The Strategic Shift of Microsoft Azure towards Cloud Solutions Provider Partners
Microsoft Azure is taking on AWS in the public clouds market. It is no secret that AWS has a 6 year lead in the IaaS segment and has more market share. Microsoft’s latest announcement about Azure pay-as you-go, which is not available under the MPSA licensing model, gives us a hint at the strategic initiative of Microsoft Azure to capture more market shares.
Let me first share a few licensing models that Microsoft uses to sell Azure.
Microsoft Online Subscription Program (MOSP).
This licensing model is subscription-based and is the default option when you visit the Azure portal and create an Azure account using your credit card. This model can also be used to purchase products such as office 365 and Dynamic CRM. This is how most small and medium businesses and individual developers purchase Azure. This is the classic Pay as you go model, with no prepaid commitments.
Enterprise Agreement (EA)
Microsoft offers EA, a volume licensing package that targets large organizations with 500 or more computers. This licensing model can also be used to purchase Azure, as well as software such as Windows and SharePoint. You can usually buy some Azure prepaid, and there are discounts, but that is not necessary.
Microsoft Products and Services Agreement (MPSA).
MPSA is a partner-driven licensing model where a Microsoft Partner assists clients to procure and manage various licensing elements. This model could be used to procure Azure, both in pre-pay and Pay-as you-go models.
Cloud Solution Provider Program (CSP)
Microsoft partners in CSP provide value-added services to clients and assist them with the implementation and management advanced products and services that will accelerate innovation on Azure.
Microsoft has removed the option for new MPSA customers not to be eligible to have an Azure pay-as you-go subscription from all of the licensing models. This can be viewed as Azure pay-as you-go being removed for new MPSA customers. These are the strategic implications, especially if you extrapolate a bit.
Azure customers will benefit from the CSP being chosen over MPSA when they choose to pay-as you-go.
Customers who purchased MPSA didn’t receive any value added services on Azure for most of their purchases. Microsoft might have realized that the MPSA partner is simply invoicing the client and adding a few percentage points. Many MPSA partners might not be able to assist clients with their migration to Azure.
Most customers who start using Azure as a cloud provider only use a few services. CloudThat often finds that new clients use only the basic services such as VNet, Storage, and Virtual Machines (EC2 instances on AWS). By tagging a consulting firm with each new customer, Microsoft ensures that all customers can take full advantage of all the new Azure services.
Microsoft will make it easier to find the right CSP for Azure customers
Microsoft wrote to me that “Microsoft is also actively evolving the referral engine process so there will be an even more seamless way to connect [customers and CSP Partners].” Currently after signing up as MOSP pay-as-you-go, Azure customers must manually find the CSP Partners at partnercenter.microsoft.com/en-us/pcv/search. It is possible that customers will ask a few questions to find the right partners for them. This helps partners to get more business and customers can, if necessary, leverage the recommendations of Microsoft partners.
Therefore, Microsoft’s long-term strategy revolves around making it easier to enable Azure customers to take advantage of the growing CSP partner network.