Channel Watch

With Office 365, Microsoft's Direct Billing Drama Continues

Microsoft created a new partner category when it launched Office 365 to fix the billing problems that vexed partners with BPOS. But there's a catch.

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Redmond Channel Partner has argued repeatedly that if Microsoft expects partners to carry its cloud services banner into the market, those partners need to be able to bill customers themselves.

Many partners had expressed hope that in upgrading the Business Productivity Online Suite (BPOS) to Office 365 this summer, Microsoft would address this "direct billing" issue.

Well, Microsoft did address it, but not in the way many partners had hoped. With the June 28 launch of Office 365, Microsoft also unveiled a new category of hosters, called syndication partners, that will be able to handle their own billing of customers for Office 365 (see "For a New Category of Cloud Partner, Microsoft Relaxes Office 365 Billing").

It's a fix only for 20 select value-added hosters around the world. For the remaining 15,980 or so of the 16,000 partners that Microsoft says are signed up to sell Office 365, the deal remains the same as it was under BPOS: Partners will jockey to have their customers sign them up as the Partner of Record (PoR) on Office 365 deals. The customers will be billed by Microsoft and the partners will receive their payments from Microsoft on active seats so long as the partners maintain that PoR status.

The new partners will include Office 365 with services such as Web hosting, broadband, security, finance solutions, audio conferencing and mobile services. This worldwide stable of syndication partners consists of AppRiver, Atea, Bell Canada, Central Europe On-Demand, InterCall, Intuit, Jack Henry & Associates, KPN, Mamut, Orange, Premiere Global Services Inc., SKB Kontur, TDC Hosting, Telefonica, TeleiSonera, TELMEX, Telstra, UPC Business, Vodafone and StarHub.

Microsoft officials are making the same arguments they have for a while with cloud billing. Short version: Billing across international markets is complicated and partners should appreciate having someone else handle the hassle of asking customers for money.

While it's true that some partners do appreciate Microsoft handling the billing or have built new business units around the model, it's also true that for most partners who didn't like the billing arrangement in BPOS, not much has changed in Office 365.

The move with the 20 partners suggests that Microsoft for now is only willing to change its internal processes for companies big enough to move the needle on Office 365 sales. Fair enough. But Microsoft of all vendors should recognize that the size of its partner community -- often cited at 640,000 companies worldwide -- can move the needle pretty dramatically, too.

Maybe if the billing aligned better with partners' business realities, Microsoft would have a lot more than 16,000 of its 640,000 partners signed up to sell Office 365. The mix of desktop software and cloud back-end may be a winning combination for Microsoft in its battle against the more pure-cloud Google Apps. But why Microsoft keeps insisting on going into this fight with one hand (its massive and loyal partner base) tied behind its back is a mystery to me.

Does Office 365 change your view of the billing issue? Let me know at [email protected] or leave a comment below.

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About the Author

Scott Bekker is editor in chief of Redmond Channel Partner magazine.


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