As a Dynamics 365 systems integrator and Cloud Solutions Provider (CSP), you know the ins and outs of Microsoft’s third cloud. Breaking down silos, unifying systems and providing your clients with a complete 360° view of their business is the name of your game.

Digital transformation? Check.

End-to-end solutions? No problem.

Cloud competencies? You lead the way.

As a Microsoft partner, you’ve probably thought that working directly with Microsoft to purchase your licensing and support your business growth is the way to go. And while it certainly is one way to do it, have you ever considered your other option? More specifically, the indirect option?

In this article, we’re going to break down the difference between the Direct and Indirect CSP models and tackle some of the most common myths we hear when it comes to working directly with Microsoft.

Direct vs. Indirect Microsoft CSP: A Comparison

As you know, Microsoft gives partners two ways to transact their CSP business:  Direct through Microsoft or Indirect through a distribution partner.  Let’s take a closer look at each model.

Direct CSP Reseller

As a Direct Microsoft Partner, you own the end-to-end relationship with your customers and Microsoft. You purchase SKUs directly from Microsoft, sell them to your customers with profit margins and earn rebates on the back end. You also own all the sales, billing, provisioning, management and support of your CSP business.

To operate as a Direct CSP partner, you must have the resources to handle all your customers’ needs in terms of technical support, APIs, licensing and billing. Microsoft also mandates a hefty set of requirements, including:

• The ability to provide the first level of cloud product support to your customers
• A Microsoft support plan – a minimum $15,000 investment with a credit check required
• Providing at least one managed service, IP service or customer solution application
• The organizational structure in place to manage customer billing and provisioning

Indirect CSP Reseller

As an Indirect Reseller, you still sell to your customers, but you purchase your SKUs from an Indirect Provider, like Tech Data. You still add profit margins to all of your licensing, and you still earn rebates on the back end.

If you don’t offer a managed service or don’t want to make the $15,000 investment in support Microsoft requires, you can partner with your Indirect Provider to offer white-label services and technical support. You can also rely on the Indirect Provider’s billing infrastructure, like Tech Data’s StreamOne, which makes it easy to bundle products and easily manage all of your subscriptions in one place.

At the end of the day, working as an Indirect Microsoft Partner is a lot less complicated and allows you to get to market faster.

Indirect CSP: Separating the Fact from the Fiction

If you’re purchasing your SKUs directly through Microsoft, making the change to an Indirect Partner can bring about a lot of questions, and frankly, a lot of misinformation about the indirect model. Tech Data recently partnered with David Warner, One Commercial Partner, US SMB for Dynamics 365 to deliver a webinar on this topic. Here are some of the most common myths he’s heard during his time at Microsoft and his response to each:

“I make much so much more in margins as a Direct CSP provider.” “I would counter this statement with a question,” says Warner. “Your margins may be higher, but have you looked at what you’re losing given all your operating costs?” Margins are typically comparable through an Indirect Provider, and you don’t have to account for the infrastructure investment to meet all of Microsoft’s requirements. Plus, you’ll still gain rebates on the back-end.

“I’ll lose my Partner Development Manager (PDM) if I move to Indirect.” “I was a PDM for eight years on the Dynamics side. Your PDM likely doesn’t know if you’re purchasing Direct or Indirect because at the end of the day, it all counts the same to Microsoft,” Warner shared. In fact, one of the advantages of going Indirect with Tech Data is that you’ll be assigned a Tech Data PDM as well, so you’re essentially doubling your support, not losing anything.

“If I leave Direct, I can never go back.” Fun fact: Did you know you can be a Direct and Indirect partner at the same time? Many partners do it, and many partners go back and forth between the two models. “If you make the change and decide a year or so later you want to go back to Direct, you’ll have to go through the same application processes and credit check, but it can be done.”

“Direct gives me respect and elite status with Microsoft.” “Not true,” says Warner. “Internally, at Microsoft, we can’t tell where partners place their deals, whether it’s through a Direct or Indirect channel, nor is it something we track when it comes to your overall business health, revenue and management.”

To hear more from David and his breakdown of the Indirect vs. Direct CSP model, check out our on-demand webinar.

Choosing an Indirect Provider

If you’re considering switching to the Indirect CSP model, Tech Data might be the right CSP provider for you. We have a dedicated Dynamics 365 team with a combined total of 18 years of experience with Dynamics 365. With an extensive partner base and strong partnership with Microsoft, we are continually evolving to ensure we’re providing our partners with the industry’s best resources, programs, services and solutions.

As a Tech Data CSP partner, you’ll have access to a Tech Data PDM that can help you navigate our Center of Excellence and unlock a ton of benefits, including:

-Partner to Partner service opportunities

-Partner marketing funds

-Keeping you up to speed on licensing changes and promotions

-Marketing support

-And more!

To learn more about partnering with Tech Data, reach out to our Dynamics team at msdynamics@techdata.com or give us a call at 1-800-237-8931 ext. 5545006.

Kayla Border is a Vendor Marketing Manager on the Microsoft Cloud team at Tech Data, where she develops go-to-market strategies for Microsoft Azure and Dynamics 365. Kayla is passionate about content and the role it plays in today’s customer journey. A graduate of Ohio University, Kayla has worked in a variety of industries, including professional sports and print advertising. When she’s not working, Kayla can be found with her nose in a book, planning her next travel adventure or spending time with her partner, Kirk, and their two cats.