Microsoft Changing Partner Incentives Even as Channel Controversy Roars

Microsoft is making changes to its partner incentives and investments, even as it grapples with ongoing controversy surrounding more stringent channel requirements.

Microsoft’s Kevin McCarthy

On May 17, Kevin McCarthy, vice president of global partner solutions, incentives and investments, posted a blog detailing the upcoming updates. Those will take effect in October — the same time that Microsoft is slated to replace the Microsoft Partner Network with the controversial Microsoft Cloud Partner Program.

“We are sharing updates now to help our partners plan ahead and will share additional details in the coming months,” McCarthy wrote.

Before laying out the changes, McCarthy noted the following: “[W]e recognize that successful partners drive transformational customer solutions. In our upcoming fiscal year 2023 that begins in July, we will continue to evolve our partner incentives and investments portfolio to provide a smooth and predictable partner experience that helps partners deliver exceptional value to customers.”

To that point, Microsoft is focusing its partner incentives and investments on cloud. That comes as little surprise. Cloud represents a category where Microsoft, through Azure, is showing formidable growth — even, according to some reports, surpassing giant rival Amazon Web Services. With that in mind, Microsoft’s changes apply to its six “cloud solution” areas: data and artificial intelligence; Azure infrastructure; Azure digital and app innovation; business applications; modern work; and security.

Changes to Microsoft Partner Incentives, Investments

The updates outlined by McCarthy remain somewhat vague. Here’s what he had to say, by type of incentive.

For Cloud Solution Providers: “We are adjusting modern work and security core program rates in the new commerce experience for direct bill and indirect reseller partners for consistency with the FY22 legacy CSP incentives program. We are redeploying the impact of this change through an increase to the customer acquisition lever, rewarding partners who drive new modern work and security business.”

Microsoft already has said it will end incentives support for legacy CSP seat-based subscriptions as of this coming December.

For Microsoft Commerce Incentives: “We are rebalancing incentives on Azure consumed revenue through Partner Admin Link, rewarding partners who drive customer growth and showcase their expertise through specializations.”

It’s unclear whether this news is welcome or will anger partners. Channel Futures has inquiries out.

For Activity-Based Incentives: “We continue to invest in pre-sales and post-sales workshops and assessments across our six cloud solution areas to drive customer acquisition and solution adoption. Partners will see new earning opportunities with modern work, security, business applications and Azure in FY23, as well as an improved operational experience for activities found in the Microsoft Commerce Incentives program.”

Microsoft has yet to clarify what “new earning opportunities” look like.

For Cooperative Marketing Funds: “We are launching cooperative marketing funds (co-op) to the Microsoft Commerce Incentives program in FY23. Once launched, partners earning incentives on breadth motion engagements in Microsoft Commerce Incentives will see incentives earnings split between standard rebate and co-op.”

McCarthy said Microsoft will have more information on this “in the coming months.”

Microsoft Cloud Partner Program: “[P]artners attaining legacy competencies by Sept. 30, 2022, or renewing legacy competency benefits will continue to earn incentives in FY23 program terms as eligible. FY23 incentives programs will also support the new Microsoft Cloud Partner Program solutions partner designations.”

Microsoft added that partners with solutions partner designations cannot earn legacy CSP incentives for the legacy seat-based CSP subscriptions that end in December.

More Change Amid Chaos

The update from McCarthy comes as Microsoft unexpectedly functions without a channel chief. Nick Parker, corporate vice president for global partner solutions, announced earlier this week that Rodney Clark has left the company. Clark served as global channel chief for just a year, taking over from Gavriella Schuster.

Microsoft further continues to face the fallout from perhaps its biggest channel-program change in 15 years, the upcoming switch to the Cloud Partner Program. Those plans, of course, have attracted swift and steady pushback from partners. Click here for Channel Futures’ coverage of partner reactions to Clark’s departure as well as Microsoft’s new requirements.