“AI-readiness isn’t a tooling problem. It’s a change management problem.” – Michael Slater, Microsoft & Security Lead at Sherweb

Microsoft tightened CSP rules and reshaped incentives, raising the bar on compliance, reporting, and operational discipline. The knock-on effect is that many MSPs are getting pulled in after AI adoption is already underway, asked to secure, govern, and rationalize live environments instead of shaping them upfront. That pressure intensified in October, when changes to the Cloud Solution Provider program forced partners to quickly reassess eligibility, incentives, and cashback exposure. With AI demand already accelerating, the gap is hard to miss: customers are moving fast, while the rules for selling and managing Microsoft services keep shifting.

As a result, distributors and partner-focused organizations have stepped up to help MSPs navigate both tracks at once. Sherweb recently launched a program and consulting practice designed to help MSPs and resellers adapt to CSP changes while also building a more structured approach to AI adoption.

ChannelE2E spoke with Michael Slater, Microsoft & Security Lead at Sherweb, to understand what MSPs are dealing with right now, from CSP and incentive changes to the growing role of the Microsoft AI Cloud Partner Program. Sherweb works with more than 8,000 MSP partners, helping them stay compliant, capture available incentives, and turn AI usage into something they can support and monetize.

ChannelE2E: MSPs keep hearing “AI-readiness,” but many still don’t know where to start. Sherweb has rolled out the 60-90-day AI program with partners. What’s the first real blocker you see, and how are you helping them move past it?

Michael Slater: MSPs often treat AI-readiness as a technical exercise. But the real problem lies in change management. That means pinpointing customer value, mapping AI to real workflows and outcomes, and guiding people through that shift. Our 60-90 day program helps partners step back and look at the problems AI can practically solve for their business. Once they can articulate real use cases for their customers, the technical path becomes much clearer. Approaching it the other way around simply doesn’t work. 

ChannelE2E: Your Copilot practice grew 400%, which makes it clear MSP demand is real. With that growth, where are partners actually seeing the most value today, productivity, security workflows, or something else?

Michael Slater: We ended our fiscal year with approximately 400% year-over-year growth in our Copilot practice. The reason for this surge in demand is pretty straightforward. Our MSP partners are seeing their own customers adopt AI independently because the productivity gains are so clear. Those that haven’t started exploring AI yet are realizing they’ve been leaving a real opportunity on the table. 

In terms of value, the end customers are realizing time savings and productivity gains. On the other hand, MSPs are seeing that they can now wrap security, governance and oversight around that usage, creating a new line of business for their more mature customers. 

ChannelE2E: The Microsoft CSP and MAICPP changes pushed a lot of MSPs into scramble mode this month. What are you hearing on the ground, and what’s your advice for partners trying to stay compliant while keeping margins intact?

Michael Slater: Months later, many MSPs are still navigating the impact of the Microsoft CSP changes. My advice is to think long-term, and not just focus on short-term margin. Don’t get distracted by the highest margin on paper if compliance and operational costs eat into your profitability. Instead, focus on recurring revenue, scalability, and capturing incentives. Fill service gaps strategically with a diverse mix of Microsoft offerings, create new lines of business, and lean on trusted advisors to help you weigh trade-offs and pick the right CSP model. 

With policies changing so often, it feels like there’s a new update every week. Having an expert guide you can make all the difference in using Microsoft offerings effectively and building sustainable recurring revenue.

ChannelE2E: You work across both Microsoft and security. As MSPs lean harder into AI, where do you see the biggest gaps in security readiness, and how quickly can those be addressed with the right plan?

Michael Slater: Most MSPs’ biggest security challenge with AI comes down to data protection. AI tools can accidentally become supercharged channels for sharing sensitive information. The good news is that with a clear plan and safeguards, these gaps can be closed quickly.

ChannelE2E: Data is usually the messiest part of any AI rollout. When an MSP says they want to “do AI,” how do you walk them from aspiration to a use case that won’t overwhelm their team?

Michael Slater: At Sherweb, we take a crawl, walk, run approach. The first step is to get the customer’s data in order. Garbage in, garbage out applies to AI more than anything else. Even the best AI tools can’t deliver results without access to clean, relevant data. Then, we start with a series of small, tangible use cases, like automating ticket routing, so the team gets to see early results without getting too overwhelmed. Those small wins can build confidence in AI, and also help define a more strategic roadmap for broader adoption down the road. We stay involved throughout, end-to-end, providing training and support so no one feels stuck.

ChannelE2E: Looking 12 months out, what’s the one shift MSPs need to prepare for in the Microsoft ecosystem, whether it’s incentives, compliance, or how AI products will be packaged?

Michael Slater: The biggest shift MSPs will need to prepare for is how central AI is becoming to Microsoft’s strategy. For MSPs, fully engaging in the Microsoft ecosystem will mean positioning themselves as a “Frontier Firm,” a partner that experiments with AI internally, deploys Copilot and other AI tools with clients, and aligns their offerings with Microsoft’s evolving AI priorities. 

Moving forward, those who embrace this shift will better understand how AI is shaping Microsoft’s services, resources, and incentives. And they’ll be best positioned to take advantage of the full range of opportunities emerging from Microsoft’s transformation, whether that’s expanding client solutions or tapping into new revenue streams. 

ChannelE2E: Ignite brought a wave of new integrations, Copilot updates, and agent capabilities. Through an MSP lens, what feels immediately actionable, and what still needs translation before partners can use it?

Michael Slater: The best way for MSPs to act is to become “customer zero.” Test the new Copilot features, integrations and agent capabilities on your own operations first. Experiencing them firsthand makes it easier to understand the impact on clients.