Microsoft’s Cloud Solution Provider (CSP) program is a powerful, important platform for any partner who sells Office 365, Azure, Dynamics CRM Online, or EMS. As more partners leverage the platform to grow their businesses, I hear more questions about the two models of CSP participants: direct (one-tier) or indirect (two-tier). What are the advantages of each, and how can you decide which is a better fit for your company? Let’s break down the differences:

Which CSP type fits your company better?
The two models enable partners to select the approach that makes the most sense for their business; both offer partners great opportunities to maximize profit and generate new revenue in the cloud. At the end of this blog, I’ll give you a more in-depth look into the CSP program in a quick video, but first, here are the basics of the two models:
    • Direct providers offer customers all-inclusive services and are capable of managing all aspects of the customer engagement, as detailed below.
  • Indirect resellers engage with a two-tier provider, commonly a distributor or hoster, who maintains the relationship with Microsoft and provides additional functions and services the partner does not.
The two models enable partners to select the approach that makes the most sense for their business; both offer partners great opportunities to maximize profit and generate new revenue in the cloud.

Why choose the direct CSP model?
Direct participants receive a deeper discount on our Online Services (Office 365, Azure, etc.) and operate via a direct relationship with Microsoft. Those who choose the direct model can also integrate their systems with ours via APIs for greater operational efficiencies.
In order to participate as a direct provider, a partner must have the capability of meeting a set of requirements. For some, these will naturally align with business operations; however, for others this may require substantial investment.
Requirements for participation in the direct CSP model:
    1. Provide unique value add on top of the Microsoft Online Services.The direct model is not meant to be transaction-only; partners should also offer their customers incremental value through managed services and/or packaged IP that enhances the value of our solutions. The general rule here is that more than 30 percent of a partner’s to-customer offering should be their own, rather than come directly from Microsoft.
    1. Be the single point of contact for the billing and provisioning relationship with your customers. Resellers can control the billing relationship in both direct and indirect models; however, for direct, it is a requirement that the reseller engaged with Microsoft own this process from end to end. To handle the billing relationship, many direct partners choose to invest in API integration with Microsoft, which can be a significant investment.
    1. Be the front-line support for your customers for Microsoft online services. Partners with a direct relationship with Microsoft are expected to provide on-going support for common issues related to billing, the service itself, usage of service, and so on. Many direct partners monetize the support they provide.
  1. Be a market-maker. Direct partners in most cases are those capable of generating significant scale and take share at a rapid pace. While there is no defined threshold as an entry point for the CSP direct model, partners should be able to perform near the top of their peers for their respective market(s).
Why choose the indirect CSP model?
An indirect CSP partner still enjoys the advantages of offering any or all of the provisions listed above, but the partner may also enjoy an accelerated time to market from not engaging in the complex and potentially costly system integration.
    • More flexibility: If it’s not part of your business plan to meet all four of the requirements, you can choose to partner with a CSP indirect provider who will offer services or support which you can resell to your end customer.
  • Less up-front investment: Just like directs, indirects maintain front-line relationships with their customers; they can provide billing and support, offer services and IP. The difference is that indirects can opt to have another provider offer some or all of those services on their behalf, reducing the need for investment.
The Cloud Solution Provider program can enhance your status as a trusted advisor, bring you operational efficiency, and increase your profitability and valuation. You can fully leverage the advantages of CSP by understanding the difference between the two types and choosing the one that best fits your business model, resources, and goals.
Get started today and begin maximizing your potential with CSP!