Partners Getting Direct Billing Option for Microsoft Azure

Starting this summer, partners will be able to resell Microsoft's Azure cloud services to customers in a way that still allows partners to control their own margins while adjusting for monthly changes in demand.

"Microsoft Azure will be available for partners to resell in the Open Licensing programs on Aug. 1 of this year," said Phil Sorgen, corporate vice president of the Microsoft Worldwide Partner Group, in a video message Wednesday.

For as long as Microsoft has offered cloud services, many partners have lobbied for the ability to bill their customers directly, rather than selling the customer on the service and having them turn to Microsoft to order and renew them. After several years, Microsoft relented and made Office 365 available to partners to resell through the Microsoft Open Licensing program in the spring of 2013. In April of this year, Microsoft added Open Licensing as an option for the Windows Intune and Power BI for Office 365 cloud services.

"Open allows you to purchase a Microsoft product or service from your preferred distributor and resell it to your customer. You control the direct relationship," Sorgen said.

With those other cloud services, partners can buy seats on behalf of customers, then bill the customers themselves. Azure's infrastructure-on-demand model requires a different approach. Microsoft's response is a token-based process, where partners buy Azure services in $100 increments and add those tokens of credit to the customer's Azure Portal.

"The credits can be used for any consumption-based service available in Azure," wrote Josh Waldo, Microsoft senior director of Cloud Partner Strategy, in a blog post. "This gives you the opportunity to manage your customer's portal, set up services and monitor consumption, all while maintaining a direct relationship."

The Open Licensing option adds to the previous options of purchasing Microsoft Azure directly on azure.microsoft.com or as part of an Enterprise Agreement.

The token approach with Azure skirts one of the thorniest remaining issues for Microsoft partners in reselling cloud services. Part of the appeal for customers of any cloud service is the ability to pay out of operational expenses on a monthly basis. However, Microsoft initially only made Office 365, Windows Intune and other services available through Open as a service that can be purchased with an upfront payment for the entire year.

That gap between customer expectation and Microsoft Licensing reality makes the initial sale harder or leaves the partner with the cash flow issue of buying the subscription up front but only receiving customer payments over the course of the year.

The ability with Azure to buy in $100 increments should give partners the ability to bill monthly in a way that adjusts for seasonal spikes and troughs in demand.

Expect to hear a lot more about Open Licensing for Microsoft Azure at the Microsoft Worldwide Partner Conference (WPC) in July. Ahead of that, Microsoft also plans a virtual summit covering Open Licensing for Azure on June 4.

Posted by Scott Bekker on May 21, 2014