Microsoft Backtracks On SaaS Partner Billing

On Sunday at at XChange Solution Provider '09 in New Orleans, Shannon Day, director of Microsoft's Software Plus Services program in the U.S., said Microsoft was planning to let partners resell services and "own the paper and agreement with the customer."

But in a Monday e-mail to Channelweb, a Microsoft spokesperson said that Day "misspoke" and retracted his statement.

Instead, starting in the second quarter, Microsoft will let partners place services orders "tailored to their customer" and designate themselves as the partner of record. The order will generate a URL that the partner will send directly to the customer to confirm and complete the order, according to the spokesperson.

"Partners continue to own and manage their customer relationships, while Microsoft manages the billing process," the spokesperson said.

The news will come as a disappointment to Microsoft partners who've been clamoring for a chance to maintain control over their customer relationships in Microsoft's Software-as-a-Service program, which it calls Software Plus Services.

Microsoft in July unveiled its Business Productivity Online Suite (BPOS) at its Worldwide Partner Conference and said VARs would receive 12 percent of the first year's subscription value and 6 percent of the ongoing annual service fees from reselling the suite.

But with BPOS, Microsoft also revealed its intention to take control of the billing relationship, a prospect that was upsetting to many solution providers. BPOS bundles hosted Exchange, SharePoint, Office Communications Server and LiveMeeting and costs $15 per user, per month.

Microsoft insists that there will be plenty of opportunities for partners to add value by integrating, customizing and providing ongoing support for the BPOS services, but many VARs feel that by taking away their ability to bill customers directly, Microsoft is insinuating itself into relationships they've spent years building.