News

Partners Sidelined in New 'Microsoft Customer Agreement' Model for Azure

• By Kurt Mackie
• January 15, 2019

Microsoft's new approach for getting organizations to purchase Azure services appears to put its partners at a disadvantage.

The "Microsoft Customer Agreement" model, which will be available for some customers as early as March, represents the new way that small and midsize organizations will be buying Azure services. With the new agreement, organizations will buy Azure services via a direct relationship with a Microsoft representative or via a portal, rather than going through a partner, in most cases.

The Microsoft Customer Agreement will replace the agreements that current Azure customers are using to license Azure services. It'll be offered to organizations when their licensing agreements are up for renewal, according to Microsoft's FAQ document on the "Microsoft Commerce Experience" (PDF download).

Azure account administrators in organizations will get an e-mail from Microsoft at licensing renewal time when the Microsoft Customer Agreement is available, and a Microsoft sales representative will contact the organization around that time. If an organization hasn't been contacted, though, the Microsoft Customer Agreement may not be available in that particular service area, according to the FAQ.

The Microsoft Customer Agreement is a "perpetual contract that doesn't expire for transactional purchases," according to the FAQ. The Microsoft Store for Business already follows this model, which now will apply to Azure purchases.

Microsoft is touting this new agreement as being a more simplified way to purchase Azure services and manage costs. Highlights include:

• An 11-page digitally stored Microsoft Customer Agreement.
• A single catalog for buying Azure software and other vendor products.
• Ability to add Azure Marketplace licensing from "third-party" software vendors.
• Flexible billing at the department or organizational level.
• A portal "for account and cost management, billing and invoicing."

Organizations may have used a partner in the past to purchase Azure services. However, with the Microsoft Customer Agreement, partner activities are mostly consigned to "value-added presales services and post-sale solutions for your Azure services," according to the FAQ.

Partners will still "play a critical role in this new commerce model," Microsoft's announcement added. However, it described the Microsoft Customer Agreement as dispensing with the administrative support of earlier agreements:

The new Azure experience will help meet the needs of customers who are looking for maximum control over their own Azure services and no longer need the level of administrative support included in the Enterprise Agreement (EA) and Azure-only Server and Cloud Enrollment (SCE). It will give customers a quick, easy and cost-effective way to buy and consume Azure services.

If an organization doesn't want to move to the Microsoft Customer Agreement, it can opt to use a partner-managed service instead via a Cloud Solution Provider (CSP), Microsoft's FAQ explained.

The switch to the Microsoft Customer Agreement was noted in a blog post by Stephen White, a Gartner research director. He pointed out that software licensing is still a complex affair for organizations, despite attempts by software vendors to simplify it for cloud services.

Microsoft shifted to its new approach with the Microsoft Customer Agreement after broadening access to Azure via its CSP partner community, which has mushroomed to thousands of partners, White noted. Now, Microsoft is pulling back control over the transactional elements associated with licensing Azure services, he added.

The Microsoft Customer Agreement approach will result in lower partner profits and growth prospects in some cases, according to White. It will diminish partner roles as licensing advisers on Azure services, for instance. However, Microsoft's partners likely will still have advice roles concerning other Microsoft software agreements, White suggested.