Microsoft’s changing cloud licensing model triggered an MSP land grab as businesses migrate from three-year enterprise agreements contracts to the more flexible, partner-based cloud solution provider model, according to Onyx Co-founder John Dusett.
Onyx, which provides a CSP growth platform for Microsoft partners, closed its first funding round with a multi-million-dollar investment led by Triple Point in July. The company said the funding will support its global expansion and continued platform development.
The bigger story for the channel is the potential redistribution of Microsoft business as customers move to CSPs.
“The transition is already underway, but the scale of the opportunity still ahead is enormous,” Dusett told Channel Dive.
Historically, large licensing resellers held an advantage over managed services providers. Microsoft licensing solution providers had the specialist licensing desks, pricing teams and enterprise deal capabilities required to manage complex Microsoft agreements that MSPs lacked.
MSPs, meanwhile, sat closer to customers but weren’t equipped to compete for licensing transactions.
The CSP model could change that dynamic, according to Dusett.
“Historically, enterprise agreements could only be managed by a relatively exclusive group of authorized LSPs,” he said. “An MSP might own the customer’s technology strategy, manage its infrastructure, deliver its security services and be the customer’s trusted advisor – yet still be structurally excluded from the enterprise Microsoft transaction. CSP removes that exclusivity.”
MSPs can now compete for Microsoft transactions as well as the surrounding services.
Automation also undercuts the LSP advantage, lowering another barrier that traditionally protected larger licensing specialists, MSPs can use AI to codify expertise around program rules, pricing, optimization and complex deal structures, Dusett said.
Onyx’s CSP Growth Engine automates licensing analysis, opportunity identification and commercial structuring. The capabilities are designed to help MSPs compete with licensing operations built by LSPs.
“Once you neutralize the LSP’s licensing advantage, you have to ask: who has the better underlying right to win the customer? Automation does not remove expertise from the market. It democratizes it,” Dusett said.
Beyond licensing
The MSP opportunity comes amid intensifying competition across the cloud channel.
Recent go-to-market changes from Microsoft, AWS and Google Cloud are pushing partners towards services-led models, according to Channel Dive sister company Omdia. The incentives are also driving cloud resellers into a crowded SMB market, the firm said, creating greater market and margin pressure.
Microsoft is also changing the economics for its CSPs. The company’s FY27 model prioritizes growth, including expansion with existing customers. Microsoft is also introducing margins designed to reward qualifying growth into strategic products, including new-to-offer purchases, seat expansion and adoption across selected AI workloads.
“A large installed base becomes less of an annuity and more of an opportunity base,” Dusett said.“The question for a partner is no longer simply, ‘How much Microsoft revenue do we manage?’ It becomes: ‘How much growth and customer value can we systematically create from the customers we already manage?’”
The shift places greater importance on the services partners can attach to licensing deals, he added. For example, Copilot licenses create an opportunity to sell security, governance, implementation, change management and adoption services.
For MSPs, Dusett said, the key is to look beyond licensing margins.
“The license is the entry point,” he said “Customer value realization is where the real economics sit.”
Whether smaller services-led MSPs can capitalize on the shift while competing against much larger licensing players remains to be seen. The dividing line will be between partners that transact Microsoft products and those capable of turning their existing customer relationships into broader growth.
“The partners that miss the shift will continue managing Microsoft transactions,” he said. “The partners that capitalize on it will manage Microsoft growth.”
