Despite the loss of margin, becoming a tier 2 partner does offer advantages. For example, Khan notes, direct bill partners take on a lot of invoicing overhead. “If you’re a tier 2 with Ingram or some other tier 1 partner usually they’ll already have a billing platform for you to do the billing with,” he says. “That’s a plus.”
Dave Seibert, meanwhile, doesn’t view spending $15,000 a year or more on support as an especially heavy burden for tier 1 partners, provided they’re running reasonably high-volume businesses. “This is a price of entry, but if you’re transacting at that level it’s an affordable price of admission,” says Seibert, who is CIO of Irvine, Calif.-based MSP IT Innovators Inc. and a member of Microsoft’s global partner-influencer advisory team.
Seibert counsels tier 1 resellers considering a move to tier 2 status to shop around carefully when selecting a distributor. “Not all distis compensate the same,” he notes, adding that some distributors offer faster response times on technical support calls than others too.
Introduced in 2014, the CSP program has some 72,000 members worldwide, according to figures cited by company officials during a press conference last month. In the 12 months prior to that media event, moreover, revenue generated through the CSP program was up 234 percent on a year-over-year basis.
Microsoft’s cloud business generally has been just as healthy. A quarterly financial statement issued last month, in fact, reported a 38 percent year-over-year increase in commercial licensing revenue for the vendor’s Office 365 productivity and collaboration suite and 89 percent revenue growth for the Azure public cloud service.
Khan suspects numbers like that have something to with the new tier 1 requirements.
“I just think that Microsoft is becoming so successful with the cloud and the demand is so high that they can make a move like this and not really care if we’re pissed off about it or not,” he says.