New Microsoft Office 365 Promo To Lure Small Businesses To The Cloud

Microsoft next month will launch a promotional offer aimed at getting small and midsize businesses to migrate from on-premise software volume licensing agreements to Office 365 subscriptions.

According to a Microsoft document viewed by CRN, the "Renew to the Cloud" promotion will run from Feb. 1 to June 30. It applies to Microsoft's Open Value, Open Value Subscription, or L+SA (licensing plus Software Assurance) agreements, which are three-year contracts for organizations with up to 250 PCs.

Microsoft will offer special promotional SKUs to distributors that amount to a 20 percent discount on Office 365 Midsize Business and Office 365 ProPlus plans, and a 15 percent discount on Office 365 E3 plans, according to the document.

[Related: Microsoft: Office 365 Fee Changes Don't Mean We're Cutting Channel Investment ]

The discounts apply only to the first year of Office 365 subscriptions, and the actual savings for end customers will depend on what distributors charge resellers for the Office 365 plans, and what the reseller charges them, Microsoft notes in the document.

The Renew to the Cloud promotion is for commercial customers only, though government organizations can take advantage of the Office 365 ProPlus discounts, according to the Microsoft document.

With the promotion, Microsoft is encouraging partners to resell Office 365 through distribution, Matt Scherocman, president of Interlink Cloud Advisors, a Cincinnati-based Microsoft partner, told CRN.

The key point, according to Scherocman, is that Microsoft is letting customers leverage their existing on-premise software licensing investments to move to Office 365. Previously, Microsoft only did this for Enterprise Agreement and Open Value Company-Wide plans, he said.

For years, partners selling Office 365 and other Microsoft cloud software could only steer customers to Microsoft and get a commission under the Online Services Advisor model. But last February, Microsoft launched Office 365 Open, which lets partners bill customers directly for cloud software subscriptions. Then in September, Microsoft began letting partners sell enterprise versions of Office 365.

The Renew to the Cloud promotion is the latest positive sign for managed services providers and solution providers that sell cloud services, said Dave Sobel, director of partner community at GFI Software, a Durham, N.C., vendor and Microsoft partner.

"These partners can be the IT department for customers and take care of everything, with one bill and one contact," Sobel said. "Selling through Open is the most channel-friendly thing Microsoft could do here."

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However, partners that are still selling under the Advisor model aren't so happy these days. Starting Jan.25, Microsoft is changing incentives for its Advisor Enterprise Agreement Deploy program, and some partners' Office 365 fees are set to drop as much as 40 to 50 percent.

One Advisor partner told CRN he's irritated that Microsoft is catering to partners with "outdated business models." In his view, Advisor partners are driving the bulk of Microsoft's cloud sales and should be the ones getting rewarded.

Another partner told CRN he's staying on the Advisor model for now because Microsoft's Office 365 volume licensing plans still lack monthly billing, and adding and subtracting licensing can be "confusing."

Microsoft couldn't be reached for comment on the Office 365 promotion or the Advisor partners' concerns. But last week, a spokesperson told CRN Microsoft invests $2 billion annually in channel incentives, and that cloud incentives are set to double this fiscal year.

So while some Microsoft partners will be making less money from selling Office 365, others will be getting some solid discounts.

PUBLISHED JAN. 15, 2013