Microsoft partners get control of Office 365 billing

New program unveiled.

Microsoft channel partners can directly resell the vendor's Office 365 cloud application suite and have the option of billing customers themselves under a program Microsoft unveiled at its Worldwide Partner Conference.

The move will eliminate a point of friction that has existed between Microsoft and some solution providers since Office 365 launched a little more than a year ago.

Until now partners have only been able to play an "adviser role" in Office 365 sales while Microsoft billed customers directly for Office 365 subscriptions and paid back to "adviser" partners a margin on subscription fees.

Some partners said not allowing them to bill clients for the Office 365 service, which Microsoft hosts, interfered in the solution provider-customer relationship. Partners that provided services around Office 365 had to bill their customers separately from the subscriptions, creating unnecessary paperwork and confusion.

The initial Microsoft decision to have a direct billing relationship with customers was based on the need to be sure Office 365 worked as advertised, said Kirk Gregersen, general manager of Microsoft Office marketing.

While Gregersen didn't disclose Office 365 sales, he said it's on track to be Microsoft's fastest-growing business product. And about 75 percent of the subscriptions have been sold or deployed with a partner involved.

About 50 percent of the 50,000 solution providers in the adviser program that have been working with Office 365 are what Gregersen described as "born-in-the-cloud" solution providers who have built new business models around cloud computing.

But the other 50 percent are more traditional resellers, many of which wanted to sell the Office 365 subscriptions and bill customers directly. Gregersen said that fits better with their business models, including paying their sales staff based on top-line revenue.

Microsoft is launching the Office 365 Open program under which partners can buy Office 365 subscription keys from a price list, sell subscriptions to customers and bill them for the service. That's the approach Microsoft offers channel partners for most of its software products.

"They can package up their own services with the subscriptions on their invoices," Gregersen said. "And they can recognise more top-line revenue. We know that for our 'Open' partners, this is their lifeblood. This will have a huge impact."

Microsoft is developing an Office 365 SKU and price list, Gregersen said, with the "Office 365 Open" option to be made available in the current fiscal year ending June 30, 2013.

This article originally appeared at crn.com