Microsoft Backs Down, Abandons Partner Program Changes

Microsoft has backed down, and will allow partners to maintain internal user rights (IUR) for Microsoft Office 365, Azure cloud and other software services, Channel Chief Gavriella Schuster confirmed this morning.

For roughly a week, some Microsoft partners complained about planned program changes that would have eliminated various software discounts, support options and other perks. At first, Microsoft dug in and insisted that the partner program perks were too expensive to maintain.

But today, Schuster reversed course. In a blog she stated:

“Given your feedback, we have made the decision to roll back all planned changes related to internal use rights and competency timelines that were announced earlier this month. This means you will experience no material changes this coming fiscal year, and you will not be subject to reduced IUR licenses or increased costs related to those licenses next July as previously announced.”

The move essentially ends a partner feud with Microsoft ahead of the company’s Inspire 2019 conference next week in Las Vegas.

Microsoft Partner Program: Budget Gap?

Still, Schuster’s change of heart raises a key question: How can the partner team afford to make this change of course when the company previously said it’s too expensive to continue IUR partner program perks?

Over the past week, after all, Microsoft leaders have repeatedly stated that the perks caused partner program budget challenges. We’ll be poking around to see if or how Schuster managed to close the budget gap, or whether Microsoft simply decided to fully eat the costs in return for partner loyalty.

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    Tom Fox:

    Bullet dodged, for now – but it is very clear how Microsoft wants the “partner” program to evolve. Thanks Joe for your excellent coverage on this issue.

    Joe Panettieri:

    Tom: Thanks for your readership. And of course, the credit for our coverage goes to our readers. You and others kept pointing ChannelE2E in the right direction as this story unfolded.

    All the best,

    Tom Fox:

    I was hoping for a story to follow up on the AMA MS held yesterday and found one.

    It would be fun to do some math… There are approximately 300,000 Microsoft Partners currently. How many are paying members at either Action Pack, Silver or Gold? If a third are paying members, 80% are Action Pack, 15% are Silver and 5% are Gold, that alone would generate $86.6 million in revenue. My numbers are entirely made up – I don’t know how many paying members there are in the partner program, but Joe could probably get those numbers.

    Applying my same guess to the 9800 new partners a month, that’s another almost $2.6 million a month in new revenue. Peanuts for MS, but also not inconsequential against Microsoft’s claim of $200 million in costs to provide IUR.

    If Action Pack abuse is as rampant as they’re claiming, they should eliminate that or tie it to your ability to prove you’re an IT company. I’d also be in favor of having to pass competency tests to renew Action Pack.

    Joe Panettieri:

    Tom: I rather enjoy math problems, reverse engineering, etc. We’ll poke around on this as well.

    Joshua Liberman:

    I see no reason they could not replace the Action Pack per se with heavily discounted and software licensing and support resources. That would put them more in line with other vendors as well. As for proving your competency or achieving one, I’m sure there could be a single test of product line knowledge if not technical proficiency. One way or another, this is doable for them, it’s just a matter of willingness on their part.

    Luis Garcia:

    They shouldn’t have been in a position to reverse this in the first place. Tom you the nail on the head.
    She’s complaining about all the new partners and it being expensive as being “freeloaders” but she makes it sound like the yearly Silver & Gold partnerships are for free. It’s thousands of dollars per year spent to maintain these partnerships excluding the cost of training & certifications of employee’s to keep the competencies. That response Microsoft gave yesterday was hogwash! If you want people to stop abusing this then you need to do it the right way and invest the resources in the MPN to make it easier for partners, not harder. Come out with new tiers instead of just Silver & Gold, maybe come out with Bronze and Platinum too for smaller & much larger entities. Expand the MAP program and come out with more packages.

    We lambasted Microsoft through their Partner twitter feeds. I also submitted this story to CNBC trying to get additional national coverage. Looks like all this complaining industry wide worked, for now.

    Joe Panettieri:

    Luis: Congrats to you and others who took a very public stand on the issue. -jp

    Luis Garcia:

    Joe: After two decades of Microsoft loyalty and selling their products, it’s the least they can do!

    Mitchell Marcus:

    As a small OEM System Builder. 365 CSP, and MSP the Action Pack Perks are critical to our being able to test, learn and sell all the Microsoft products presented.

    Thanks to all who worked to get Microsoft’s head around this issue. Imagine what would happen in the long run if all of a sudden all the Microsoft Partners started looking in other directions.

    Remember the rule… Always, Always take care of the people that feed your beast.

    Mitchell Marcus
    The MSM Technology Group
    Chatsworth, CA 91311

    Denis Wilson:

    Thanks for doing a very thorough job of keeping all the partners appraised. We took a look at the needs of our company and the cost of MAPS and then took a look at the future selling Microsoft products to SMB folks. Taking that all into account, we decided to cut our losses now rather than have to deal with these types of issues constantly. It is our belief that Microsoft doesn’t want to support the small MSP. So we have dropped IAMCP, the Microsoft Channel, and MPN. Instead, we are working with SherWeb for Microsoft product that we need and go to alternatives for the rest. Our clients don’t care about Microsoft and their financial issues (that’s a laugh). We do what our clients want us to do; support and service them with good products and network services that make sense. If Microsoft doesn’t make a difference to our SMB clients, they shouldn’t make s difference to us.

    David Walker:

    This is another pointer that Microsoft and its Channel Chief Gavriella Schuster is totally out of touch with the very partners she is in charge of developing. If Microsoft employed a real supporter of the channel, who understood and embraced the channel, it would be even more significant than it currently is. In 28 years of dealing with Microsoft in the UK, they have never listened to the channel, and I think this latest debacle indicates the long term thinking of Microsoft and eventually and the channel could become for the few rather than the many. I suggest if like us, you have your eggs in one basket now is the time to look at this strategy and seek additional partners. As I have always said of Microsoft, a great company, a great brand leader and a great innovator; however, the channel management team has never been great. Channel partners come in all sizes; we are a smaller partner love the brand but hate the lack of focus by the channel management team on the smaller but equally important partner. We have been 100% committed to Microsoft for over 28years however Channel Chief Gavriella Schuster has lost this – Overall Disappointed.

    Joe Panettieri:

    Hey Folks: Just a quick “thanks” for ongoing comments, feedback and reaction. I’m curious to see if/how Microsoft wins back partner trust after this episode. I tend to give companies the benefit of the doubt when they make a misstep, but some firms never seem to learn. Examples:

    1. Facebook and privacy;
    2. Comcast and customer support;
    3. NY Mets ownership and the fans;
    4. NY Knicks ownership and the fans;
    5. NY Jets ownership and….

    Whoops, sorry. I was starting to drown in my own NY misery here. But you get the picture. We’ll be watching to see if Microsoft truly puts — and keeps — its best foot forward with partners…

    John Hill:

    Joe, many thanks for keeping us all informed as information came out. I agree with David that Channel Chief Gavriella Schuster is completely out of touch with the channel and the needs of channel partners. Also, many thanks to all of you that also very vocally and publically expressed your disapproval about the changes like I did. I think we must have hit a critical mass that even Microsoft felt should be paid attention to. I agree with the thoughts that many of you expressed in previous comments about ways Microsoft should consider updating their program without yanking the rug out from under many of us. Thanks to everyone for maintaining a unified front and getting results.

    Joshua Liberman:

    In the end it really comes down to their attitude towards their partner community. For years, it has been clear to me that ultimately, they will burn us for fuel, especially the “smaller” or sub $1M spend partners, or nearly all of us. The real issue here is not of intent (they have to right to run the business as they please), but the arrogance of the move. And again, they clearly so new future but LARs and the CLOUD. The message today that refers to the “confusion” in the partner community was just adding insult to injury. We are not confused. That was a very clear message; something that starts with F, and ends with UCK, but is not FIRETRUCK. YOU. No confusion here.

    Dimitris Miaoulis:

    I’m sure Channel Chief Schuster is not that worried about losing the free channel sales, implementation, training and support and that this delay is only to make it through the upcoming event in Vegas without a pitch forks and torches scene. Microsoft looks at the channel as an expense? Imagine if someone could do the math of how much time the channel puts into sales, implementation, training and support that Microsoft does NOT pay for and they a crying about what it costs to support the channel. (I say this in the context of being a Microsoft partner for 22 years).

    Joshua Liberman:

    It would not surprise me one bit of Microsoft was clueless enough to believe their own nonsense (that their stuff just works) and does not see channel partners as anything but fuel to burn.

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