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Maximising CSP profitability: Key strategies to consider

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The Cloud Solution Provider (CSP) program offers tremendous opportunities for profitability, but success requires diligent management of partnerships, billing, and subscriptions. By optimising these aspects, you can ensure your business remains profitable and efficient.

Here are some essential strategies to consider:

Billing and renewal dates

Properly managing renewal dates is crucial. Staying informed about price changes can significantly impact your profitability. If you’re unaware of these updates, you might face surprises that affect your margins and sales team commissions. Regularly review and adjust your billing practices to ensure accurate invoicing and timely renewals. You can find more information on pricing updates in our article about Microsoft Price Changes.

Correct provisioning

Avoid common mistakes like charging a customer for an Academic/Non-Profit subscription while provisioning a Commercial subscription. Ensure that customers with Education and Non-Profit qualifications are billed correctly, even if they access Commercial subscriptions and double-check the SKUs you provide to customers to prevent any discrepancies.

Ghost subscriptions

Be vigilant about subscriptions created by engineers using a corporate card via Pay-as-you-go (PAYG). These “ghost” subscriptions can lead to revenue leakage, and if the customer switches providers, you’ll still be paying for these unused subscriptions.

Also note, transitioning a customer from purchasing on the Microsoft Website using Pay-as-you-go to Microsoft CSP can be complex and may cause downtime for end users, so clear communication with your technical and sales teams is essential. Collaborate with your Accounts Payable team to review Microsoft charges and investigate any discrepancies or unexpected costs. By working backwards, you can identify any missed revenue opportunities or potential overcharges.

Duplicate subscriptions

Similar to the “ghost” subscriptions concept, it is very common for procurement people to provision two subscriptions with the same quantity accidentally. The action here is to check that you don’t have duplicates by looking in Partner Centre to see licences available versus licences assigned.

Solutions designations and specialisations

Invest in solutions designations and specialisations. These can grant you access to some SKUs at reduced costs and make you eligible for additional incentive programs, ultimately increasing your profitability. Explore the available designations and align them with your business goals to maximise benefits.

Buying indirect

Consider leveraging your Indirect Provider for technical assistance and other value adds, such as Azure infrastructure design, quoting solutions, etc. They can help reduce operational costs associated with serving your customers. By collaborating with them, you can optimise your service delivery and potentially increase profitability.

High touch customers

Some customers require a higher level of support due to frequent support requests or provisioning needs. Implementing a tiered support model (Good/Better/Best Support or Bronze/Silver/Gold tiers) can help manage customer expectations and allocate resources effectively. Understand your customer base and tailor your support offerings accordingly. Balancing the cost-to-serve with the level of service provided is crucial.

Evaluate your billing processes and explore automation options

Manual billing can be time-consuming and impact profitability. Assess your current billing procedures to identify areas for improvement. Consider automating repetitive tasks related to invoicing, such as generating invoices, sending reminders, and tracking payments. Automation can significantly reduce the time spent on these processes.

Opportunity Cost of Manual Billing

Every minute spent on billing represents an opportunity cost—time that could be better utilised elsewhere. Instead of manual data entry and reconciliation, your finance team could focus on strategic financial planning or customer engagement.

Risk Mitigation Through Automation

Automation minimises the potential for human error and ensures that your billing cycle remains consistent, reducing financial risk to the business. Consider how much time your finance team spends reconciling Microsoft CSP invoicing, reliance on a single person for invoice reconciliation, and contingency plans if that person leaves or is unavailable.

Invest in Streamlining Tools or Systems

Look into tools or software solutions like Xeneth’s MSPlus that streamline invoicing and reduce administrative overhead. These systems can automate tasks like data entry, reconciliation, and reporting. By investing in the right technology, you can improve accuracy, efficiency, and overall billing effectiveness.

Microsoft CSP profitability calculator

Microsoft offers resources to help partners understand profitability. The Microsoft CSP profitability calculator is a valuable tool that helps assess potential Microsoft Co-Op funds (Marketing Funds) and rebates (Cash). Visit the Microsoft Commerce Incentive Resources page for more information and access to the Excel document.

Services on top of Microsoft CSP

The Microsoft CSP program can be very profitable, not only because of the margin in licensing but also due to the projects you can undertake on top of that. For example, providing training for maximising Microsoft Teams usage or structuring your files in Teams/SharePoint, or configuring security in Microsoft 365 can add significant value to your offerings.

Consult with Xeneth

For expert guidance, analysis, and consultation specific to your Microsoft CSP / Microsoft practice, reach out to Xeneth. We provide tailored recommendations based on your unique business context and goals.

Optimising profitability involves a combination of strategic decisions, efficient processes, and leveraging available resources. By implementing these strategies, you can maximise the profitability of your Microsoft CSP practice.

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