Microsoft has always been a Partner-centric company. While it’s common to talk about Microsoft Enterprise Agreements as being “direct deals,” in every case there is a Partner involved. Microsoft calls these “Licensing Solutions Partners” and they are certified by Microsoft to be competent in the details of Microsoft’s enterprise volume licensing deals.
At NET(net) we hear many of the same questions from our clients about how these relationships work, and what exactly the role of the LSP should be.
What is an LSP?
An LSP is a Microsoft Partner who is authorized by Microsoft to be named as the Partner of record in enterprise licensing deals. Usually these are Enterprise Agreements, but the Microsoft Product and Services Agreement (MPSA) and the newer Microsoft Customer Agreement are also relevant.
Most LSP’s are also generalist technology resellers. Familiar industry names like CDW, Insight, Dell, Crayon, and Bytes are on the list, as well as more specialized firms such as SoftwareOne, Softchoice and SHI.
LSPs are very limited in number. Microsoft does not publish a list of their authorized LSP’s, and in fact make it very difficult for a customer to find LSP’s. While Microsoft does offer a “Partner finder” website at https://appsource.microsoft.com/en-us/marketplace/partner-dir, the service offers no specific filter for “LSP” so any search for licensing support will also include other types of license resellers.
If you are unsatisfied with your LSP’s services, feel free to contact NET(net) for referrals to competing providers.
How are LSP’s Paid?
It varies by deal type and the specifics of the deal in question. For most Enterprise Agreements, in the US, the deal is invoiced direct from Microsoft to the end customer. In these cases, the LSP receives a commission fee, based on a sliding scale determined by factors such as size, product mix, and other performance incentives defined by Microsoft. Typically, this commission to the LSP is in the 0-5% range, with some deals in the 5-10% range.
But that’s not all. Many LSP’s treat their Microsoft licensing sales as a “loss leader” to gain the customer relationships and be able to sell other products and services from their catalogs. So, when you are evaluating your LSP, consider not only their ability to support your Microsoft licensing needs, but also the full range of products, services and support the LSP can offer.
What should your LSP do for you?
If you have an Enterprise Agreement with Microsoft – or any other volume licensing agreement such as MPSA or CSP or SPLA, your LSP should at minimum be providing the following to you:
- Timely and correct transactions and billing for orders. Yes, this is something we still must call out in the year 2022.
- Quick and accurate answers to routine licensing questions such as “what’s the right license to buy for this project?” and “How many licenses do we have for this product?”
- Internal specialists who are available for in depth conversations about complex licensing topics and what-if scenario planning, such as when contemplating migration from on premise to Azure cloud infrastructure.
- Bundled or included services such as license tracking, compliance assistance, and news updates on relevant topics.
- Executive contacts and a fully documented account team map including escalation and conflict resolution methods.
- Confidentiality – specifically to include binding commitment to not share your information with Microsoft or other suppliers.
- Advocate for your interests – ahead of their financial interest in selling more Microsoft licenses.
How do LSP’s really compete and differentiate themselves?
If you sit through a pitch meeting from every LSP, as we have done, you’ll find that they all pretty much do the same things and offer the same services. So, at a checklist level, they all appear to provide very comparable offerings.
Still, there are a few points of distinction. For example, some LSP’s are better equipped to handle global customers and multi-country / multi-currency transactions. Some LSPs offer bundled services in support of IT Asset Management (ITAM) and license tracking. Still others offer no-charge compliance checks. It’s important when evaluating an LSP to understand the full range of their offerings and which may be valuable to your enterprise.
But the most important item that an LSP can provide to you boils down to that ineffable “quality of service”. A committed, experienced, responsive account team, skilled and available inside specialists, and a culture of quality service are the keys. We counsel many clients that the account team is the most important ingredient here, and many clients have followed a given individual from one LSP to another due to that person’s strong service.
What if my LSP is not making the grade?
Many clients bemoan the (false) perception that they are “stuck with Microsoft” and therefore can’t change providers when prices are too high, and service is weak. But when talking about Microsoft LSP’s that is not the case.
It’s actually pretty easy to change your LSP. Any time you are starting a new deal, be it Enterprise Agreement, MPSA, etc., then you have the right to name any eligible LSP as your partner for that deal. This also applies to “renewals” of an expiring Enterprise Agreement – at that time you can name a different LSP.
The only real restriction is when you are mid-term in an Enterprise Agreement. You can change the LSP upon 90 days’ notice in that case.
What’s the best way to compete and find a new LSP?
Well, you’re already asking the right questions. Yes, you want to treat alternative LSP’s as competitors and screen them via a disciplined process to make sure the new Partner meets your needs.
At NET(net), all our Microsoft related engagements include this service at no extra charge. We’ll screen your current LSP, assess fitness based on the above criteria (and a few others that we’ll keep secret for now), and if justified we’ll seek out competitors and screen them for suitability, pricing and terms.
Most enterprises already have multiple active relationships with major resellers such as CDW, Insight, Dell etc. You should consider the entire scope of your relationship, not just the Microsoft spend. What about your laptops, desktops, peripherals, imaging, warehousing and delivery / staging services, accessories, other software brands? A consolidation plan might be the best approach, or maybe your specific situation is better suited by hiring a licensing specialist firm for your Microsoft business while leaving the rest of your spend in another provider.
How to Save
First step; everyone should benchmark their LSP / reseller spend and/or agreement. With just a few pieces of information, NET(net) can benchmark your deal (in as little as 1 business day) and show you how much you can save.
The Commercial Arrangement
Scope. Evaluate the full list of tech products and brands that you buy via resellers and direct. Understand he annual spend amounts, major projects and refreshes planned or coming, and any key suppliers with special relationships.
Volume. To maximize your discounts, you want to maximize your volume, so you should consider your planned consumption during the coming year(s), even if not committed at the time of the initial agreement (more on that below).
Bundling. If you are buying PC’s direct from Dell, for example – would you be better off by buying them via a reseller, if the added volume enables better pricing or terms overall?
Incentive Pricing. Customers who buy more quantities or additional suppliers should better pricing than an “off the street” buyer. Try also to get 'minimum' discount language so as not to set a floor on the price, rather a ceiling. This will enable you to evaluate competitive alternatives available in the market and help you benefit from the maturity of the market where prices generally come down over time.
The Contractual Agreement
Most resellers / LSP’s provide a standard commercial terms agreement. Many enterprises should customize the terms to address topics such as freight costs, returns, pricing caps and floors, rebates and other incentives, as well as template SOW and professional services terms.
Supplier Performance Management
When you have a deal with a new LSP, what are the expectations? What is your tracking and governance plan for the relationship?
TIP: Begin from the assumption that your new supplier will fail to deliver any of the promised new services. How will you know? When and how will you act in that case?
NET(net) can help you optimize your relationships with your LSP’s and resellers, and with Microsoft’s June Fiscal Year-End fast approaching, there is no better time to capture value, so Act Now.
Contact us today to learn more about how we can help you save 32-60% on all your technology investments, including those with Microsoft, or Sign up now for a Savings Cloud subscription on Microsoft, and we will get started right away helping you minimize costs and risks, and maximize the realization of value and benefit.
Founded in 2002, NET(net) is the world’s leading IT Investment Optimization firm, helping clients find, get and keep more economic and strategic value. With over 2,500 clients around the world in nearly all industries and geographies, and with the experience of over 25,000 field engagements with over 250 technology suppliers in XaaS, Cloud, Hardware, Software, Services, Healthcare, Outsourcing, Infrastructure, Telecommunications, and other areas of IT spend, resulting in incremental client captured value in excess of $250 billion since 2002. NET(net) has the expertise you need, the experience you want, and the performance you demand. Contact us today at firstname.lastname@example.org, visit us online at www.netnetweb.com, or call us at +1-866-2-NET-net to see if we can help you capture more value in your IT investments, agreements, and relationships.
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