Full Guide: Microsoft Direct CSP to Indirect Reseller Journey

Home Blog Full Guide: Microsoft Direct CSP to Indirect Reseller Journey

In this comprehensive write-up about the latest Microsoft CSP program guidelines, we have explained everything, including:

  • Difference between Microsoft direct and indirect CSP
  • Updates to the direct CSP program
  • Latest criteria to become a direct provider
  • How to transition from Microsoft CSP direct partner to indirect reseller?

What is Microsoft CSP Program?

Microsoft Cloud Services Provider (CSP) program is meant to help partners sell the resources and cloud solutions to businesses around the world. Some of the popular cloud solutions under the CSP program include Microsoft Azure, Office 365, Dynamics 365, etc.

In the market of cloud business, this is the most popular partner program with availability in over 193 geographical locations. You can become a Microsoft partner through this program and choose to sell the solutions directly or indirectly.

The pricing of the solutions can be adjusted by the partners for profits. The responsibility of providing support to customers stays with the partners.

microsoft csp program

Difference Between Microsoft Direct and Indirect CSP

Before diving into how to transition from CSP direct bill partner to indirect reseller, let's first understand what are the differences between a direct CSP and indirect CSP.

Microsoft Direct CSP

As the name suggests, the direct partners or CSPs have a direct contract with Microsoft. What it means is that if you are a direct CSP, you buy the cloud solutions directly from Microsoft and then resell them to customers.

This is a highly profitable model under the Microsoft cloud solution provider program. However, the tech giant has set some criteria and requirements that can make some interested businesses to change the route. Moreover, not every business that applies for this program gets qualified.

Over the last couple of years, Microsoft has made the requirements to become direct CSP tighter and reduced the overall number of direct partners. Some of the primary requirements include an advanced support agreement and generating $300K in CSP revenue. The detailed requirements have been discussed later in this write-up.

Microsoft Indirect CSP

As an indirect CSP under the Microsoft partner program, you buy the cloud services from a qualified indirect provider or distributor. Since you are not directly connected to Microsoft for selling the solutions, it becomes easier to get to market.

All the required tools and resources are provided to you by the Microsoft indirect providers. You can then sell the services to end customers at a profit margin of your choice.

Microsoft doesn't have a tight set of guidelines for indirect cloud solution providers. Hence, it becomes convenient to scale at your pace in the market. Moreover, the tech giant offers incentives and Partner of Record Status (POR) for high performance.

Microsoft CSP Direct vs Indirect Channel

Now that you have learnt what is direct and indirect CSP, let's go through a quick comparison between the two channels.

microsoft direct csp indirect provider

New Microsoft Requirements for Direct Bill Partners

In January 2021, Microsoft announced CSP program changes for direct partners. Whether you are an existing direct CSP or interested in becoming a new one, you must know the minimum requirements to enroll in Microsoft CSP direct program.

Following are the latest Microsoft CSP Program changes:

1. CSP Revenue of $300,000

This is meant for the existing direct bill partners. To continue in this partner program, they must have an annual CSP revenue of at least $300K. In case they don't meet the revenue criteria, they will be restricted from providing the solutions further.

The aim of Microsoft behind new direct bill partner requirements is to empower partners to generate more profits from their business while offering better value to customers. Since March 2021, the new requirements have been affecting the existing partners as Microsoft is ending the partnership once their support contracts expire.

2. First Level of Cloud Product Support

The second new requirement for direct bill partners is to have a Microsoft support plan. It can either be Advanced Support or Unified Enterprise Support. The cost of these plans will be over $16,000 per year.

The cost will be higher depending on a number of factors, like historical annual IT spending, cloud services sales in the last 12 months, license-only purchases in the last 60 months, etc.

While this cost might not look high to some direct partners, they must consider whether they can justify the cost with their annual revenue.

There are a few things that you must also know about Microsoft Unified Enterprise Support. It was formerly available as a Premier Support plan. However, it has now been replaced with a Unified Enterprise plan. Since July 2021, the Premier Plan is no longer available for new customers. The existing customers are allowed to renew it till June 30, 2022.

Here's a quick overview of how the Unified Enterprise Support pricing is calculated:

microsoft unified enterprise support pricing

3. Minimum of One Managed Service

To continue as a direct provider or become a new one, it is mandatory for the partner to offer a minimum of one managed service, IP service, or customer solution app.

Additional Microsoft Direct Bill Criteria for New Partners

The above-mentioned requirements to become Microsoft direct CSP are also applicable to the new businesses looking to join the partner program.

In addition, the CSP must have worked as an indirect reseller for at least one year. The CSP must also have the required infrastructure for customer's subscription and billing management.

Impact of New Microsoft Requirements on Direct CSP Partners

The new criteria introduced by Microsoft are forcing a large number of businesses to transition from CSP direct partner to indirect reseller. It is because of the constraints in terms of budget, time, and teams.

Microsoft is not just asking to hit the minimum revenue criteria, but also to meet requirements related to billing, provisioning, and first-grade customer support.

If you are a direct bill partner, you have got three options now:

1. Meet the new Microsoft CSP requirements

If you are confident about meeting the new eligibility criteria, including $300K annual revenue, first-grade support, and providing at least one managed service, then you can continue your business.

For this, you need to work on transforming your marketing strategy to drive more sales. In addition, you should highly focus on finding new opportunities to upsell and cross-sell your solutions to existing customers. These things will need you to expand your team and onboard new resources.

2. Cancel your partner subscription

In case you don't meet the requirements, your partner subscription will be canceled. Microsoft will now allow you to provide any of its cloud solutions to the customers.

You can also go this way if you have other business plans or want to explore other opportunities in the cloud business.

3. Switch from direct partner to indirect reseller

The last and the best option is to move from a Microsoft direct CSP to indirect reseller. This way, you can continue to sell cloud solutions to the customers, but through the indirect partner channel.

In fact, Microsoft itself is recommending the direct partners to enroll as indirect resellers if they can't meet the new criteria. As a result, most of the businesses in the CSP program are wondering how to become indirect resellers smoothly.

Suggested Reading- 6 Impactful Ways To Scale Up Your Cloud Reseller Business

Microsoft Direct CSP to Indirect Reseller Journey

We have covered the step-by-step process of how to become an indirect reseller from a direct partner. Before moving on, please note that you can participate in the indirect reseller program with the current direct bill tenant.

Making Changes in Microsoft Partner Center

1. Login to your Partner Center dashboard. Your MPN ID and partner profiles must be current.

2. Once signed in, navigate to the enrollment form to check the partner details.

3. After reviewing the details, click on Enrol Now. This will send your enrollment request to Microsoft. Once approved, you will get the confirmation email. It takes one to five business days for confirmation.

4. When you have received the approval, log in to your Partner Center dashboard.

5. You can now check the indirect reseller agreement on the Overview page. Go through the agreement and choose 'Accept and continue'.

6. It will bring the indirect reseller functionalities to your Partner Center.

Finding a Microsoft indirect provider

The next step is to choose the right indirect provider to form the relationship with. While you will get the same Microsoft cloud solutions from every indirect provider, but there are variations in the level of support, service, technical training, marketing, managing financial terms, etc.

We have covered the full list of Microsoft indirect providers (country-wise) that you can browse and find the right provider in your country.

From within the Partner Center, you can select the indirect provider. When you choose one, the provider will connect with you by email and share an invitation link. After following the remaining steps, you will be on your journey to selling services as a Microsoft indirect reseller.

Speed Up Your Growth as a Cloud Reseller

To become competitive in the cloud reseller business, you must have solid strategies and modern tools. The cloud market is indeed growing at a fast pace and there is a wide pool of businesses looking for cloud services. It is your time to target them and offer them the right solutions.

The primary challenges for cloud resellers today include complex billing, delays in provisioning the services from distributor to customers, high overhead costs, and inability to sell multi-cloud.

You can tackle all these challenges with a modern and purpose-built cloud subscription billing software like Xtributor.

Xtributor is the first-ever subscription management platform for cloud resellers. It quickly connects APIs from multiple distributors, fetches the products with price books to your cloud marketplace, and then enables complete automation for provisioning and billing of services to the customers.

It empowers you to become a hypergrowth Microsoft reseller by tackling the complex management related to selling solutions from multiple indirect providers or distributors. The platform comes with required integrations with payment gateways, accounting tools, and taxation tools.

No matter what billing terms your customers opt for, Xtributor automatically manages everything from onboarding to the renewal.

microsoft direct partner to indirect reseller transition

Wrapping Up:

At certain points, there comes a time when changes come from every direction. The best way to tackle such changes is to put aside the worst-case scenarios and look out for the new and best opportunities. Becoming an indirect cloud reseller is currently the best opportunity for direct partners who can't meet the new requirements by Microsoft.

Read Next- 3 Ways Cloud Resellers Can Boost Profit Margins With Operational Efficiency