Channel Watch

Give BPOS a Chance

• By Scott Bekker
• November 01, 2010

Here at Redmond Channel Partner magazine, we're pretty bullish on the cloud and on Microsoft's prospects to be a major cloud player with a vibrant ecosystem of cloud partners. That doesn't mean we think Microsoft is making all the right moves in the cloud. Case in point: Microsoft Business Productivity Online Suite (BPOS). The biggest partner concern about BPOS is that Microsoft bills customers directly. Again and again from readers, we hear variations on this theme: "BPOS is interesting, but I need to be able to handle the billing."

The reasons are obvious. Partners who handle their own billing can bundle the service with their own and third-party components and services appropriate for their customers, and it allows them to maintain flexibility on pricing. That's not even getting into concerns about Microsoft cross-selling and upselling customers, a role that Microsoft has traditionally relied on partners for -- and which, frankly, partners are much better at than Microsoft is.

Not only is Microsoft keeping those options away from partners with BPOS, Microsoft is currently making the same moves with Windows Intune, its forthcoming cloud-based systems management toolset.

Responses from Microsoft to this concern apparently come in two forms. On the one hand are people who don't understand what a showstopper direct billing is. I've even heard a Microsoft spokesperson talking about direct billing as a feature, allowing Microsoft to innovate with billing. Then there are those who probably understand the problem, but will toe the company line -- at least until it gets changed internally.

It has to be acknowledged that allowing small partners to handle billing would pose some challenges for Microsoft. On the infrastructure side, the company is used to dealing with a small number of high-volume partners, such as large account resellers and distributors, when it comes to licensing. Yes, infrastructure partners currently work with those transactional partners for margin or just make all their revenues from add-on services and implementation. They're used to it, but that model is tougher for partners in the cloud: it's not clear that there's as much service opportunity up there.

Implementing partner-led billing has challenges for Microsoft, but they aren't insurmountable. Microsoft has a successful model on the Dynamics side, where it has a broader community of partners who sell licenses directly to customers. The company has also made it work with Comcast, where Microsoft technology backs the cable giant's white-label small-business offerings. Comcast is a huge partner and a single example, but it could provide a way forward.

Not every partner wants to handle billing, but a lot do. If Microsoft can find a way to offer partners the option, it's a surefire way to accelerate partner interest in and enthusiasm for the company's packaged cloud offerings.

What does your company want to do about BPOS billing? Tell me at [email protected].