Microsoft admits LAR fee cuts may lead to consolidation


Microsoft admits LAR fee cuts may lead to consolidation

Microscope contributor

Microsoft has defended the fundamental changes to LARs fees being implemented in the autumn but admitted that the overhaul may result in partner consolidation.

From late September, two thirds of Enterprise Agreements fees on licence sales to named accounts - ones directly managed by Microsoft - will be cut to push the community downstream to win net new business from corporate and mid-market customers.

Edward Hyde, channel sales manager at Microsoft, said that other some tweaks it had not rung any changes to the compensation model since the 1990s but warned it would be a moving feast over the next decade.

"I don't expect it to remain static for another ten years, we'll need to keep adapting it and moving it forward," he told MicroScope.

He said Microsoft was not reducing the overall LAR incentives, instead "repurposing them," but conceded that the strategic shift would suit some better than others, adding that there was an over-reliance on the fees from several in the community.

Asked about resulting consolidation, Hyde said: "It would be unwise to expect no changes of that sort. We don't have a specific agenda to vary the number of partners in the UK."

"But I think we do accept that each of our partners is different and for some this will be an easy set of changes to digest...for others perhaps in the mid- to long-term will decide that they need to make different decisions," he added.

Hyde pointed out that partners will have had the best part of two years to digest the changes when they go live later this year.

The majority of the fee changes have now been communicated to LARs but Microsoft is finalising additional details that will be relayed to the community at the global partner event in July.

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