How to choose the correct Microsoft CSP model for your business

How to choose the correct Microsoft CSP model for your business

With businesses around the globe prioritizing cloud adoption, a huge opportunity has been created for selling and managing cloud services. Microsoft CSP program allows businesses to go further than just reselling software licenses. Cloud Solution Providers are responsible for managing the end-to-end lifecycle of their customers. This includes managing the customer billing, provisioning, and support. CSPs can sell their solutions and services along with Microsoft products, which increases the revenue streams. There are various other benefits of becoming a Microsoft CSP such as strengthening customer relationships, earning recurring revenue, expanding product portfolio, cross-selling and upselling opportunities, and setting own prices and profit margins.

Different CSP models offered by Microsoft

Microsoft offers two distinct CSP models: the direct-bill model and the indirect model. Further, there are three different partner types under these two models: CSP direct bill partners, CSP indirect providers, and CSP indirect resellers. To get the maximum benefit from the CSP program, you need to understand the benefits and eligibility requirements of each model and choose the one best suited for your organization.

Direct-bill model

The partners in the direct bill model purchase the Microsoft products directly from Microsoft and sell them to their customers on their own. The partners opting for this model should be capable of providing billing, provisioning, and support services to their customers. As there is no intermediate reseller in this model it allows the partners to keep the entire margin with them. Partner organization must meet at least USD300K in Cloud Solution Provider program annual revenue during the preceding 12 months as an indirect reseller. Partner must have the ability to provide the first level of cloud product support to their customers and should have a Microsoft support plan, either Advanced Support for Partners (ASfP) or Premier Support for Partners (PSfP), depending on partner needs.

Indirect model

There are two partner types in the indirect model: an indirect provider or a distributor and an indirect reseller. The indirect resellers are partners who transact with indirect providers and further sell the Microsoft products and subscriptions to their customers. The indirect providers transact with Microsoft on behalf of the resellers. The indirect providers supply billing and provisioning infrastructure and provide technical support to the resellers.

Becoming an indirect reseller helps partners get to market quickly. They do not have to meet the stringent revenue and support requirements that direct CSP partners have to meet. As far as the profit margins are concerned, as there are two partners, the indirect provider and the indirect reseller, involved in the transaction, the profit margin depends on the mutual contract.

What do you need to become a Microsoft CSP Partner?

To be eligible for either of the CSP models, the partner should have an active membership in the Microsoft Partner Network and MPN ID for the location they want to sell in. Apart from these the following requirements need to be met to become a Microsoft CSP partner.

Eligibility requirement for becoming a direct bill partner

  • To be eligible for the direct bill model, the partner should have achieved annual revenue of at least USD300K in the previous 12 months as an indirect reseller in the CSP program.
  • A direct bill partner should have the infrastructure to manage the billing and provisioning of licenses of its customers.
  • Fulfill the support obligation by purchasing the Microsoft Advanced Support for Partners package or the Microsoft Premier Support for Partners package.

Eligibility requirement for becoming an indirect reseller

How to decide which Microsoft CSP model is right for you?

As highlighted in the sections above, there are pros and cons to each type of partnership in the Microsoft CSP program. To select a CSP model that is best suited for your business, you need to consider the following points.

How quickly are you looking to get to market?

Becoming a direct CSP partner is time-consuming as it takes approximately 4 months to meet the prerequisites and get certified. If you are looking to enter the market quickly, becoming an indirect reseller is the right choice. If you have some existing opportunities of selling Microsoft products and subscriptions it makes sense to become an indirect reseller and make the sale.

How much revenue do you expect to make?

Direct CSP partners have higher profit margins, but they have higher upfront costs due to capital investment in infrastructure as well as the requirement of purchasing an annual support plan from Microsoft. Both of these reduce the net profit of the business. Becoming a direct CSP partner is feasible only when the annual recurring revenue outweighs the upfront and operational costs involved.

What kind of billing and provisioning infrastructure is available?

Microsoft expects its partners to manage the billing and license provisioning of their customers themselves. Direct CSPs need to have the necessary infrastructure for billing the customers and managing their licenses and subscriptions. On the other hand, indirect resellers can rely on their indirect providers to provide these services to the customers.

Can you provide support to your customers?

As a CSP partner, you have to manage the end-to-end relationship with your customers. This involves providing 24/7 support to customers. If you can provide round-the-clock support, you can opt for the direct model or choose the indirect model where you can collaborate with the indirect providers and divide the workload.

Why should you partner with C3?

Once you decide which model is the best fit for your business, the next step is to build a CSP business that thrives in the competitive business environment and is seen as a trusted advisor by the customers.  Partnering with C3 helps you establish and grow your CSP business by:

  • Automating invoicing and error-free billing process
  • Providing self-service features to customers
  • Creating custom offerings and product bundles
  • Automating the provisioning of licenses and subscription management
  • Reducing the time to go-to-market

Book a demo today to know more about how C3 can help you scale your growth as a CSP, for whichever model you choose!

Ravi Kant
Ravi Kant

As the Business Head @Spektra Systems, I’m responsible for Product Management and GTM Strategy. I’m an experienced CX and Digital Business Growth professional with major focus on driving business success through Continuous Innovation and Disruptive Marketing.

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