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Microsoft to restructure LAR compensation model again

Microscope contributor

Microsoft is planning another round of sweeping changes to the Enterprise Agreement fees that LARs make on sales to major accounts which may force some to drop the accreditation.

LARs have until October 2011 to redeploy resources to win net new business, with a particular thrust towards mid-market and corporate cusotmers, and can expect the commercials to swing heavily in this direction.

According to sources in the LAR community, Microsoft is not reducing the overall pot of funds available to partners but is halving the 4% fees paid on partners' business with the top global 1000 accounts.

"Microsoft wants to take away money from the top end and use it to incentivise behaviour to sell cloud services, SAM services and corporate Enterprise Agreements in the mid-market," said one insider.

The penetration rate of the largest accounts is such that Microsoft, like other vendors, is questioning why it needs to reward partners to fulfilment when it does not have the same coverage lower down the food chain, said another source

LARs are expecting more tactical incentives from the vendor to chase down shares gains and some reckon this is the first time it has operated like this.

With a distant deadline set for the revamp, Microsoft has clearly taken on board past mistakes as the previous shift in fee criteria was delayed following feedback from LARs that they needed time to adjust the business model.

Some partners reckon the changes will not suit the larger LARs including HP, Computacenter, SCC, Dell or Insight which could drive consolidation in the partner base.

"The big organisations will need to move down into the mid market or rethink thier investment in being a LAR," said one source.

Microsoft refused to comment.


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