Microsoft instituted major changes in its Cloud Solution Provider (CSP) program, which governs how channel partners sell its cloud services. The revamp, effective October 1, significantly affected the cloud distributors that operate as intermediaries between the hyperscaler and downstream MSPs.

Sherweb is one of the distribution companies that has seen its business advisory role expand in its Microsoft business as MSPs seek guidance on navigating the program changes.

In a key shift, partners who have had a direct-bill relationship with Microsoft now must decide whether it makes economic sense to stand pat or move to indirect partner status. Sherweb is helping partners with the transition.

Partners have also encountered change as the vendor's legacy Microsoft Partner Network evolves into the Microsoft AI Cloud Partner Program, which emerged in 2023.  Sherweb offers guidance to partners on the intricacies of that program as well as CSP. The changes affect program features such as partner incentives and cashbacks.

A major shift

Microsoft has been outlining the various program changes for months, if not years. But the magnitude of the shift differs from past channel updates.

"It is the biggest upshift in requirements that I have ever seen," Alexandre Laflamme, programs and sales incentives manager at Sherweb, told Channel Dive.

Laflamme, who has been involved in the CSP channel for more than 10 years, said past program changes have been incremental. The new protocols increased the annual revenue threshold to remain a direct-bill partner from $300,000 to $1 million. Direct-bill partners transact business directly with Microsoft, whereas indirect partners work through distributors, such as Sherweb.

Microsoft alerted partners to the various changes, but according to Laflamme, many companies in the channel still struggle to decode them. 

The program shift has transformed Laflamme’s work with Microsoft partners.

“It was a role that was very educational before, but has now become more advisory," he said. "A couple of years ago, I was telling partners how you can use the program to qualify for cashbacks, and I was explaining the formula to them. Now, I look at a partner’s situation, and I tell them what they need to do business-wise to continue to stay in the cashback program."

Laflamme estimated that the volume of Microsoft partners seeking advice on program changes has more than doubled over the past year.

"More and more, this is all I do," he said. "I feel a lot more like a business advisor."