Microsoft advises Direct (Tier 1) Cloud Solution Providers on new costs, performance standards

Microsoft has advised partners that it is raising its expectation on existing partners who operate at Tier 1 or "Direct" Cloud Solution Providers (CSPs).

In a recent communication, Microsoft told partners that Tier 1 CSPs, or those partners that sell Microsoft cloud solutions directly to clients, that Microsoft will required them to buy on of two levels of support contracts with Microsoft, starting at a $15K annual cost ($10K in emerging markets). This requirement will go into effect by a partners' next enrollment period after August 31, 2018.

And Microsoft hinted that they could institute revenue thresholds. In their words:

"While there are no specific performance targets associated with these updates, your performance will be considered as a key success component in the future."

As part of the new standards, Tier 1 CSPs will be expected to demonstrate that they offer unique services - IP, managed services, or another type of application. And they must have billing and provisioning infrastructure in place to manage their cloud customers.

"Microsoft wants partners who can make what they see as the right investments in the cloud business model to stay as Tier1/Direct CSPs," says Dave Wallen, vice president of product and channel marketing for Microsoft partner (and indirect CSP) Velosio. "They are trying to give partners who do have scale to invest in Tier 1 the time they need. Partners can do it with good billing infrastructure and with investment in developing IP to be SaaS-ready. ...