This article first appeared in Cloud Reseller News magazine issue #1.
Three months on from some big changes to the Microsoft Cloud Partner Program, how has the channel reacted and what should they do next?.
Microsoft consolidated its partner program, pushing resellers toward Cloud Solution Providers and raising the direct-bill threshold. While larger Managed Service Providers welcome these changes, smaller partners find the new financial requirements daunting. Despite initial frustrations, industry leaders view this shift as a strategic opportunity. Offloading operational tasks to CSPs allows resellers to mature, differentiate, and specialise in high-demand areas like AI and security, ultimately fostering more sustainable growth and service-led engagement.
On October 28th 2008, in the Los Angeles Convention Centre, Ray Ozzie, the then Chief Software Architect at Microsoft, announced a new offering at the web tier of computing: Windows Azure.
Described as “Windows in the cloud”, Azure was Microsoft’s first step into the cloud game, “providing core capabilities, such as virtualised computation, scalable storage, and most importantly, an automated service management system”. Officially launched in 2010, Azure has grown into a business that generated over $75 billion in revenue for Microsoft last year, accounting for nearly half (45%) of total Microsoft Cloud revenues.
We’ll skip the history of cloud computing and move on to the present day, well, November last year, when new changes to the Microsoft Cloud Partner Program came into effect.
“The move to consolidate Microsoft’s six solution areas into three – AI Business Solutions, Cloud & AI Platforms, and Security – has been a breath of fresh air for us in the field,” said Infinity Group CEO, Rob Young. “It reflects the way customers are actually buying and consuming cloud services, and partners like us appreciate that clarity.”
Along with consolidating its go-to-market strategy, Microsoft has also consolidated its partner program, pushing all but the largest resellers away from Enterprise Agreements toward Cloud Solution Providers.
“Where I’ve seen the biggest reaction is around incentives and eligibility,” continued Young. “Microsoft lowering the bar for earning incentives by allowing partners to qualify with 25 capability points instead of full designations has been genuinely helpful, especially for fast‑growing practices that are strong in delivery but still building out formal certifications.
“That said, the raised direct‑bill threshold has been a wake‑up call for smaller MSPs and regional consultancies across the UK. It’s reshaping the landscape, but most leaders I speak to recognise Microsoft’s intent: strengthening the ecosystem’s maturity, security and customer confidence through tighter standards and operational assessments.”
“In general, larger, more established MSPs have received these changes more positively,” added Christian Nagele, CSO at inforcer. “As they tend to have more internal resources, higher budgets, and more customers, it is easier for them to meet the new revenue targets put in place and achieve Solution Designations. This allows them to maintain their status and remain eligible for their monthly incentives, while continuing to focus on growing their business. They are also able to be put in a customer referral program, listing them as an available partner for any business looking to find an MSP in their region or country.
“Smaller MSPs that are just starting are typically more frustrated by the new requirements. Direct-bill partners must now demonstrate $1,000,000 in total Microsoft spend over 12 months. For established MSPs, this might seem achievable, but it can be daunting for those still building their customer base and service offerings. These MSPs will still be able to sign up for the Cloud Solutions Provider Program, but will face mounting pressure to hit this number within the designated period. For many, this will become a significant barrier to entry, which may exclude them from entering the Program altogether.”
Nobody Likes Change
These changes may be tough to swallow from the perspective of an MSP. Adding another link in the chain can be seen as a negative, but being pretty much forced to do it can be seen as rubbing salt in the wounds.
But the other side of this coin, as Nagele points out, is an opportunity to take advantage of the flexible costs depending on what the MSP wants to prioritise.
“Working with a CSP can offer customers reduced licensing costs and access to Microsoft licensing expertise. CSPs support user-based, consumption-based, and device-based licensing options, allowing businesses to be flexible and scale usage up or down depending on how their needs change.
“CSPs can also help customers automate license management to ensure seats are aligned with actual headcount, helping to optimise costs.”
Young would go further, adding “the shift to an indirect CSP relationship has become a strategic decision rather than a forced downgrade.
“With Microsoft introducing stricter authorisation requirements, including operational capability assessments and higher revenue thresholds, a significant number of UK partners no longer meet the bar.
“The opportunity with a CSP is clear: UK indirect providers offer a robust operational backbone that handles compliance, security scoring, billing, provisioning and support frameworks. This frees partners to focus entirely on service delivery and customer success: the areas where they can really differentiate.”
Standing Out
That point of differentiation is where resellers need to focus, according to Daniele Selvi, Head of Microsoft Strategy for France, Italy and Spain at Sharp DX, who described the changes as “a great moment for resellers to rethink their long-term identity.
“Instead of focusing only on transactional resale, this is a chance to evaluate where we are the real value, whether that is specialisation managed services, AI adoption or industry-specific expertise.
“Basically, the CSP model is actually pushing everyone to mature, differentiate and build repetitive services. This period is an opportunity for resellers to modernise their offering and maybe reposition for more sustainable growth rather than a more volume-based dependency.”
The idea that these changes are an opportunity for resellers to look at the way they go to market was echoed by Oliver Harvey-Jones, Cloud Director UK&I at Arrow ECS, who said, “The current market environment presents an opportunity for channel partners to reassess strategic focus.
“With the volume of new technologies entering the market, attempting to address every opportunity can dilute impact. A key consideration is clarity of positioning, understanding where the organisation can differentiate and what it aims to be recognised for.
“That may involve strengthening renewal processes, building AI capability, expanding migration services or forming peer-to-peer relationships to extend capability.”
Nagele echoes Harvey-Jones’ sentiment, saying that “the new CSP Program is set up to encourage a ‘grow your business’ model.
“Outside of specialising, resellers who are just getting started should focus on their growth plan. Find ways to connect with your community to extend your reach. Not everyone has an IT team or is using an MSP; some might have just purchased Microsoft out of the box. By talking to these business owners and showing them the real risk of not having proper security in place, you could earn their business and give yourself a jump start on getting your Microsoft business established.”
Growing Up Fast
Overall, the consensus is that these changes are giving resellers the opportunity to mature and work on specialised services they can offer.
“The changes to Microsoft’s CSP programme have accelerated commercial maturity,” said Harvey-Jones. “Channel partners are now more intentional about lifecycle management, forecasting accuracy and service-led engagement.
“Given the pace of innovation across Microsoft’s portfolio, the most successful are those channel partners that define their focus clearly – understanding what they want to be famous for in the market – and align their investments accordingly. The shift has fostered more structured, sustainable business models and deeper end-customer relationships.”
“From my perspective, FY26 is a moment for UK resellers to decide what kind of partner they want to be in an AI‑driven market,” added Young. “Microsoft’s emphasis on AI Business Solutions, Cloud & AI Platforms and Security isn’t theoretical. It’s where the UK customer demand is already heading.
“In our own business, we’re using this period to double down on specialisation: Copilot adoption, Azure modernisation and security-lid transformation. We’re also focusing on using Microsoft technologies to better equip us to guide our clients. The refreshed FY26 funded engagements, which now require demonstrable customer outcomes, reinforce this direction and reward deep expertise.”
