Microsoft products are an important string to the bows of resellers and MSPs across the UK and Ireland. From Microsoft 365 and Office 365, through to Microsoft Teams, businesses and organisations are familiar with solutions from across the ecosystem so these are often at the heart of technology stacks.
Resellers and MSPs are always looking to add value with Microsoft, and keeping pace with new solutions and Microsoft’s evolving partner programme is essential. One significant update has been Microsoft’s move to split licenses for Microsoft 365, Office 365, and Microsoft Teams. The stakeholders we spoke with offered a range of viewpoints on the impact this might have on the Channel.
This could make the market more competitive. Ben Merrills, CTO, Jola, commented, “The move to split licenses will have an impact on the channel. A greater choice presents both opportunity and the potential for confusion in the channel. More time will be spent choosing the right options for each customer and new documentation will be required.
“On the flip side, this could make the market more competitive. The unbundling of licences will create price rises for some customers, which may lead to new opportunities as customers shop around for the best deals.”
For Andy Rawll, head of UK product marketing, 8x8, this shift means more flexibility for end-customers. He said, “The benefit is more for end-customers, providing them with more flexibility to pick and choose which elements of the Microsoft suite they deploy. I don’t think this helps the channel so much as it complicates the selling process.”
He explained the full impact will depend on whether this granularisation will drive the recruitment and accreditation of more Microsoft solution providers.
As such, the main benefit could be pricing transparency. Justin Hamilton-Martin, director of product strategy, Enreach for Service Providers, said, “Transparency around pricing enables competition to flourish, which is good for customers and the industry. By unbundling the costs of these services, it makes it easier for customers to see what they are paying for and to select the specific services they need. This approach also supports customisation by the channel according to the use case.”
Hamilton-Martin pointed to Teams as an example. He said, “It was previously more challenging to sell an additional video collaboration tool to users who perceived that they were already getting the service for free as part of their service bundle. Now, that there is greater transparency, users can see that nothing is free and make more informed decisions, creating opportunities for the channel.”
Ben Avery, head of channel, Gradwell Communications, expects the full impact to be complex. He said, “The impact of Microsoft’s decision to split licenses on the Channel will be complex. On one hand, the widespread use of Windows, which is already integrated into 95 per cent of users’ systems, simplifies the sales process as the platform’s familiarity reduces the need for complicated onboarding processes. This makes the transition smoother and more appealing to potential customers.”
He argued that the focus for the channel should be on shifting from “simply selling Microsoft add-ons” to “emphasising the adoption and overall utilisation of Microsoft Teams as a robust UCaaS platform”.
Avery explained, “By positioning Teams not just as an add-on to a PBX but as a comprehensive solution, resellers and MSPs can enhance its value proposition and sell more complex, margin-rich deals. Additionally, this change may open the door to discussions about alternative UCaaS solutions, encouraging customers to conduct thorough analysis of the market to select the best fit for their needs.
“This shift could lead to more informed decisions about collaboration and greater customer satisfaction as a result which ultimately would benefit the Channel.”
Ryan Martin, head of indirect, ANS, also discussed the possibility of more complexity but this will be muted. He said, “I don’t believe this will have a huge impact on the channel, it adds a little bit more complexity into managing licenses but also provides more flexibility with a more competitive price points versus features.”
The Channel could also need to work to address any customer confusion that might arise from this licensing change. Joe Ashley, cloud and cyber services director, Focus Group, said, “The shift in licencing model will no doubt confuse customers who are already challenged with optimising costs across the board. This means Microsoft partners need to understand what their customers are trying to achieve so that they’re not overpaying or underutilising. MSPs will need to show they understand the choice, complexity, and value of the investment, instead of approaching it as a transactional agreement.
One benefit for the Channel could be in being able to offer customers more tailored solutions. Andy Elliot, vice president, marketing, AudioCodes, said, “Unbundling Microsoft licences presents a positive opportunity for the channel to offer more tailored solutions for their customers. Customers wanting a full Microsoft solution with the productivity benefits of integration can still have that, but those who want to run Microsoft 365 alongside alternative UCaaS services, can do so, too.
“A huge part of the channel value is understanding specific customer needs and providing them with the best value solution for those needs. Unbundling of licences allows them to do exactly that. From a Microsoft perspective it could actually lead to even more growth for Teams as unbundling licences also gives them more flexibility to adapt quickly to competitive market trends.”
For Kristina Bennington, vendor business manager, Giacom, there will be an impact for channel companies, but “not in the way most people expect”. She explained, “The changes primarily affect new subscriptions and enterprise products. Existing customers with bundled licenses are likely to see minimal disruption in their current arrangements. Microsoft is progressively moving toward a modular arrangement of its product offerings. This approach mirrors consumer retail strategies where add-ons are commonplace. This modularity is being rolled out globally, aligning with broader consumer trends.
“For customers who traditionally purchase the entire 365 suite, splitting the Teams license could result in a slight price increase. However, this is only a concern if the suite is bought separately from Teams. On the plus-side, the unbundling allows for more tailored solutions. Customers can now opt for licenses that exclude Teams or choose Teams as a standalone product. This flexibility can help resellers and MSPs to better address diverse customer needs.”
There is some uncertainty within the channel as companies navigate these changes. Scott Jenkins, customer solutions architect, Dstny for Service Providers, said, “We are currently seeing a few dominant impacts in the overall market. The most obvious example is the sense of uncertainty that channel companies are feeling after the change, not only in how Teams now interacts with the rest of the Microsoft suite but also how they can differentiate themselves alongside these licensing changes.
“Under this sense of uncertainty, channel partners are also realising that this may be a new opportunity to unlock some added flexibility through the ability to create further subsets of users.”
Teams players
It is no secret that Microsoft Teams has exploded in usage in recent years. Those we spoke with were in agreement that opportunities can still be found by helping organisations either adopt Teams or to do more with their existing investments.
Martin, from ANS, explained what he is seeing in the market. He said, “The growth of Teams has been remarkable, somewhat accelerated by its mass adoption during the Covid-19 pandemic. I think there have been some excellent examples where channel partners adapted quickly and gained significant traction in an open market. The opportunity still exists within reseller and MSP customer bases but margins are likely to be more competitive with more complex Teams solutions like conferencing or Copilot integrations likely being a more fruitful market.”
Ashley, from Focus Group, added, “Microsoft Teams remains the single pane of glass that customers choose to work within, so it still instrumental to any Microsoft investment. There will most likely be more competition from other vendors, now that it’s purchased as a separate licence, but Microsoft will continue investing heavily into expanding the capabilities and wider app ecosystem of Teams which remains appealing to customers. Teams Voice is the other big opportunity for MSPs.”
CallCabinet offers a Microsoft Teams integration that can deliver business intelligence capabilities while ensuring regulatory compliance across audio, video, and screen capture interactions. The company’s reseller and MSP partners are finding opportunities in industries such as finance, healthcare, and legal services where regulatory compliance is mandatory. By combining CallCabinet features with every Teams seat, partners can provide customers access to encryption, audit trails, automated alerts, and customisable retention policies.
Simon Peters, managing director for the UK and EMEA, CallCabinet, said, “For resellers and MSPs, this presents a significant opportunity to offer additional value and capability to their existing and prospective accounts. By bundling CallCabinet’s solutions with Microsoft Teams deployments, channel partners can provide measurable business value while driving additional revenue streams. This also provides a clear path to new conversations with existing customers to increase ARPU on every Teams seat previously sold.”
Elliot, from AudioCodes, discussed the rising number of global daily active users for Microsoft Teams. This has risen from 280 million in the second quarter of 2023 to 320 million in the first quarter in 2024. He added, “Teams continues to be the dominant platform for enterprise collaboration, so the channel community should be looking at it as a great opportunity for revenue growth in future years, not just with Teams itself and the associated Microsoft licencing, but as a platform for additional applications and services that add even more value to Teams.”
For Bennington, from Giacom, opportunities will continue to emerge in line with Microsoft adding new capabilities and features to the product. She said, “Microsoft is continually innovating in the Teams space, creating significant opportunities for resellers and MSPs. The Channel still has a large whitespace to explore, and the introduction of products like Teams Premium, which offers advanced security and AI features, will open new doors with buyers. These innovations enable resellers and MSPs to open new and meaningful conversations with customers, offering enhanced solutions built for customers’ specific needs.”
She added Teams Phone presents considerable “untapped potential”, especially with the ongoing digital phoneline switchover. Bennington explained, “The Channel has a unique opportunity to drive Teams Phone adoption, guiding customers and highlighting the benefits of a modern communication solution built on Teams. By leveraging these opportunities, resellers and MSPs can expand service offerings while strengthening relationships, playing a pivotal role in customer digital transformation journeys.”
Rawll, from 8x8, also pointed to Teams Phone as one area of opportunity. He said, “There’s still money to be made from Teams. In fact, I would argue that the opportunities are increasing, particularly now that Teams Phone is backed by a 99.999 per cent SLA.”
Richard Jones, commercial director at Tollring, added, “By integrating third-party analytics apps into a Teams implementation, resellers and MSPs can enable heightened levels of insight and understanding for their customers into both workplace dynamics and customer experiences. The accessibility of qualitative and quantitative analysis of communications within Microsoft Teams to businesses of all sizes is a game changer, presenting a huge opportunity for partners to help customers understand their business better.
“The trick is to find added value solutions such as call analytics, collaboration analytics and recording that are easy to use, easy to deploy and require little training. Get this right and you can expect a stronger, more competitive portfolio, new opportunities to increase ARR and ARPU, and reduce churn – all in one fell swoop.”
Some channel companies might find Teams is not the best solution for every use case they encounter when scoping out projects with customers. Chris Eaton, solutions consultant at Evolve IP, said, “Teams is still providing lots of opportunities in a technology world which is constantly changing. According to the latest figures, it’s estimated that only 10-20 per cent of Teams users are adopting the PSTN phone system element. Enterprises that are familiar with the Microsoft suite might feel more comfortable adopting or continuing to use Teams as their primary collaboration tool.
“However, there are other compelling alternatives such as Webex by Cisco, which provide Microsoft integration whilst differentiating themselves with features like Vidcast and meeting summaries. Organisations can choose to have the best of both worlds and it’s up to the resellers to create more awareness around the options available to them.”
Avery, from Gradwell Communications, added, “Microsoft Teams continues to provide significant opportunities for resellers and MSPs. However, it’s crucial to assess whether Teams is the ideal solution for specific challenges or if other products, might be more suitable for certain environments, such as call centres. If viewing the solution through an independent lens, Teams may not always be the best fit for voice enablement needs, as it can lack a full PBX feature-set. It is essential to consider the unique requirements of the customer rather than adopting Teams just because it is widely used.
“While customers often opt for Teams Direct Routing or Operator Connect to enhance their Teams experience, they still seek the advanced PBX features available in more specialised products. Having an approach that considers the requirements and features, rather than just the provider, Microsoft in this instance, ensures that resellers and MSPs can tailor their offerings and maximise the value of their solutions.”
Getting certified
For channel companies looking to offer their customers Microsoft solutions, Microsoft certifications can be important. Richard Garel-Jones, product director, Oak Innovation, explained why.
He said, “Frequently, it’s a dealbreaker. If we’re ever competing against an uncertified solution, then the sale will nearly always go to us – because who wouldn’t choose the option that has passed Microsoft’s rigorous security and performance standards? Additionally, Microsoft throttle the use of their Call Recording Graph API for uncertified solutions, placing a limit on the number of calls that can be recorded, so it’s simply not an option for organisations who need to record a lot of calls.
“As a vendor, certification also means a presence on the Microsoft Marketplace, which is where a lot of customers will go to find to look for and compare suitable solutions, even if they ultimately purchase via an MSP.”
Jenkins, from Dstny for Service Providers, added, “The value of Microsoft certification cannot be understated as without it you lose certain guarantees on both a company and employee level. A Microsoft certification immediately gives you what you need to make it through the first stage of a buyer’s consideration phase – a level of trustworthiness.
“It’s not just about how a company is certified overall though, to gain a certain level of Microsoft certification, a company must contain employees who have specific certifications themselves.
“And it’s not just about the formal certifications, a lot of the industry information that many rely on come from technical community leaders who are Microsoft MVPs.
From a hardware vendor perspective, certifications can help demonstrate the solution will work seamlessly once deployed. Holli Hulett, co-founder, Boom Collaboration, said, “At Boom Collaboration, we believe the end user experience is paramount. They deserve solutions that work seamlessly and deliver exceptional video and audio quality.
“Microsoft certifications hold value for ensuring deep integration and peace of mind for customers. We understand their importance and are working towards achieving them.”
Digging for gold
Outside of Teams, there are plenty of other big opportunities with the Microsoft portfolio. Microsoft’s new AI product, Copilot, is attracting a lot of attention as businesses examine how they might use AI.
The functions of Copilot include: summarising the key discussion points of a conversation held on meeting software and providing recaps for someone who joins late or misses the whole event, creating PowerPoint presentations from prompts, drafting emails, analysing long email threads and documents, and creating summaries and graphs of data on Excel spreadsheets.
Ashley, from Focus Group, said, “Copilot is the obvious opportunity. There is still a lot of fear around the democratisation and adoption of AI, so in order to see the most success MSPs need to help customers classify and protect their data, as well as prepare the wider organisation for adoption. Compliance and security need to be a part of the conversation as well as adoption and return on investment.”
Bennington, from Giacom, also highlighted Copilot, alongside other opportunities around business applications and security.
When discussing how MSPs can add value to Copilot, she said, “Copilot, is set to massively enhance productivity and innovation for UK organisations. MSPs can leverage Copilot to foster AI adoption, guiding customers on their journey towards AI readiness and futureproofing their businesses.
“Copilot presents a significant opportunity for MSPs to enhance their customers’ use of Microsoft 365, delivering substantial productivity and efficiency gains.”
She added, “Microsoft’s suite of business applications including Dynamics 365 and Power Platform present numerous opportunities for MSPs to expand services and enhance their value proposition. These tools enable MSPs to provide end-to-end solutions that drive business transformation and growth, making them indispensable to customer operations.”
Bennington also discussed opportunities around backup solutions. She explained, “A common misconception about Microsoft 365 is that backups are included in the service – they are not. Therefore, MSPs should develop a robust security offering that includes backup and disaster recovery, and device management. Microsoft 365 Backup and Archive are also on the horizon, creating further opportunities in this area.”
This feature appeared in our July 2024 print issue. You can read the magazine in full here.