Is the role of Microsoft LSPs coming to an end after the upcoming major Microsoft support changes?
Microsoft is making some drastic changes to the Enterprise Agreement support model for Fortune 500 companies. This might be one of many changes planned for the future in regards to what the next world market payments for example, will be.
The key message Microsoft is putting across says for pre-selected strategic customers, Microsoft itself will provide end-to-end transactional account support and services under the Enterprise Agreement.
This for the past decades was provided by Licensing Solution Partners and LSP Enterprise Software Advisors to qualifying customers and for direct deployments only.
Licensing Solution Partners’ roles in EA currently
LSPs as they are also called go into partnership with Microsoft to deliver a wide range of products and services to existing or would-be clients on behalf of Microsoft.
The LSPs are authorized by Microsoft to supply/sell licenses to medium and large organizations through Volume Licensing programs such as an Enterprise Agreement or an Enterprise Subscription Agreement. The LSP is the partner of record
Microsoft prepares a contract and the LSP assists the clients with any clarifications after which the clients sign. As a partner of record, the LSP receives a royalty fee or commission/kickback from Microsoft after closing a deal.
How is Microsoft Planning to carry the changes out?
Microsoft says it will provide the support for any transactions that need to happen under Enterprise Agreement, contracts for pre-selected, selected and strategic companies namely, Fortune 500 directly.
Microsoft might set up a new team to handle this new support initiative. This was done by the LSP but going forward the LSP will be removed from the contract.
The new team that will be created might reside, within the regional operation centers of the selected enterprises because there will be the need for the language-barrier challenges to be avoided where the account is based basically.
This will take effect January 1st 2023, for any of the accounts selected that will renew in that timeframe.
Why is Microsoft embarking on this new EA path?
According to Microsoft the changes will give customers a better Enterprise Agreement.
1/ To enhance partnerships and provide the customers’ organization with a different customer experience. Other benefits will be a differentiated customer experience for selected customers, providing a team of support specialists who will own transaction-related activities and queries end-to-end.
2/ It is also to improve and lead the response times, reduce the number of handovers and increase velocity in customer engagements. Microsoft thinks it can do a better job compared to what the LSPs are currently doing.
3/ Microsoft wants to discontinue the pushing aside of LSPs working on very large accounts or serve as contacts between Microsoft and these large accounts and provide support directly. However, it will reach out to the LSP where there is a need for them, like registering a new contract or creating an additional customer price sheet.
4/ Microsoft is also doing this to gain firsthand deeper insight into customers’ day-to-day requirements and timely adjust services, making process improvements that better align with their needs.
Just maybe, Microsoft will take on all operational and services, work and support historically provided by Enterprise Advisors for direct enrollments.
Any implications for future Enterprise Agreements?
If you are a massive Fortune 500 company and you have an indirect contract, this will not affect you. This is only currently for large companies that have a direct Enterprise Agreement. If you are one of the pre-selected strategic customers (like a Fortune 500), then it states that this is not for the public sector.
Again, the biggest change with the new agreement means no more fees for the LSP on these accounts. However, the LSP is to remain active on the accounts and can sell their additional services.
The new EA document states the different countries and the languages that are supported including local delivery. If you’re in Italy, you will get people that speak English and also Italian. In Portugal, Portuguese, Spain, Spanish, in the Netherlands, Dutch and England, English.
There will be a toll-free number that you need to dial in order to get your support or your information by email. You can send an email to a specific address that will get picked up and carried out according to your needs. The estimated availability differs for each country. This has already been started in the US.
How will the new Enterprise Agreement work?
The current LSP will not play an important role anymore after the oncoming renewal for the strategic accounts, which means they will still need to finalize important tasks at the end of the common contract.
They will still need to offer services like an annual order through or slash zero usage. Also, any reservations need to be reconciled, meaning, if that strategic customer is using the reservation options or purchase of cloud services, they will need to finalize that and they will need to make sure that the extended term opt-out has happened at the end of the contract.
Those will be the final activities for these accounts from the LSP. After, this will move to the Microsoft teams to hand out or deal with the new process as they will set it up. All activities from creation to amendments to contracts, whatever needs to be signed by customers will be taken over by Microsoft and will no longer be done by the LSP.
What happens to LSPs?
They will no longer be compensated by Microsoft for their activities on these accounts. They are free to deliver other Microsoft services, but they won’t get any rebates and kickbacks from Microsoft.
In the past 20 years, this model has never been changed. The latest EA announcement is just the beginning of many more announcements that will follow in the coming years. However, could it be that the current role of LSPs has been questionable, especially with large accounts?
Will this also feed into beliefs that in most cases the role of the LSPs was not of much added value looking at how Microsoft has surprisingly made this announcement?
Another thing is that within the time Microsoft has immediately effected this directive in some of the regions, how can they help clients promptly? It takes time to set up within the internal organization of Microsoft.
We do anticipate that a lot of clients will experience issues when it comes to submitting orders, invoice issues, which were normally all done by LSPs. Now this must be done by Microsoft itself, knowing the fact that they have announced a hiring freeze. It is now a lot of work managing a Microsoft contract.
In all these developments and what the future holds for your dealings with Microsoft, there is no cause to be alarmed especially going into 2023 and beyond. Our team of experts at Q-Advise are available to assist you whether you are an existing or new client. We work independently and are not Microsoft-influenced, so be rest assured your contract negotiations, license & cloud management, compliance and software optimization are in the right hands.
Contact us and talk to an independent Microsoft expert