Microsoft’s move to simplify its Open License program and how it affects you

Umbrellar Connect

Created 20 years ago, The Microsoft Open License program was designed for small and midsized customers to buy multiple perpetual software licenses at a volume price. In a recent announcement, Microsoft is transforming its commerce platform to benefit both customers and partners alike.

“Once it’s fully launched, it will enable faster, simpler transactions”, says Dan Truax, General Manager, Global Partner Solutions at Microsoft. 

A simpler, faster transaction process means customers can consolidate their transactions with a single managed entity, with the option to go directly to a preferred partner. Effectively, cutting out the back and forth and lengthy process of handling multiple relationships that have been implemented by Microsoft.

Umbrellar Head of Cloud Technology, Rob Farnell, says “This gives partners the opportunity to add value to their service, where they can sell, advise, build and manage the customer”. The benefits of this update are two-fold for partners – margin incentives, and a better direct relationship with the customer. 

Evolution of the commerce experience

Currently, offers are available through various licensing programs and platforms, but this purchasing experience for customers and for partners is fractured. Each licensing platform has its own unique contracting experience and terms and conditions, as well as disparate customer, partner, and field management console experiences. Looking ahead, the purchasing experience will evolve to improve the overall picture of the customer position and the ability to advise the customer about logical next purchases.

Microsoft’s vision for the future is to provide a single, connected platform experience for customers – regardless of which purchasing motion they buy through:

  • With an expanded offer catalogue, the new commerce experience will allow Microsoft and partner offers to be brought to market faster – however, customers choose to transact.
  • Partners can help customers in every purchasing motion to get the most value from their technology investments. In the breadth motion, partners will manage all aspects of their customers’ purchase, deployment, and use of technology across all stages of the customer lifecycle. In the enterprise motion and self-service motion, partners will provide customers with the services and solutions they need to succeed.

All customers will sign the Microsoft Customer Agreement – with terms and conditions that scale to the ways they buy.

  • Breadth motion – The breadth motion is the primary purchasing motion for mid-sized and small corporate organizations that typically do not require unique contractual requirements beyond price negotiation. They are serviced primarily by partners in the Cloud Solution Provider program, which is the optimal licensing construct for the breadth purchasing motion due to its consistency and scale. Partners in the Cloud Solution Provider program manage the end-to-end customer relationship from contracting to service delivery. You have full discretion over pricing, and the support services and value-added services you deliver. It is here that partners are equipped to fully serve these customers and Microsoft can provide best-in-class partner economics including wholesale pricing and incentives. Microsoft will continue to invest in a Qualified Referral Program to enable that bridge to be more effective and to scale efforts in providing great customer experiences.
  • Enterprise motion – The enterprise motion is the primary purchasing motion for larger customers as these deals generally require a high level of Microsoft involvement to support the complex terms needed for these digital transformation deals. These complex terms can require special approvals to provide dual use rights, lead status SKUs, multi-tenants, multi-affiliate, and more. These scenarios require in-depth conversations between Microsoft and the customer to better understand how the changes help and meet the customer needs. The enterprise purchasing motion is serviced by the Enterprise Agreement. It also includes Microsoft Customer Agreement (MCA) transactions quoted and contracted by Microsoft sellers, where partners continue to play key roles in both pre-sales and post-sales activities. Partners are involved in the enterprise purchasing motion today, and will continue to be, especially as it relates to building solutions, consulting, and advising our customers on their technology needs as well as in the deployment and integration scenarios and ongoing managed services. Partners are critical in the pre-sales and post-sales activities, workshops, and proof-of-concepts, and work with Microsoft to accelerate customers’ digital transformations. When customers contract through Enterprise Agreements (EAs), partners may also be involved in invoicing, collections, foreign exchange, and supporting licensing compliance with customers.
  • Self-service motion – Self-service scenarios exist across all sizes of customers, large or small, individuals or individual departments, and they exhibit specific technology purchasing needs. In these cases, the individuals procuring the products know exactly what they want and how they intend to try or buy the services. These customers prefer to make purchases online via a web portal or through an assisted self-service purchase motion via a Microsoft Seller; but all customers intend to self-serve the ongoing management of their subscriptions, new trials and/or future additional purchases. These customers may also require services from a partner on specific workloads or other web advisory services and will be instructed on how to engage with a partner.

What does this mean for partners? 

“It’s a great opportunity for CSPs in New Zealand, and globally, to start courting customers – whether that’s as a direct reseller or as an indirect provider,” says Farnell. Microsoft partners can apply to be a direct reseller through the MyCSP.io portal where they will be able to access all of the capabilities offered as part of the breadth motion. 

With the future changes, wholesale pricing and incentives will be aligned to the way Microsoft Azure and seat-based Microsoft Online Services are sold in the new commerce experience. Incentives will be graduated through the purchasing motions, and there will be a different set of incentives for partners to continue to engage in the enterprise purchasing motion. Partner economics in the breadth motion will be optimized for deals below 2400 seats for new commerce seat-based online service offers, or Azure deals below $1M USD annualized consumption. Partners can sell to larger customers through the Cloud Solution Provider program (above 2400 seats or $1M USD annualized consumption), yet the underlying deal economics on the additional seats or revenue will be less compelling. There are no mandatory conversions between motions, but the economics on the transaction will change as the size of the deal increases – moving more to enterprise-like from breadth. When concessions are needed to meet customer requirements, this will be done through the 

What does this mean for customers? 

Customers can continue to renew and purchase new software licenses, Software Assurance, and online services through the Open License program until December 31, 2021. As of January 1, 2022, commercial customers won’t be able to buy new or renew software licenses or online services through the Microsoft Open License program. New license-only purchases should be transacted through partners in the Cloud Solution Provider program.

As the start of 2022 and licence expirations start to approach, customers will need to find a provider to transact new license purchases.

Learn more about MyCSP

Umbrellar Connect

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