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Microsoft has raised the bar

Microsoft has raised the bar

Microsoft is doubling down on a clear, long-term game plan: value creation that runs deep—for customers, for itself, and for the partners who power its ecosystem.

This shift is shaking up the Microsoft partner landscape. Success is no longer about just pushing volume or fulfilling transactions. It’s about working with the right partners—those who bring real capabilities, deep customer engagement, and alignment with Microsoft’s strategic priorities in areas like AI, security, and next-gen cloud innovation.

For our partners, it’s important to really unpack what is behind these changes. They go directly to the performance, capability and impact that Microsoft will seek from its Partners of the Future.

From Volume to Value.

From Volume to Value.

Microsoft isn’t hiding its intent. It wants fewer, more capable partners—those that can help customers extract real value from their tech investments, and who are equipped to support its next wave of innovation.

Let’s call it what it is: Microsoft is preparing for the future. And that future is heavy with investment in AI, data, and quantum tech. Supporting this scale of innovation requires a channel that’s concentrated in partners that can deliver strategic outcomes to their customers, far beyond licensing transactions.

EA Eligibility Has Shifted: The minimum seat count for an Enterprise Agreement has been creeping up, with mid-market customers being redirected toward Microsoft Customer Agreements (MCA) or the CSP model. It’s a signal that Microsoft wants its direct resources focused on high-impact enterprise accounts.

CSP Program Changes: Direct Bill partners now face stricter revenue and resource thresholds. In FY2025, partners need at least $1M in annual CSP revenue, a Microsoft Solutions Partner designation, and full business vetting to stay direct. For distributors, the bar is even higher.

 

 

The Driving Factors

The Driving Factors

Customer Experience at Scale

Microsoft wants every customer—SMB or enterprise—to get solid support. That means partners must be equipped with real technical depth and the capacity to deliver consistent, high-quality service.

Cloud Consumption = Lifeblood

The value in cloud isn’t the initial sale—it’s the ongoing usage. Microsoft’s incentives and performance metrics are now structured around adoption, upsell, and long-term customer engagement. Partners that can’t drive those outcomes will be challenged to maintain relevance in the Microsoft ecosystem.

 

 

Funding Innovation

Microsoft’s Copilot, AI models, and Azure Quantum aren’t cheap initiatives. Partners that help drive consumption free up Microsoft to keep investing in big-ticket R&D. This ecosystem balance only works if the partner network delivers results.

Efficiency in Partner Management

It’s simply more sustainable for Microsoft to manage fewer, stronger partners. This streamlining allows for more focused support, tailored programs, and greater return on enablement spend.

What this means for Partners.

What this means for Partners.

Whether you’re a GSI, a regional MSP, or a niche ISV, Microsoft’s message is clear: the bar is going up, and it’s time to adapt.

Big Partners

You’re in a good spot—but don’t get complacent. Microsoft will expect continued investment in AI, industry solutions, and co-sell readiness. If you’re already in deep, lean into the partnership even more.

Mid-Market Players

This is a tipping point. Some partners will scale up—organically or through acquisition—to meet Microsoft’s new criteria. Others will move to the indirect model, working under distributors who offer the support infrastructure they need.

The good news? Indirect doesn’t mean second-rate. The right distributor can bring support, automation, and incentives that make the indirect model a solid choice—if selected for more than just the lowest margin split.

Smaller MSPs

The pressure is real. Many will lose direct status. But that’s not the end—it’s a shift. Success here hinges on finding a distributor who helps you stay relevant: supporting your growth, keeping you up to date, and helping you align with Microsoft’s evolving priorities.

Niche and Specialist Partners

Microsoft values niche expertise. If you’re deeply focused on a particular industry or workload, double down on that and look for partnership models that complement your strengths.

Whether you co-deliver with a larger partner or build a unique solution, you still have a place—just not in the old transactional mould.

Strategy First.

Strategy First.

When change hits, it’s tempting to chase cheaper pricing to stay afloat. But when partners race to the bottom on cost, they erode their own profitability—and miss the bigger opportunity.

Focus on delivering unique value: services, insights, and outcomes that are hard to replicate.

Avoid the Cost Trap.

Differentiation is Lost: If all you offer is the lowest price, you’re interchangeable—and easily replaced.
Investment Ability Erodes: Thin margins mean no room to build services, develop IP, or innovate.
Incentives and Support Reduces: Microsoft’s incentives increasingly reward outcomes, not transactions.
Customer Loyalty Attrition: If customers don’t see value, they’ll leave when a slightly cheaper offer comes along.

From Reseller to Value Creator

From Reseller to Value Creator

To align with Microsoft—and stay competitive—partners need to evolve.

Develop Repeatable IP

Build something of your own that runs on Microsoft tech. This could be an industry-specific app, a prebuilt Power Platform solution, or a managed service packaged around a specific customer challenge. Microsoft favors partners who bring something new to the table.

Double Down on Services

Reselling licenses is fine—but wrapping that sale in onboarding, support, and optimisation is where the margin (and loyalty) lives. Help customers get the most from their investments and you’ll be hard to replace.

 

 

Co-Sell and Collaborate

The fastest-growing partners are those who co-sell with Microsoft and other partners. Marketplace listings, joint planning, and collaborative delivery are all levers for growth and exposure.

Embed Strategic Technologies

AI and data are at the core of Microsoft’s direction. Learn them. Offer them. Package them. Customers are hungry for guidance, and Microsoft is keen to support partners who can deliver.

Operate with Scalability in Mind

Smart automation and well-designed delivery processes matter. Operational excellence frees up time and capacity to focus on customer value and service differentiation.

Size is not the defining factor.

Size is not the defining factor.

You don’t need to be a giant to make the shift past transaction and into the transformation business.

Across the channel, we’re seeing:

ISVs integrating tightly with Azure and publishing through the marketplace.
Service providers co-selling and collaborating to land strategic accounts.
Data analytics and AI boutiques aligning closely with Microsoft’s new tech and getting visibility through field sellers.

The Wrap Up

The Wrap Up

Microsoft is laying out the future of its partner ecosystem—and it’s not optional. Partners who embrace this shift and evolve their models will find greater alignment, access, and support. Those who hang onto legacy approaches may find themselves sidelined.

So, what’s the move?

Microsoft is evolving fast. Its best partners will evolve faster.

If you’re large: deepen your alignment and invest in strategic growth.
If you’re mid-sized: decide whether to scale up or partner smart.
If you’re small: find allies, specialize, and focus on delivering clear value.
For everyone: price matters, but value wins. Prioritise enablement, differentiation, and customer outcomes.

Let's talk about what comes next

Let's talk about what comes next

Microsoft’s channel strategy is changing – but with the right approach, it doesn’t have to be disruptive.

At Crayon, we’ve built the people, platforms, and experience to guide partners through this evolution.

If you want to stay competitive in the Microsoft ecosystem, now is the time to act.

Open to exploring what Crayon can do for you? Simply leave a few details with us, and our team will be in touch to discuss your needs.

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