000 TTM billed revenue at the reseller tenant level, complete the mandatory requirements of the Partner Center security score, amongst other requirements.
Writing about the authorisation changes, Denzen stated: "We want to ensure our CSP partner ecosystem is well-positioned to create the seamless solutions and experiences our customers have come to expect while accelerating growth opportunities."
Eligibility bar also raised for distributors
CSP eligibility requirements for FY26 distributors will also increase on October 1, 2025. In addition to the requirement of USD$30 million TTM billed CSP revenue per authorised region, distributors will need to pass an annual assessment, have an active Advanced Support for Partners (ASfP) or Premier Support for Partners (PSfP) plan.
Distributors will have to pass an automated assessment that measures operational capabilities, including channel management, billing, provisioning, customer support, and security.
They will have to complete the mandatory requirements of the Partner Center security score.
Changes to CSP incentives eligibility
The new eligibility requirements for CSP incentives are designed to ensure that direct bill partners and indirect resellers have capabilities aligned to a given solution area, according to Microsoft.
They are based on either attaining Solutions Partner designations or a partner capability score in a given solution area, as well as a revenue threshold.
These Solutions Partner designations are:
- Modern Work incentives: Solutions Partner designation for Modern Work or Security
- Business Applications incentives: Solutions Partner designation for Business Applications
- Azure incentives: Solutions Partner designation for Data & AI (Azure), Digital & App Innovation (Azure), or Infrastructure (Azure)
FY26 Direct Bill Partners will need CSP authorisation, USD$1 million TTM revenue and at least one Solutions Partner designation for solution areas.
FY26 Distributors will require CSP authorisation.
FY26 Indirect Resellers will need Solutions Partner designation for solution areas, or 25 partner capability points in each solution area. They will also require USD$25,000 TTM revenue for all solution area incentives.
In FY26, CSP change of channel partner ("COCP") activity will be measured by Microsoft and monitored “regularly”.
Microsoft has published a Partner FAQ about the CSP changes.
New subscription terms for E3, E5 and Teams Enterprise licenses
Microsoft is also launching three-year subscription terms for Microsoft 365 E3 and E5 in CSP, with or without Teams, as well as Teams Enterprise licenses in CSP on June 1, 2025.
At either midterm or renewal, cloud solution provider (CSP) partners will be able to change E3 and E5 subscription terms for customers who have EOS SKUs of Microsoft 365 and Office 365 Enterprise suites with Teams to the new three-year EOS terms.
Effective July 1, 2025, a three-year subscription for Microsoft 365 E5 Security and E5 Compliance mini suites will also be available.
Earlier this year, Microsoft 365 E5 Security was made available as an add-on to Microsoft 365 Business Premium.
To help transition customers from on-premises solutions or upgrade them from Office 365, Microsoft is launching 10% discount promotions for new-to-E3 or new-to-E5 customers on the CSP three-year subscription terms.
In April, a channel transfers interface in Partner Center was introduced that helps partners renew expiring EA offers for Microsoft 365 E3 and E5 with Teams and Office 365 E1, E3, and E5 with Teams—which are EOS—into CSP and maintain the customers’ Teams entitlements.
AI-powered automation that streamlines midterm upgrades by handling subscription cancellations and credits automatically was also introduced – something that Microsoft said results in “fewer duplicate SKUs and a reduction of support resolution times down to one day or less”.
Microsoft is also extending the Microsoft 365 Copilot Getting Started discount promotion through June 30, 2025.
Driving more renewals and upgrades
Dezen positioned the changes as "additional updates designed to help CSP partners drive more renewals and upgrades, retain customers, upsell, and scale their businesses."
"At the same time, we will deepen our investment in the partners who are delivering transformational impact with customers, aligned to our strategic imperatives."
She also referred to the announcement as "a continuation of our investments in CSP offers, capabilities, and enablement for FY25".
This has included aligning incentives to strategic priorities of Copilot on every device across every role; AI design wins with every customer; securing the cyber foundation of every customer; migrations; and Microsoft 365 core execution.
Microsoft has also dedicated 70% of total partner incentives to partners that serve the small and medium enterprise customer segments.
Denzen also flagged that Microsoft has introduced a new promotions, including a new-to-Microsoft 365 E5 offer to help CSP partners win new customers.
On July 15, 2025, MCAPS Start for Partners will "go deeper on our priorities and GTM strategies and will have dedicated CSP breakout sessions", Denzen stated. She said registration details would be sent soon.
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