Microsoft releases the shackles from Office 365 partners

Some 18 months since the launch of Microsoft’s Business Productivity On-line Suite (BPOS), the Redmond Giant has had a revelation about the role of the channel in selling their cloud offerings in the market. At today’s WPC event, Microsoft announced their “open” model for Office 365, the current iteration of the on-line suite. It establishes the reseller as the primary point of customer relationship with the ability to use the traditional resale model, set price and invoice the customer for the cloud service along with other products or services they may be selling.

This change was a long time coming, as Steve Balmer and Kurt DelBene, President of the Microsoft Office division, noted. “This is what you’ve been asking for”, they commented after a rousing round of applause from the audience. Early on in the BPOS channel program, it was rumored that Microsoft had plans to invoice customers directly but brand those invoices with the logo from the partner-of-record. That plan never seemed to materialize. And, with the limited margins partners have been able to make on the per-user licensing model, BPOS was originally launched into the channel with much fanfare but limited partner enthusiasm and momentum. In the wake of that disappointment,, Google, Netsuite, Oracle, VMware and others have been actively attempting to woo top Microsoft partners away from any further investment in the company’s flagship cloud suite.

To further address the margin issue, Microsoft today also announced the Office 365 Advisors Program which will offer partners selling more than 150 seats additional up-front margins. DelBene indicated the total margin opportunity for this tier of Office 365 partners to be 23 per cent on the first year of service alone. With user deployments happening 5 times faster than previous versions, the Office 365 suite seems to be gaining momentum with new deployments of thousands of users at major corporations such as Burger King, Lowes Home Centers and Japan Airlines. Microsoft execs touted that Office is now being used by one billion people worldwide.

There has always been a product in the Microsoft line card that’s the loss-leader. And, Office 365 may remain that product for the forseeable future. But, the opportunity to lead with productivity applications and expand to Lync, Sharepoint, Dynamic, Intune and other applications remains the Trojan horse sales opportunity for all Microsoft partners. Clearly, Office 365 is a fundamental component of Microsoft’s big bet on the cloud. Reinserting their partners in the active sales, marketing and transactional food chain, while bolstering channel margins, will allow the company to leverage one of its most concrete and competitive weapons in the cloud market – the power of its volunteer army of authorized resellers.

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