Microsoft's Office 365 strategy has not always been well-received by the channel. It was criticised for choosing to give syndication partner Telstra exclusive rights to resell Office 365 to small and medium businesses, which many partners saw as undermining their relationship with customers.
The situation improved in early 2014 when Microsoft brought Open licensing to Office 365.
Microsoft has 15,000 active partners in Australia and almost certainly the biggest reseller base of any technology vendor in the world – and this channel is quick to criticise the vendor whenever it fails to cut resellers in on the action. Microsoft is still facing a backlash over its decision to restrict the reseller base for its Surface tablet.
"Microsoft's major advantage over every tech vendor on the planet is their channel," said Dominic O'Hanlon, chief executive of Rhipe. "When they started releasing their public cloud offerings like Azure and Office 365 and they were not available to the channel, the channel was looking at them saying, 'What does this mean?' They have just answered that question [with CSP]."
O'Hanlon said CSP aligns seller and buyer behaviour in software-as-a-service. "The challenge for traditional disties is this is not how they work and it is a fundamental change in their business model, in how they pay people, in how they forecast.
"The whole concept of the cloud is that you can quickly get access to what you need and pay for it when you need it, whether compute, storage... that is the concept of the cloud.
"But as companies [vendors] have started deploying their software in the cloud, it has taken them a while to work out people don't want to pay for it when they don't use it. Even Salesforce, you still need to pay for a seat whether or not you use it. You still need to commit upfront," said O'Hanlon.
The most successful software vendor to make the transition from perpetual licensing to a subscription service was Adobe with its Creative Cloud, however, that is largely a direct sales scenario that sidelined its channel, as one reseller told CRN last month.
Disties to provide migrations
Microsoft's CSP program is about more than just putting partners in charge of deployment and billing. Microsoft has repeatedly said it wants partners to add value in the transaction. For 1-Tier partners, this has seen innovation such as Queensland-based Cloud First's Office 365 bundle aimed at the franchise sector.
Both Rhipe and Ingram said they would add value by helping resellers with support and migration.
Last year, Rhipe purchased Microsoft specialist nSynergy for up to $25 million; those Office 365 migration skills will come in handy for Rhipe CSP wholesale strategy.
O'Hanlon was quick to stress that the distributor was not looking to sell direct to customers.
"The challenge many small service providers have is that they have no Office 365 implementation and support capability. One of the mistakes service providers make is they think of Office, they think about Word and Excel, but Office 365 includes SharePoint, Yammer and Lync - enterprise products that need to be implemented, that need security access and where you need to personalise the user interface," said O'Hanlon.
"Our pitch to partners is, if you have no Office 365 implementation skills or support capability but you think your customer needs that, you have three options: one, introduce a competitor; two, build your own team; or three, come to us and we will have an agreement that you own the customer, we won't sell direct but we will provide the capabilities and sell though you just like we sell Microsoft licensing to you.
"The only [resellers] I come across that don't like that story are those that have built internal capabilities, and the reason they don't like it is not because they think we will compete, it is because they think we will make it easier for their competitors," he added.
Rhipe expects to be up and running with CSP licensing on 1 July, said O'Hanlon.
Ingram Micro will provide migration and support services, said the newly hired executive director of Ingram Micro Cloud, Richard Duggan.
"We are adding migration services as well as an option for partners that don't want to invest in level 1 services. We will be able to provide those level 1 services. We are focused on complete lifecycle maintenance for our partners."
Ingram Micro senior regional manager Danny Dainton said that by providing migration services and a 24/7 helpdesk, the distributor would enable "partners to drive the sales focus while we manage the back end from a billing, provisioning and maintenance perspective".
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