As MSPs take the first steps toward launching an Azure practice, one of the most important decisions will be where to procure their Microsoft CSP licensing. For the larger Microsoft partners driving significant CSP revenue, a direct relationship with Microsoft may be possible.
As a Direct CSP, these partners will invest in Microsoft support and commit to specific revenue targets in order to participate in a direct relationship with Microsoft. This results in a high level of engagement with Microsoft including deeper discounts and a dedicated partner development manager (PDM).
However, for most partners building out an Azure practice, it will make more sense to transact Azure consumption as an Indirect CSP Reseller, where essentially, the Microsoft partner is able to purchase Azure and Office 365 through an Indirect CSP Provider (aka distributor). By leveraging this arrangement, the MSP can get access to sell Azure without having to make revenue and other commitments to Microsoft, while still potentially receiving value added services from their distributors.
With that in mind, here are some factors to consider when selecting a distributor(s):
- Size of the organization. Bigger distributors give you many more options in terms of product breadth, they are more stable, and get vendor’s (e.g. Microsoft) attention. Smaller firms may want your business a little more and can move faster.
- Focus. Do you want a born-in-the-cloud distributor with a laser focus on cloud, unencumbered by legacy products/services/processes or an all-encompassing firm with the ability to service all products and services? Or something in between?
- Pre-sales Resources. Can the distributor help with pre-sales efforts, design, pricing, etc.?
- Marketing. How will a distributor partner with you to drive demand to your existing customer base and with new prospects? Are there MDF programs available?
- Support. What kind of technical support is offered? Will you need to be self-sufficient, rely on vendor support, or will distribution bridge the gap for you?
- Provisioning portal. Are all cloud services easily provisioned and organized? Can they tie into your PSA? How much does the distributor allow you to streamline ordering and track consumption and/or subscriptions?
- Credit. What types of financing and credit lines are available?
Once you’ve selected a distributor, you’ll have a vehicle to transact Microsoft Office 365 and Azure and will have put yourself in a good position to build and grow your Azure practice. In order to be successful as a partner, here are some steps you can take to work more effectively with your distributor:
- Consider a vertical focus, and work with your distributor to see if they can add any additional value to help service that vertical. Similarly, have a compelling story to tell as you must be able to differentiate yourself!
- Take advantage of certification paths from your distributor (these can be provided from the distributor, a vendor, or some combination of both). Boot camps, educational tracks, trade shows, and other avenues can all advance your organization’s knowledge and progress.
- Collaborate with your dedicated account representative and/or cloud specialists that add value in terms of pre-sales, marketing, etc. Your distributor’s technical team can become an extension of yours—able to assess current customer environments and design solutions. Similarly, leverage your distribution team’s expertise in Microsoft discounts, programs, etc. to get creative on packaging, deal structure, and margin optimization. For instance, with Azure, your distributor can help you take advantage of Reserved Instances and Azure Hybrid Usage to optimize Azure pricing which could help both your margin and your customer’s pricing. It is not uncommon for a distributor to help you realize margin gains of 50% or more by combining different Microsoft incentives and their own incentives. That’s big money!
- Leverage your distributor’s network and ecosystem. For example, rather than spending upfront for large purchases, is there a financing partner that your distributor works with to optimize your cash flow?
- As you build your practice, build a library of content highlighting your wins, your expertise, and your partnership with the distributor — and socialize that content within the distributor and to the outside world, too. Be specific! Talk about the problem that existed, how you partnered with your distributor to solve it, the investment needed, and the business outcomes achieved.
Your decision on which distributor to work with is one of the most important decisions you will make as you build and grow your Azure practice. The right distributor will line up well with your organization’s needs in terms of sales, marketing, financing, operational, and technical assistance.
As public cloud growth continues to accelerate rapidly, having a distributor who can partner with you to both help now and as you grow will be a critical part of your success.