Microsoft responds to Internal Use Rights removal: we can’t afford it

UPDATE (July 12, 11:55 a.m.)

Microsoft has retracted the decision to discontinue its Internal Use Right (IUR) program for its partners.

In a blog post, Gavriella Schuster, corporate vice-president of One Commercial Partner, announced that Microsoft has retracted the planned discontinuation of IUR for its competency programs originally slated for July 1, 2020.

“We have made the decision to roll back all planned changes related to internal use rights and competency timelines that were announced earlier this month,” wrote Schuster. “This means you will experience no material changes this coming fiscal year, and you will not be subject to reduced IUR licenses or increased costs related to those licenses next July as previously announced.”


Below is the original article posted July 12 at 9 a.m.

Key Microsoft spokespeople gathered at the Redmond headquarters in Seattle, WA Tuesday to address its partners network’s concerns over the impending discontinuation of the Internal Use Rights (IUR) benefits for its Action Pack and competency programs, which kicks in July 1, 2020. In short, it was too expensive, according to Gavriella Schuster.

“It really overran my budget this year,” said the corporate vice-president of the Microsoft One Commercial Partner program. “And when I started to do the calculations, I had to cut back on things that I was going to invest in this year, and I had to cut back so that I can pay those bills. If we continue to grow the number of partners [at this pace], and we continue to grow their usage — because they’re doing awesome things with all the technology — pretty much I could only afford to pay for the use rights. And I couldn’t afford any of the other services.”

IRUs provided partners with tools and training on running their entire business on Microsoft products and has long been recognized as a marquee benefit. Its removal means partners must now pay a fee to receive the same level of support and functions.

Schuster explained that Microsoft’s partner program has been gaining 7,000 new entrants per month, and that the IUR cost is simply too much to sustain even for a giant like Microsoft.

“As we moved into cloud services, we didn’t really think through that very much. Now there’s a substantial amount of real costs in that. If our partner ecosystem with 7,000 new entrants every single month continues to grow like this, we can’t afford this…We can’t actually afford to run every single partners organization all around the world anymore, because it’s not free.”

Key Microsoft spokespeople gathered at the Redmond headquarters in Seattle, WA Tuesday to address its partners’ concerns over the impending discontinuation of the Internal Use Rights (IUR) benefits for its Action Pack and competency programs, starting July 1, 2020. Photo by Tom Li.

Toby Richards, general manager of Microsoft One Commercial Partner program, said removing the IURs is Microsoft’s way of refocusing licensing around testing rather than business development.

“Action Packs will still have product licenses, Silver and Gold [competency levels] will still have product licenses,” said Richards. “But our goal for those the use of those is around business development. Business development meaning the development and test scenarios to build out new solutions or new practices. Perhaps for technical sales training, or for doing demos or sales. So, partners at all three levels will continue to get product licenses from our programs. That’s a pretty standard thing that we’ve been offering for decades.”

Displeased Microsoft partners

Shortly after the change was announced, the Microsoft partners community responded with mixed reactions. While some agree with the company’s cost-saving measures, many Microsoft partners, particularly small to midsize partners, were unhappy with the change.

I’ve always been a loyal Microsoft Partner,” said one anonymous source in an open letter posted on Reddit. “I have stayed up to date on your innovations, but no training ever gave me the familiarity with your products that the IUR provided…I’m really saddened to see you taking such a hostile position to MSPs. To a degree it feels like the end of an era.”

He said that many of the small shops and developers who rely on IURs will “simply evaporate”.

“We’re partners, and partners stand up for each other,” he added.

“MS Partners across the world feel a sense of betrayal with these latest changes,” said George, who works for another partner but asked to keep his identity and title private. “The Internal Use Rights allowed partners to fully exercise the use of MS products under all conditions within their day-to-day business, allowing the Partner to learn the product intimately whilst also sharing that knowledge with their clients. The clients win because they ultimately get the services of a Partner who lives and breathes the products they have been offered. Taking away Internal Use Rights will result in poorer outcomes for Partners and their clients.”

A petition has been created online demanding Microsoft to reinstate IUR. So far, it has received over 5,517 supporters.

Higher competency requirements are needed to improve quality, says Microsoft

Microsoft has also announced a higher on-boarding requirement for its Silver partner competency program, raising the minimum tenant from four to 10. In addition, a loss of customers will now tally against the quota, meaning that partners must retain their clientele while attracting more customers. 

The on-boarding change will take effect on October 1, 2019, leaving some partners just months to reach the new bar. Those who fail risk losing their competency status, which can hurt their credibility.

“We are raising the competency threshold; that’s something we definitely do every year, every other year, so that we continue to raise the quality bar,” said Schuster “We have a fairly complex kind of capacity model, right? How many best partners do you need in any given location before it gets to be too many best partners for customers to choose from? And so we have this model where we figure out that algorithm and then we say, ‘Okay, so how many partners do we have?’ And if we already have too many partners, we call the best partners, then it’s time for us to raise the threshold because it means that we’ve gotten to a place where we have to then differentiate the best again.”

But many partners don’t subscribe to the same notion and vocally expressed their disagreement.

“Microsoft claims that benefits will only be provided based on your competency level and yet when you see the new changes to competency requirements, they all have higher sales KPI’s, making it effectively impossible for many partners to meet,” said George. “Competencies used to be about learning and showing your knowledge. All it seems like at the moment is Microsoft wanting partners to sell more without effectively focusing on quality. Everything Partners stand for is about delivering quality. Not quantity.”

“Seems like these should not be called competencies anymore since the requirements are solely based on sales now with no value placed in demonstrable skills,” wrote Brian Martin, dynamics computer specialist, on the Microsoft Partner Community forums.


Tom Li’s travel and accommodations to attend this event were paid for by Microsoft. This article was not reviewed by Microsoft before publication.

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Tom Li
Tom Li
Telecommunication and consumer hardware are Tom's main beats at Channel Daily News. He loves to talk about Canada's network infrastructure, semiconductor products, and of course, anything hot and new in the consumer technology space. You'll also occasionally see his name appended to articles on cloud, security, and SaaS-related news. If you're ever up for a lengthy discussion about the nuances of each of the above sectors or have an upcoming product that people will love, feel free to drop him a line at [email protected].

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