I realize that many of you partners out there know a lot about Microsoft Online Services and our Business Productivity Online Suite (BPOS). So you may think this information is stale or old, but it bears mentioning. I worked at a recent Everything Channel Virtual Event (CRN) called Cloud Computing Is All the Rage: How Solution Providers Can Get Into the Game and Grow Their Business where I staffed the Microsoft Cloud booth.
I was simply amazed at the numbers of VARs and SIs that were unaware of out present offerings in the cloud. This is certainly reasonable if I was referring to some of our newer offerings like Windows Azure or SQL Azure, but I figured most persons attending the event, which was cloud focused, would have known more about BPOS which has been in market in beta and production form for roughly two years now. I do not pretend to think that Microsoft is the only player the cloud, but we are one of the movers and shakers in this paradigm shift and I expected more VARs and SIs to know what was up over here at Microsoft.
The purpose of THIS post is quite tactical in nature and is designed to clarify a question I received from several persons while at the Everything Channel event. If you require detailed information about on boarding your company and selling BPOS then I would visit the Microsoft Partner Network quickstart site here.
Three separate VARs at the event mentioned they wished BPOS fees (read commission) extended beyond 3 years. I was taken aback at first as I didn’t understand the nature of the comment or question. I thought I heard or read what they were stating incorrectly. …Then I thought I must have missed some vital communication that had made a HUGE change in the BPOS partner of record fee structure. Finally I made a connection. ALL of our examples demonstrate payouts over a three year period of time. Nothing “shows” fees for a forth, fifth and consecutive years.
Look at this screenshot of the present partner core BPOS deck on the quickstart site:
It only shows the fees over three years. Why? Well, if you are planning long-term it is important to note that three years (selling the same quantity of BPOS sears each year) is the point where you residual fees (6% per annum) eclipse your Net add or sales fees(12% per annum) in terms of the cash coming on to your business. This three year view demonstrates the process of building that annuity stream for your business.
Please note that in year four and subsequent years you do not lose that recurring revenue as long as your customer continues with the service.
So to extend the example in the slide (using 1000 seats per year):
Notice the area in orange. This is where Residuals overcome Net Add fees as a percentage of total revenue for the partner.
The net net is that BPOS is an evergreen agreement, as long as both your customer continues with the service AND you remain as the partner of record you will continue to get the fees on a quarterly basis. HAVE NO FEAR! We are not going to leave you hanging after three years.
Thanks for listening! Now go and sell some BPOS deals; it is not a new product, just a new deployment methodology!