Indirect vs. Direct Microsoft CSP: What Makes Financial Sense? | Stratos Cloud Alliance

Many IT service providers have watched the recent surge in demand for cloud solutions and wondered how they can best shift into that market. Going it alone seems like a daunting prospect. Fortunately, some lucrative partnership models are out there to help managed service providers, resellers, and other technical service organizations bootstrap themselves into a competitive market position.

One of the most popular and proven partnership models is the Microsoft Cloud Solution Provider (CSP) program. Becoming a Microsoft CSP opens doors to more diversified revenue streams, recurring revenue, access to targeted sales and marketing resources, and much greater business growth.

Microsoft designed its CSP program to help providers grow in a crowded service market by delivering cloud capabilities to small- and medium-sized businesses (SMBs) and larger corporations. This program allows IT providers to maintain control over customer relationships and engagement.

But importantly, there are two quite different types of Microsoft CSP partnerships: direct and indirect models. Which one is right for your business? This article will explain how the overall CSP program works and the key differences between direct and indirect partnership models.

What are the key benefits of the Microsoft CSP program for partners?

Joining the Microsoft Cloud Solution Provider (CSP) program offers its partners more than the ability to resell Microsoft licenses. That is just bread and butter. It positions you as an integral part of your clients’ operations. You will function more as a trusted IT advisor than just a license vendor. The program’s monthly billing cycles enhance flexibility for you and your clients. You will have more opportunities to up-sell, cross-sell, and provide bespoke services unique to your niche, enhanced with wider access to the Microsoft ecosystem.

That is what is important at a high level. But here are some other specific advantages that may be important to you as well:

Expand your managed service offerings—The CSP program positions you to meet the increasing customer demand for managed services.

What are the key benefits of the Microsoft CSP program for partners?

That is what is important at a high level. But here are some other specific advantages that may be important to you as well:

Expand your managed service offerings—The CSP program positions you to meet the increasing customer demand for managed services.
Add value to existing offerings—Bundling Microsoft products with industry-specific solutions allows you to provide added value to your customers.
Increase profits—Offering expanded support and billing services, whether independently or through a Microsoft Indirect Cloud Solution Provider, opens doors to new revenue streams.
Lead digital transformations—The CSP program provides resellers with comprehensive tools to transition clients to the cloud.
Strengthen your client relationships—the CSP program empowers resellers to engage with clients on their terms. Set your margins, deliver chosen services, and structure your business according to your preferences.
Bring your unique solutions to market—CSP partners can leverage Microsoft’s foundational solutions for cross and upselling, creating opportunities for their intellectual property and value-added services.
Strengthen customer engagement—Regular meetings with customers foster a better understanding of their business and needs, enabling more meaningful and effective collaborations.

Direct vs. Indirect CSP: Which one is right for me?

You can operate under two different financial frameworks within the CSP program: indirect and direct billing. Each enables different market strategies.

Indirect model overview

Direct CSP partners acquire and resell Microsoft licenses and products directly from Microsoft. Indirect partners purchase these items through a CSP Indirect Provider. Microsoft only imposes a few requirements for a managed service provider, reseller, or other business to become an indirect partner.

An active membership in the Microsoft AI Cloud Partner Program and a PartnerID in the region(s) where you want to conduct business.
The authority to conduct business and sign legal agreements on behalf of your organization.
A business relationship with an official Microsoft indirect provider.

Benefits of becoming an Indirect CSP partner

Broadly, indirect CSP partners have fewer requirements under which they must operate. They reduce your go-to-market times for offering new services. Once enrolled with Microsoft, the only other major setup is to locate a CSP Indirect Provider to facilitate transactions. Collaborating with an Indirect provider creates new opportunities to expand your cloud service business by tapping into that Provider’s own resources, in-house technical proficiency, and knowledge of the Microsoft ecosystem.

Your Indirect Provider can handle any combination of presales support, billing, provisioning infrastructure, and technical support for your customers while you remain the face of the operation. And if you have your own capabilities in any of those areas, you can, of course, leverage them instead. This eliminates the need for substantial upfront investments, allowing you to focus on generating revenue and fostering customer relationships.

Choosing the Indirect model grants MSPs and resellers greater flexibility, freeing them from the stringent revenue and infrastructure requirements of the Direct model. For many IT providers catering to SMBs, joining the Microsoft CSP program as an Indirect partner is a more accessible route, enabling the provision of Microsoft products and fostering profitability in the cloud business.

Direct model overview

In the direct-bill model, partners procure Microsoft products and subscriptions directly from Microsoft and then sell them to their customers using their own internal sales team. This model suits partners with the necessary sales, billing, and support infrastructure. Opting for the direct model entails partners taking on the responsibilities of independent sales, billing, management, and customer support on their own.

Unlike Indirect partnerships, Direct partnerships carry substantial requirements, including having an existing, major Indirect partner account. You must maintain:

An active membership in the Microsoft AI Cloud Partner Program and a PartnerID for the location that you want to sell in
Have had at least USD$300,000 in annual revenue in the Cloud Solution Provider program during the preceding 12 months as an Indirect partner.
Purchase a Microsoft Advanced Support for Partners or Microsoft Premier Support for Partners package to meet support obligations, including 24/7 “elevated break/fix support.”
Internal infrastructure capabilities including “billing, provisioning, customer support, compliance, and security.”

Benefits of becoming a Direct CSP partner

Direct CSP requirements are both greater and more stringent. Meeting them only makes sense for major organizations with the time and resources to maintain an elevated level of revenue. An indirect partnership makes the most sense for most organizations looking to access the Microsoft ecosystem and tap into new resources.

Partnering with Stratos Cloud Alliance makes financial sense

We are the Microsoft Indirect Provider of the Year with extensive experience in helping organizations move to the cloud. Partnering with us, a proven indirect cloud provider who understands the Microsoft ecosystem end-to-end can help you move your clients to Dynamics 365 and other Microsoft services more easily and effectively.

Schedule a quick call today to learn how Stratos Cloud Alliance can help you get started with the CSP program today.