Channel Watch

What Microsoft's About-Face on Office 365 Billing Means

Despite snubbing its OEMs with the Surface, Microsoft's decision to allow direct billing with Office 365 shows that Redmond still has its partners' back.

A month ago, Microsoft partners were looking at a pretty disorienting program. For several years a lot of partners had been asking Microsoft to let them sell Office 365 and its predecessor, the Business Productivity Online Suite, directly to customers.

It had shaped up to be one of the biggest controversies in the Microsoft channel.

Then in June, Microsoft signaled a sharp break with one of its oldest and most strategic categories of partners -- the OEMs that make the PCs that run the Windows OS. Microsoft announced it was releasing its own tablet PCs for Windows 8 and Windows RT called Surface.

Speculation ran wild that Microsoft was unhappy with the systems OEMs had produced so far, and that it wanted to either spur them to improve or muscle them out of a potentially lucrative market. I suspect Microsoft's official answer to that question will only come in a few years and will depend on how well the Surface sells. For what it's worth, Microsoft was careful to keep the spotlight on OEM models rather than the Surface at its Microsoft Worldwide Partner Conference (WPC) last month in Toronto.

Something else interesting happened at WPC. At a moment when the pendulum seemed entirely on the "Microsoft will do everything itself" side, people inside Microsoft started pushing it back.

The company announced that for the first time, the broad base of partners would be able to handle customer billing of Office 365 through Open Licensing.

Later, Jon Roskill, corporate vice president for the Microsoft Worldwide Partner Group, sounded a note Microsoft executives have been hitting for years. "Other companies will tell you they're partner-driven, but the proof is in the pudding," Roskill said. "What the competitors are missing is what we've known all along: That you are the best sales force in the world, bar none."

The competitors Roskill didn't name are Apple, Google, Oracle and VMware. Like Microsoft, all of those companies have shiny products right now. And all of those companies, Microsoft definitely included, are facing incredible pressures to realize as much revenue and profit from direct sales as possible.

What Microsoft has is partnering institutions. The institutions consist of people who remember how partners have helped Microsoft win in the past, job titles with "partner" in them, long-standing and well-staffed departments dedicated to partners and employee scorecards filled with partner-revenue and partner-satisfaction metrics.

I personally know of several Microsoft partner executives who pushed and pushed for years for direct billing on Office 365, for example. Microsoft's internal partnering institutions won't win on behalf of partners every time, but the fact of their existence is a critical reason that Microsoft is still a good partner

More Columns by Scott Bekker:

About the Author

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

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