What is the Cloud Solution Program?

The CSP program is Microsoft's channel strategy to resell Office 365, Dynamics 365, and Azure. It allows authorized partners and resellers to bill, provide support, and own the end-end customer delivery of Microsoft's cloud solutions. The CSP program comes in two flavors: CSP Direct and CSP Indirect.

CSP Direct

Previously called CSP Tier 1, the CSP Direct program allows qualified partners the ability to resell Microsoft's cloud solutions directly to their end customers. It's more than just reselling; with CSP Direct, you own everything, including all the support, billing, platform, and expertise.

The benefit of CSP Direct Authorization:

• Own the customer experience.

• Ability to bundle additional solutions on top of simply reselling Microsoft cloud. For example, many CSP Direct partners have built consumption platforms for Azure or API for billing. All of which can be additional fees to charge your customer.

• Ability to offer solutions from other programs. As an example, as an SPLA partner, you can offer the Qualified Multitenant Hosting option for VDI, SPLA, and Office 365.

• Better pricing. With the direct model, there's no go-between to drive up costs.

Limitations of CSP Direct:

• It's an investment. You need the resources, including staff, platform, and support, to handle customer inquiries.

• Billing in territory only. This means you can only resell Microsoft cloud in your authorized territory.  This makes it difficult for organizations with a global customer base but limited authorization.

• At the end of the day, you are the expert. Good or bad, the buck stops with you.

CSP Indirect

Previously called CSP Tier 2, The indirect model fits well for organizations that do not have the resources, support, or platform to manage their end customers.

The benefit of CSP Indirect:

• If you partner with a CSP Indirect distributor, you can go to market faster because you are

leveraging the distributor's CSP authorization, not your own.

• Little upfront financial commitment.

• The CSP Indirect distributor will have the platform to support your customers.

• The CSP Indirect distributor will handle different levels of support, so you are not forced to manage the entire process.

Limitation of Indirect Authorization:

• Cannot participate in the QMH addendum (hosted VDI using Windows 10 E3/E5)

• Higher prices. The distributor works with Microsoft directly, which procures Office 365/Azure licenses

that will be resold to your end customers. Many more layers than working directly with Microsoft for

pricing.

• Must work with an authorized CSP Indirect distributor. In some cases, you might already have a

relationship with another distributor that is not CSP Indirect authorized. This means you are working

with multiple vendors or terminating an established relationship.

• No direct line of support from Microsoft. The CSP Indirect partner will only have access to Microsoft

support. If the CSP Indirect partner does not provide you and your customers with adequate support, your end customer may be impacted.

• For the Indirect authorized partner, the margin is very slim. To stay competitive, they cannot mark up the costs too high (which is good for you) because it is a third-party billing process. For the Indirect partner (distributor), the way to make up the lower margin is to bundle other solutions with CSP.

What is Microsoft's strategy for SPLA partners?

Remember that CSP is not a partner-hosted solution; it's a Microsoft-hosted solution. CSP is just a channel program for managed service providers and other hosting providers. It's also designed for resellers who have a large volume licensing footprint. Yes, in a way, it competes with your own hosted solutions, but it also compliments it. Microsoft's strategy for CSP is to market to all SPLA partners that have the following characteristics:

1. Established customer base

2. Report thru SPLA Exchange/SharePoint/Skype/Office (all Office 365 products)

3. Have an established IaaS offering (use Azure as backup)

4. Have a support system in place

5. Healthy, financially stable.

Let's review each one independently.

1. Having an established customer base helps Microsoft reach customers they do not typically market to. Remember, this past year, Microsoft revamped its sales force to focus less on enterprise programs and more on cloud solutions. Your business is Microsoft's sales engine. Microsoft does not have to acquire your business to accomplish this.

2. Report thru SPLA all the Office 365 components. Microsoft knows what you report each month in SPLA. They also know who your customers are, especially if you created an End Customer Enrollment (which is part of your SPLA agreement). In my opinion, Microsoft would rather have you sell the Office 365 components than host it yourself. That's why Office 365 is typically priced lower.

3. Having your own IaaS offering is great in Microsoft's eyes. You can leverage their data center for DR/redundancy, slowly transition your customers to Azure as the cost of a data center continues to rise, or bring the Azure technology into your data center with Azure Stack. Last, Microsoft still gets paid when you report Windows/SQL in SPLA.

4. Having a support system in place is evident. SPLA partners who host their solutions would likely already have some sort of support team established. In CSP Direct, you are the direct support line for your customer. This lowers Microsoft's investment in providing first/second tier support calls.

5. Financially stable is just as important. If you do not have the funds to support your payroll, the likelihood of you investing in funds to market cloud solutions is not very high. What are the requirements to become CSP Direct authorized?   The official statement and updated conditions to become authorized are listed on the partner website. Microsoft is the only one who can approve your organization for this program (not your reseller, distributor, or partner). Where your reseller and partner can help is with is your relationship with Microsoft. Many SPLA providers have not had any contact with Microsoft directly; it is the reseller who can help broker this relationship. Your Microsoft account manager is your advocate for becoming authorized, and it's essential to have an excellent relationship to promote eligibility.

The process is relatively quick, and in some ways, it depends on how quickly you can provide the appropriate information to Microsoft to review. If you are serious about becoming CSP Direct authorized partner but worried about the process, start going through the steps now, even without authorization, including:

1. Get a support team in place

2. Get your financial records in shape

3. Invest in a platform to support the purchasing process

4. For the Qualified Multitenant Hosting benefit, get a landing page created.

5. Build a relationship with Microsoft.

6. Report your SPLA on time and pay on time. Nothing screams compliance risk or business instability than being delinquent with the publisher you are trying to establish a partnership with.

7. Review your Microsoft partner membership. To be SPLA authorized, you must be a Microsoft partner. In most SPLA renewals, it's alarming how many hosting partners do not know if they are a member or not. Being a Microsoft member helps build credibility with the publisher and achieve certifications necessary for your business. Please go to www.partner.microsoft.com to review eligibility requirements and the different levels/benefits for each partnership level.

Conclusion

Is CSP right for your business? Is SPLA? Only you can decide the answer to those questions. If you feel your customers can benefit from a Microsoft-hosted solution as opposed to your own, then CSP is your answer. If you feel your customers appreciate your local data center, support, and offers, then SPLA is the best way to accomplish these goals.

In many cases, it's not an either-or question, and it's both. If an end customer wants to use Azure, do you turn that customer down or find a way to help support them? Another thing to consider is that not supporting your customer opens the door to competition. Every MSP, every hoster, can be eligible for CSP.

Microsoft bet is cloud, and they are the only ones who can offer a true hybrid solution leveraging SPLA and their own hosted offering

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