Inside the Channel

Microsoft to let VARs do their own billing for SaaS

Microsoft's Software-plus-Services deal is a sort of love-it-or-hate-it proposition, and it's dragging resellers kicking and screaming into the new era of SaaS. Ultimately, it's a good deal for customers, but represents a big change in how resellers get their revenue.

One of the more contested elements of Software-plus-Services was microsoft's billing policy, where customers would have been billed directly by Microsoft. The latest reports indicate that Microsoft has switched directions, and will now allow channel partners to bill their customers directly.

Microsoft's Business Productivity Online Suite delivers VARs a 12 percent commission on the first year's subscription, and six percent thereafter. When it was first announced last year, Microsoft said they would control the billing. At the recent XChange Solution Provider '09 conference in New Orleans however, the company told providers that they would make a change in the unpopular policy.

Billing for services may seem insignificant, but it's an important issue for resellers. Leaving the billing up to the vendor of course, relieves the reseller from the administrative task of billing and collecting, but there is some value in retaining that function. For one thing, when you do your own billing, you "own" the service. Your customer associates you, the VAR, with the service, as opposed to the vendor. When the monthly bill comes from you, the customer is more likely to call you when they need something else. When the monthly bill comes from the vendor, you're invisible after you've provisioned the service. Doing your own billing is one of the great hidden marketing techniques in the VAR business.

Naturally, the monthly bill also gives you a good venue for customer updates, newsletters, and other small marketing reminders that you still exist and have other things to sell.

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