Microsoft CSP Partner eco-system is large and there are partners who are transactional and work with high volumes and low margins. While some partners who work with a handful of end customers with kid gloves and specialized services.
Regardless they are doing one thing consistently, which is buying a service and reselling it to their end customer. Out of the thousands of MSPs, ISVs, VARs and SIs out there globally, the Microsoft partners will identify themselves as Microsoft partners.
For these partners being part of the Microsoft, the channel is an important part of their identity, whether they have their own services products, or sell other services and products or any combination. This huge ecosystem of companies big and small, worldwide generate revenue and service customers in countless ways.
It is rare for organizations which are selling Microsoft cloud services that the margin from their Microsoft service resale is the biggest contributor to their bottom line. Microsoft partners selling cloud services are looking to CSP as the way for them to capture or shape their financial future.
Cloud Profitability is what the ecosystem is striving for as CSP Partners. However, to measure profitability it is important to imagine the journey and identify costs and revenue opportunities.
In the below figure I have an example of a typical customer journey. It starts with a simple interaction of a phone call, or email and the sales team are engaged, a customer is onboard, services are implemented and then after that is where we have the longest duration of engagement with the customer takes place.
This is the realization phase where we grow the services, support the customer and manage all their service needs.
Through the five phases of Discover, Evaluation, Buy, Implement and Realize, we can group these stages into three main cost categories for us to measure and manage – the Customer Acquisition Costs (CAC), the Engineering costs and then the Cost of Service(COS).
Cost of Service is where most of the opportunity to reduce costs and incur costs are faced by most partners.
This is why indirect partners negotiate different margins with distributors on who will handle the service call, and why Microsoft is requiring direct partners to purchase the paid support plan like Advanced Support for Microsoft Partners Or Premiere support.
This is where the accounting team spends their time billing and reconciling invoices. This is also the area where most partners who don’t have a system or plan will struggle to scale their operations.
We listed out the cost of items to benchmark and categorize the costs under the COS phase- some of which were labor, 3rdParty costs, system costs. Some of the costs are hidden and some are in plain sight, however, each one of these affects profitability.
Through Work 365, we are looking to address every item here, and would like to know what else you are seeing as costs for your recurring subscription business?
Post Articles, videos or images on any subject of your choice and earn cash from our Revenue Sharing Program.
We are also accepting Free Guest Posts with 100% Dofollow links. ... Read More Details