ERP087 - NCE and Other Microsoft Channel Changes

I've had some real stories on the road. I just got back from a trip. And we had one partner with a distributor that was contemplating moving to us. And you know, I'd mentioned in my keynote, hey, if you have any questions about NC, we're past the date you can leave. We passed that point really. But I can talk to you a little bit about, you know, the future and what it looks like. And the person looks to me and says, hey, what's NCE? And I'm like, how much Microsoft is you have? He's like, oh, 50,000 a month. I'm like, whoa. Okay, you need to you need to sit down. And he's like, so there's a price increase, that's it. I'm like, that's part of it. It's like you're also locked into. He's like, but I was going to leave soon. And I was like, yeah, probably not anymore depending on how your licenses were converted. Like you need to go have a talk with your rep. Like they never called me. And I'm like, yeah, that that's really unfortunate, I'm sorry, but like, you know, you have a problem you need to go figure out right now. So of course he ran off tail and face to go figure it out what he was going to do about, you know, his business because operationally I think it did affect him. Welcome to Evolved Radio, where we explore the evolution of business and technology. I'm your host Todd Kane. Endpoint security built on a zero trust default deny foundation. Finally, a lightweight, simple to deploy and easy to manage approach to application allow listing. The perfect complement to your current security stack. No minimums and no annual contracts. Find out more by visiting PCmatic.com/MSP today. That's PCmatic.com/MSP today. Today on the Evolved Radio podcast, I'm joined by Mike Slater with Sureweb. Mike and I dig into the Microsoft NCE program. What's changed and what you need to know. We also chat about how this partner program changes an indication of where the industry is trending in general. Mike's passion for the channel and his depth of experience are perfect for this complex topic. I found it really valuable. I hope you enjoy my conversation with Mike Slater of Sureweb. If you enjoy the show, please consider leaving a rating and review in your favorite podcast app. It really helps to spread awareness and bring more listeners to the show so we can share the message with more of the community. Now, on with the show. Mike, welcome to the Evolved Radio podcast. Thanks Todd, appreciate being here. So, we're going to get into a topic that is fresh for everybody. And I think you have some really unique and important insights on this. Going to be talking a lot about sort of channel programs. And fairly specifically, going to get broader a little later. But really want to dig into the Microsoft NCE program. Which I think there's a lot of love and a lot of hate for in the industry. People were pretty stressed out to kind of get things changed over to this new program for CSP licensing. Do you want to give us kind of the quick skinny from your perspective on what NCE is? This is the new commerce experience program that Microsoft has kind of rebranded their their licensing sales through. And you guys obviously at Sureweb have a large portion of the industry and support a ton of MSPs and IT providers with their licensing needs. So you guys definitely have the inside track on this. So you want to bring us up to speed really quickly for anyone that is not familiar with NCE and then we'll kind of get into the program itself. Great, well, you know, two things. First, I'm glad I have an NDA that expired. Because you you did corner me and ask me this question before and we I had to talk in very general terms. So I'm glad we can revisit this conversation with everybody else listening to talk more about it. And the second thing is, it's it's quite a change. So the way that I always look at NCE is, you know, I always give the the Microsoft version first, right? So it's pretty clear. You know, Microsoft always says NCE is a unified billing platform, right? That provides resellers with tools, manage subscriptions, you know, handle seat-based offers better. And you know, offer new sales capabilities, operational efficiency and commitment from your customers to you. Right? That's kind of the positive spin. So when you digest that, you say, oh, well, there's terms. So I can get a commitment for a year. You know, people can't just leave anymore and just run away licensing. Especially they do with one year. You commit. So that's sort of the the Microsoft version of it, right? From a distribution point of view, it also changes the game a lot too. So. For our point of view, what it means is that, you know, the kind of rat race that is kind of distribution. Right, where, you know, all cloud distributors, traditional broad lines are kind of fighting each other. That kind of goes away. Because one of the biggest changes that that, you know, partners can't shift their licensing anymore like they used to. And depending on where you're at with NCE. That's a great thing because you're really happy or now you're married to somebody for at least the next year that maybe you don't want to be. So it all depends on your perspective. Kind of the the top changes I do to highlight it, what the the most meaningful would be. Because again, there's a million things that change in the back end that MSPs don't really care about. But I'll talk about what I call the impact points. And there's about five of them. So the first thing is that, you know, subscriptions are cancelable. But only within a very tight window. So originally it was 72 hours. So if you accidentally got something or you, you know, purchased something for a client, they changed their mind, they have a little buyer's remorse. You used to have about 72 hours, that's going to expand to five business days pretty soon. It already is available depending on the time of this podcast when it goes out. And then going forward, they are going to open that window up apparently to a week. But again, with everything like NCE, it changes frequently. We also have the inability to reduce seats. So you can add more seats to a tenant in a commitment. So you can go and top up, but you can't reduce. So it's something very important to keep in mind. So reduction is in that 72 hour soon to be a week window. Should we maybe pause on that one? Because I feel like the like this is this is probably the major sticking point, I think that that people are are kind of concerned about in the in the channel. That, you know, you have a client that has a 20-person seat count and, you know, they, okay, I'm going to get you guys on Microsoft licensing and set you up for your annual agreement. And that's the biggest change right now is that like if you want to go monthly, you're paying extra. So okay, I'm going to get you on your annual. You're paying extra twice. Right? Because you have the March price increase and then you have the and then you have the monthly if you go monthly as well too. Right, so there's there's one price increase that everybody gets no matter what you transact on. Right? And then there's the, well, now you're going monthly on an annual commit. Which everybody was before, Microsoft just didn't enforce it. Right? And now you're going to pay a little extra on top of that too. So it's a big price increase depending on how you look at it. There is the flat price increase, there's the uh increase if you want to to have the option to do month to month. Correct. Then, you know, it that 20-person office say they let they let go two people, they still have to pay for 20 seats for the rest of the year. Correct. Correct. 100%. Yeah. There's no way out of that. So Microsoft has kind of put and again, this is a lot like the um the RI conversation. Right, that they had before. Which again, for Azure reserve instances. So technically, Microsoft does have a clause to hit people with a penalty if you leave your RI, if you cancel it. Now, they don't enforce it all the time right now. Right, I've heard a very few cases where it's been enforced. So I would look at it this way. That they have stated that there might be some leniency for like cases of bankruptcy. But again, nothing's guaranteed. So just because even in one case they might, it doesn't mean they're going to do it all the time. And I and we don't have any idea at least on the on the Sureweb site what the mechanism is going to look like yet. Like it's all uncharted territory. Which is kind of the biggest challenge of NCE is that, you know, you have everything on paper and then we actually have to try to do this in practice. So I would be safe and assume. That yes. There's no recourse if you pass that that window, 72 hours now, a week very soon, you're out of luck. And you would be on the hook with your distributor and with Microsoft to pay the bill. So, uh, you know, I I have a a history in more of the enterprise space on this. So I I've seen a lot of EA agreements being put together. And one of the things that that we used to do there, I don't know if this is how EA agreements currently work. But you would have that minimum clip, it was kind of the same thing. Like this is your annual seat count. And then you can add more and then on that annual basis of a three-year term, you can ratchet up and down wherever that new baseline is. Is it does it allow for kind of the same thing, I guess because it's an annual commit? That you can reset what that number is on that annual basis. Yeah, on an annual basis you can make the change. So that's the way that it goes. So you can, again, much like an EA. Like and that's what people are kind of comparing this to many ways. Right? Which is is the EA part. Which is kind of funny because there's some partners that said, well, we've been successful. Either staving off an EA or we've been successful in taking EAs by license flexibility. It's been one of the things that we've offered, so that's also kind of in a way going away. Again, I I can't speak to the way way that the enterprise agreements are done because again, we're a distributor, we don't do those. But I'm curious to see if like the same requirements have been put on to direct customers with enterprise agreements. Like are they also in the same boat? Like, you know, it'd be an interesting to visit, like has that flexibility disappeared? Or is the month to month still valuable even if it costs 20% more in some cases? Right? So that's an interesting exercise that we'll all learn together in the next few months. Right. So I guess to to circle back to what you mentioned, what I maybe heard you're suggesting, you can verify if I heard this right. That it's possible they may not chase you on this if you try to reduce the seat count. Like it's to be seen. You'll get chased for sure. I mean, your distributor will definitely chase you, that's just the way that it works. But I think that like for extenuating circumstances, there was some discussion of this. But again, it's it's it's nothing's defined. And my my policy is with any vendor, right, you work with, that unless it's in writing that you can specifically do this thing, assume that you can't. Right? That's the way that I look at it. Same way you treat RIs. Right, you know? There has been some forgiveness in RIs in the past we've seen, right, extenuating circumstances, things have happened. But generally speaking, right, it's I would not test these policies personally. I wouldn't want to take the business risk. Only in extreme circumstances where you say like like if they're like the business folded, then maybe you can get some recourse. Right? That was the example that was given. Like like bankruptcy was one of the ones that was highlighted to us. But I think again, the the case you mentioned, which is what I think is most of them are going to end up being. Right? Which is, oh, somebody they they've lost two employees, right? That they don't want the seats anymore. They're in month four, they're commit. Well, they have to go all the way to month 12 on their commit and that's just the way it's going to be. Okay. And then the the other caveat to this. And I for anyone listening, I apologize if we're retreading territory that you've spent the last two months trying to figure out. But I have noticed like a a number of partners that I've run into seem somewhat unaware of this. Right? Like they're just like, oh, it's fine, like their price went up. That's all they've sort of perceived around this. So I I do want to kind of clarify a couple of these points as well. The other one was that that's a sort of a an extreme hot button for for channel partners is like if that seat agreement changes. Or that client like renegs on their their agreement for those licenses. Like that Microsoft will not go chasing that client, you're on the hook as the partner. For the cost of those licenses. Which I think a lot of people are a bit nervous about. I don't know that this is something that happens a lot. It's not like someone just bails on their agreement in except in a circumstance like where they they go bankrupt or something. But it does create sort of this nervousness of like if I lost a big client and they stopped paying their bill, I still have to pay for their licenses. Which feels a little risky for some, I suppose. Yeah, it is. So I'll address kind of both those points. So so the first point, the way it works right now, the way it's structured is you kind of you would be on the hook no matter what. So the impact of this. And remember your your other question, by the way, we'll go back to it was who hasn't heard of this and I I'll tell you a lot of people haven't. And we'll talk about why. But in terms of impact, yeah, you're definitely going to be on the hook. I think real MSPs, when I say real, I'm not trying to be, you know, gatekeeping. But just people that actually have all their customers on a month-to-month agreement and already work in annual contracts, don't mind as much. Right? Right, and again, what they really did and and the guys from Sureweb, we actually locked in your price in your legacy on the legacy platform until November 30th. So if you were one of our partners, we actually kicked the can down five months for you to talk to your clients and do it. So everybody that's in a full managed service provider role where they aren't selling the license, they're selling it as part of their overall offering, these guys are mostly fine. So they're the ones that I think do view it as just a price increase. They're like, well. In my day-to-day operational business, I already had a commit. I had these guys on the line for so many more months. They're probably not going to leave. I'll just have to add this into the contract for next year. So they're not as concerned. The people that are either VARs, break fixes or somewhere in the middle or mix of those businesses are the ones that are the most concerned. Because they're the ones that are usually selling naked licensing. Which is what I refer to just straight. Your office business premium, right, costs this much amount of money. I want this amount of much money for it and I'm going to make the 5% off of this. I do for my distributor. Right? Which is the worst thing you could do. Those people are going to be the most affected. Right? Because again, now they're really just selling the SKU and not selling the value. So those people are going to be hurt. In terms of people that are surprised, you you'd. I've had some real stories on the road. I just got back from a trip. And we had one partner with a distributor that was contemplating moving to us. And you know, I'd mentioned in my keynote, hey, if you have any questions about NC, we're past the date you can leave. We passed that point really. But I can talk to you a little bit about, you know, the future and what it looks like. And the person looks to me and says, hey, what's NCE? And I'm like, how much Microsoft is you have? He's like, oh, 50,000 a month. I'm like, whoa. Okay, you need to you need to sit down. And he's like, so there's a price increase, that's it. I'm like. That's part of it. It's like you're also locked into. He's like, but I was going to leave soon. And I was like, yeah, probably not anymore depending on how your licenses were converted. Like you need to go have a talk with your rep. Like they never called me. And I'm like, yeah, that that's really unfortunate, I'm sorry, but like, you know, you have a problem you need to go figure out right now. So of course he ran off tail and face to go figure it out what he was going to do about, you know, his business because operationally I think it did affect him. Just as an aside, it's pretty shocking that someone with 50k in sales for licenses did not get a call from their distributor on this. Yeah. Yeah, I mean, we can have all different podcasts on on on broad lines work. Again. I've sold into them and I've competed against them for a while. So there's there's a whole discussion to have around that, which uh I I'll have to clear marketing to see how much I can and can't say. Let's put it that way. But yeah, it's fortunately it's not surprising. I mean, I've even had. Um good like, you know, really good friends of mine that are MSPs, like they've just known throughout the years, different places. That come and said, hey, like, you know. One person we converted recently, that was with another even cloud distributor was like, I figured out NC on my own. But I want to validate the information with you. And that was sort of the check with us to see if we were cool and they wanted to shift to Sureweb. And we had the answers that were in line with what they thought. So they immediately shifted. But you'd be surprised. I mean, this was such a bonanza. Like we were spending, I I kid you not, four hours a day, every single rep on the phone, having the same NC conversation with people. And it was a lot of work. Yeah. Well, and that was evident too because one of the things that that popped up through this transition. Was they Microsoft ended up having to actually delay the actual transition from the original start date. Because the distributors, it looked like the back ends were just getting crushed by the amount of administrative changes that were happening. Like systems were taking like 30 minutes to respond and there was just so much activity. That it was kind of an impossible ask to do all of this in one month, I think. Yeah, it it was pretty funny because I I I recall we had a hard deadline. And it was an all hands like we had extra operational team, people on our sales team ready to go, ready to roll. And we were firing on all cylinders, like it was the amount of work we did was truly, I mean, we had the best month we've ever had at Sureweb, by the way. Like we we because again, we just took advantage of the situation. And made it good for the partners who in turn made it good for us. Right? Right. But I remember we had a specific cutoff time and like we I got reminders from Microsoft, like, hey, just so you know, like at this time, we're it's it's over. And then it was there's a problem, it's going to be three hours later. And then later that night it was, there's a problem, we're going to extend it for a while now. Right. It was it was very funny. Because I heard stories, I mean, I first of all, I don't know if we had any platform issues, but I heard that other distributors like went down. Yeah. Which is something that I heard of at the show I was at because this was all happening while I was at a conference. So again, you know, there was the reaction of people realizing this and I'm updating people in the boardrooms. We had at this conference the next day being like, hey, NC update. I found out about about 12 hours ago, here's the changes. Like you now have a little bit more time to move into the platform, right? And take advantage of some of the benefits you get from it, right? So it was it was a very wild ride, let's put it that way. Yeah, wow. So we talked about some a couple of the positives. A couple of the the the frustrations with this. Is there anything that you've heard being circulated in the channel that is just absolutely not true? And and is maybe sort of pervasive rumors or just sort of discussions that are happening that need like things that need to be reset or myths, I guess. Yeah, I mean, I definitely heard a couple things. I I think that one of the biggest myths I've heard is that. You know, MS two things, number one is that this is just another step in Microsoft wanting the MSPs role. Which again, we hear all the time, I mean, if you're involved in any community forums. It pops up all the time, there's always somebody that says that. It's like, I in my experience, I'll tell you it's the opposite. They've they've never been in a meeting where they've wanted to take stuff away from distribution. Right, because distribution is the point where all the stuff comes from. Right? They're always like, how can we give you more? Like Microsoft will. Even refer partners to us that are that are failing to hit their direct quota obligations, they mean give them two indirects to work with. Like. They're trying to push this out more and make this a their way of doing the whole SMB mid-market. If they want to go through CSP indirect. So that's the first thing I'd squash. This is not a a first stage in that. They they truly don't want to do that. They don't they already did this. They tried it. That was the old advisor program. Right, you used to go in and get your commission. That disappeared for a reason. The whole idea is they want partners to transact and they want them to be there. So they should remove that idea from their place. This is not some grand scheme. I've never heard any discussion of that. Discussions always been, how can we get more people off of direct into indirect because it's better for everybody. Right? Partners get better service. I mean, even the Microsoft reps, right, like they still get paid as far as I'm aware, you know, a territory account manager, no matter where the transaction comes from. They just want you to buy Microsoft. So. Again, the whole thing is set up to enable partners. So like we should stop having that very paranoid discussion because it's not productive. So that's the first thing I'd squash. Just really quickly, I would echo that because I see the same. Right, all the way back to BPOS, it was like Microsoft's trying to steal all our business. And that that's never been the case. Right? Like I I understand where that perception comes from. But I I I strongly believe in Microsoft's long-standing position of we're going to build 80% of what the customer needs. And the last 20% is always provided by the partner community. Like as far as partner-led organizations. Microsoft is probably one of the best in the the IT channel as far as. Definitely agree. What they build and support around the channel. So I I strongly agree with that. Like Microsoft is not a competitive threat. Not at all. You know, a bit of far a field on this, but like they're they're building lighthouse as a potential RMM solution. And everyone's sort of panicking or or or very excited about it. Saying like, you know, here it is, like they're they're building these tools and and they're coming again for for sort of our position in the market. And it's like, no, it's another tool. Like you could leverage this if you want. But like again, I agree, like just like it's not worthwhile viewing them as a competitive threat. But they do reshape how they engage with the market a lot. Right? I think that's maybe the frustration. And that's a valid point. Like I think even even the most, you know, dedicated Microsoft rep would be like, yeah. You know, these things change. We remember the action packs, right, from a couple of years ago where they're talking about getting rid of that and then, you know, they reneged on that. So. You know, these things do happen and the voice does. The community does have power. But I just think in this case it's like it just makes it's not a big clay. I think it's strictly motivated by stability, numbers and kind of adjusting to the way that that SAS is sold. Like everybody has annual commits now. If you were to buy any enterprise software, very few people will price it month to month and you're paying annually for everything anyway. This is just kind of the direction software is headed to. And is it right or wrong, that's not my position to say. Because again, I see both sides of the argument. I just understand that, you know, I I don't think Microsoft's unique in this position, I think it's just the way the industry goes. And touching on the other rumor, which is that partners are being treated differently. Depending on who you are and what you do. Like if you're a direct indirect. I've had some people say, oh, if I just went direct, this would save me from this. This would not save you from happening. The same thing would happen no matter what, plus you'd have a quota. That's that's very hard to hit unless you're adding, you know, thousands of seats per year, which you could be and all the power to you if you are. But for a lot of people in the mid-market game, SMB game, that's not realistic, you might add a couple hundred people a year, not a couple thousand. And again, Microsoft raises that bar in my experience once every couple years. And they make it harder to be a direct, not easier. So. That's the other thing I would say, doesn't matter where you sit. I've had people come to me and tell me, oh, well, you know, we're exempt from this. And I've done I've asked Microsoft and they said, no, they're actually not. They have the same rules. They also can't change. You know, some kids, oh, we can change after six months. But I I again, I could be wrong because it's NCE and sometimes we say the wrong things, everybody, even experts in Microsoft like us. But from my understanding, no, they're on the same annual commit. There's no way around it. They don't get any special exceptions either. This is the way Microsoft has. Shifted all their business too. This is the way it's going to be for modern work. And that's that's sort of the the part that I see as as the directional change that's probably been happening for maybe north of a decade. Right, is is sort of that reshaping of the channel and how Microsoft actually engages with the partners. I think is worth noting. Because I think some of the smaller partners feel like they're being sidelined. Which to some extent, I think that sense is probably somewhat true. Because it felt like a long time ago, like anybody could be a Microsoft partner. Like you just sign up on the web page and you could be a solo shop with no competencies whatsoever. And you just apply and all of a sudden you're a silver partner and you pay your your your fees and you're able to advertise that. And I feel like they're trying to reshape that type of engagement where they're making it a bit more difficult. To be recognized as both a silver partner and certainly as a gold partner and they're kind of they're making it tougher to achieve those competencies. To create a bit of a gap between the people that are just sign up blindly on the website versus people that are actually committed to the Microsoft stack. And are, you know, looking for a development model and a business model that is aligned around the Microsoft ecosystem. And I think I feel like that's maybe the change that people see is like they're making it difficult for me to be a partner. And it's like, well. Sort of, like some of that is is potentially true in my eyes. Right? Do you do you see it similarly? So what I'll do is I'll I'll kind of distance myself from Microsoft. And Sureweb and just say this is Mike Slater's thoughts on on kind of what's happening and kind of pre pre-cate that ultimate thing. And to say. Is is I think that's that's the way that the channel is going. Right? That there's there's vendor life cycles. And there always is. Right? So generally when you're a newer vendor or you have a new product, right? You have to kind of cross the product gap a little bit. This is something I talk about a lot of my keynotes. So the best way to do it is is accuracy to evolve on the fire. Right? So when you just start this program, you want as many people using your software, you publish a premium version of it. Right? You make it really easy to become a partner, you just have to sign up here and you get access to all these things. That's kind of the way that old products go. Right? You know, like Amazon didn't make money for years, right, under this model. They just wanted people to get used to online shopping. And just cross that product gap in their head to be like, I don't have to go to the store. I can just buy this online and feel confident doing it. Right? So it costs resources, time, energy to get there. But once you get to the bridge. Diminishing returns kind of kicks in. For every channel program in the history of time. So there are ones that are older than the Microsoft, like Telcom ones that have been in place with major carriers for for decades. And they did the same thing over a period of time. It used to be really easy to be a partner with, you know, Nortel back in the day. And then Nortel made it progressively harder when I started to come up was the very end of that. Right? When I was working in the Telco industry. That started to become harder and harder to do that. Right? They kind of got rid of it. And Avaya made it more difficult. And, you know, then you heard start having quotas. So what kind of happens is, as the technology matures and it starts to sell itself. You know, the vendor is going to basically look at at whoever's involved in the thing and be like, you need to add value to this now. Like we're past the point of right. I just want you to buy this and give it to somebody. Because if you're not adding value, right, and you're not making sure the product retains, which is really what most vendors like channel partners for. It's really the retention. You know, there's a fact. That I was told years ago. That but the check, but it's something sold through the channel last two and a half times longer than a direct sale. So that's what we're looking for. All vendors will distributors is longevity of that contract. And if you're commoditizing it, like I said earlier, and you're just selling naked licensing and everything is a price king game. You're going to have a hard time hitting those quotas. But again, if you're building this into your offering as a managed service provider and you're thinking monthly, you're thinking long-term, you're building up your business. You're going to be okay to hit these goals, like I love the most, I'd say fast running MSPs in our partner program. Are all operating this way. And that's why they're the ones that were the least impacted by NCE in terms of like real financial negatives for them. Because they're ready. So I really do feel like yes, it is it is a feeling that's happening, it kind of is happening. And that's just like the natural evolution of the channel. Right? And every single vendor will do this. Like they've. You know, big hardware vendors that do laptops and desktops have the same thing, right, where, you know, sometimes they're channel friendly, then we go through years like right now where they're not. Right? And these things kind of go in cycles. So that's what we have to look at it. And Microsoft is now in an upswing, they had an amazing year, like the sales of of teams. By itself and adoption has gone what thousands of percent. Over what it was two years ago. So now we're going to a point where I feel like the channel has to mature. You know, cloud technology is now the standard, it's not an upsell, it's not an upgrade, it's just what everybody's expected to use right now. And we need to adapt to that, everybody does, including the partners. So I feel like it is a downward pressure. But it's. It's within their right to do it. That's the way I look at it. 100%. No, I I certainly don't disagree. So in that, I guess what I'm hearing you're suggesting is if you're doing kind of an annual model. And your Microsoft licenses are included in your seat count essentially, like kind of all in seat price including the Microsoft stack. That's probably the better play. Because then it's tied into your agreement. And you're kind of covered. 100%. By the agreement around those seat counts and and the engagement there anyway. Right? Correct. And if you're smart and you've like taken advantage through distribution or like are you managed to stay on the legacy platform, whatever way you did it. Right? Because many ways you could have done that in the last couple of months, like you did take that can down the road. So maybe you can even align some of these dates and put people into NCE at the right time. Right? Now, again, logistically that's complicated to figure out. And that's a whole discussion with an account manager. And and again, I I stand to be fact checked as this thing ages and the market changes and NCE changes again because it just changed two days ago. So these things happen. The information here maybe need may need revisiting in two months if you're listening to this later, I guess. Right. We'll do another one. We'll do NC part two. And it'll be and we'll do a part three as these things evolve. But yeah. Like if you're savvy and you you've already have this annual long-term outlook relationship with your clients. This is a minimal impact issue. Because again, and then it becomes like what other people said. Right? So there's either two camps of the price increase thing. There's, oh, it's just a price increase because I'm prepared and I know how to handle this. Or it's just a price increase because no one's told me what's happening. Right? And then, you know, you very obviously want to be in one camp and not the other. Yeah. Because that's what I saw a lot of people, like the people that were that capitalized on this and got started really early. That's what they had to spend a lot of their time doing was figuring out the T's and C's. And resigning people on agreements so that they the the client was clear that they held a financial responsibility. Around these licenses tied to the agreement, so if you leave, that's fine, but you still have to pay this out because it's not my cost. Right? I think that that was the a lot of that that uh the the paperwork that I saw getting done in the background. On that, I guess, like the the the shaping and the reshaping of that that partner engagement model. Now. This is fairly recent as well. But now Microsoft is really reshaping the partner agreement around exclusively cloud. Yeah. And this again, it's sort of this this push that I feel. Like incentives drives behaviors is is sort of an idea. Certainly in sales. And, you know, partners are used as a sales arm, as you said, they're very successful at this. And that's why Microsoft respects and uses and leverages the the channel partners for this. But. You know, it's also don't sell the things that are just commodity and we're not interested. Like everyone's going to sign up for Microsoft Office. That's not something that we're trying to drive behaviors around. But. We are trying to drive consumption of other things, so if you sell office, great, I'm not particularly interested. But I'm going to knock down your commissions because that's not what drives my interest. But. If you increase your cloud sales, uh Azure, Dynamics, all of those those uh technologies that they're now trying to really sort of push hard on. That's where they're starting to drive a lot of the incentives. Is that is that sort of how. The initial pass on this, anything you want to add there? Yeah, I I think you you touched on a lot of the the cornerstones. Right? So I I I this is a relatively new and I I've only really reviewed one. So I I looked at modern workplace. Right, because that's the one I was the most interested in because that tends to be a high volume number within the channel. Right? Because modern work is is a big. Big chunk of of what the current business is. Right? So if you take a look at it, what's interesting is previously competencies were really like based on competencies. Right? Like what can you do and how can you do it? Right? So it went all the way from just your silver competency, all the way to being an Azure expert. MSP. Which is like the highest end of what you could do from a competency, right, that requires a lot of financial. But a lot of technical. Like you need to be 20 certs. You know, deep in Microsoft's Azure cloud, like AI scientist, Azure architect. Like very, very hard things to get the most MSPs won't be able to actually get in reality. It's going to be a select few. And we've seen that kind of shift towards yeah, the the cloud partner program is very much focused on net new. It's very much focused on. Pushing the things that Microsoft is really interested in. And again, Microsoft interested always very transparent. Everybody. Right? Microsoft is interested in net new seat ad. Right? So Microsoft is very interested when they look at their entire channel to see which partners are adding new seats. Right? So who was on. You know, on prem solutions before, who was in private cloud before, like legacy hosted exchange. And then who is now transacting in modern work. Right? They want to convert those people into that cloud. So you're being weighted against that. Same thing with Azure. Right? You're being weighted against consumption and advanced services. Right? If you're going from that competency now. So they're really kind of bringing the whole channel in line and again, I'll in this ambiguous way. So you're aligned to what everybody is aligned to from Microsoft to the distributor to the partner. We're all kind of rowing in the same direction right now, which is the positive. Right? Because again, it's always better when you're aligned to what your customers want. Which I like too. I mean, one of the biggest examples is, you know, about why I don't like the break fix model is you're aligned to your customer failing. You want them to have a major issue to build time. Which is bad because you both have the opposite goals now. Customer wants to not have any issues and you want them to have a problem once a year that costs $20,000, maybe $30,000 to service. Right? So that's not good. What I think this is good for is it's going to align MSPs a little bit more into what Microsoft cares about. So I think things will start to make more sense if you are a managed account with Microsoft. Either directly or indirectly. I think that you'll see a lot more access to resources. And you'll see a better alignment of what people want. Now, one of the critiques I've had of this or what I've seen already people talk about. Is, oh, well, it's not about customer retention anymore, it's about net new ad. And like, that's fair. That's a fair statement. But at the end of the day, it's it's. We're here for you, we're here to all add value to this partner program. Whatever way we take it. So if you want to be valuable members, we have to contribute somehow, so it's not only about taking care of the existing clients. Is we will have to have net new ones. And that's just the way of the world. Like that again is. You know, we're all in a growth economy here in the West. So, you know, if you don't like that, there's a bigger issue you should probably go take action on. Which is far beyond what me, you, Microsoft and distribution. The entire IT channel could fix. But I think it it also. Leans towards what like the evolution of the the channel model. Is like the the break fix is is sort of dead and gone. Like it's commoditized service, you're not competing on that. You're not necessarily competing for ticket closes. And the evolution of the model is back towards consultative services and it's about business enablement. And I think that's where this starts to get interesting is like Microsoft is is is is. Nudging if not sort of like pushing the the partners towards the firm nudge. A firm nudge. Yes. Towards the things that that the businesses will ultimately need, certainly over the next 10 years. Like this is this is the evolution of the channel. And the channel engagement with the partners and Microsoft is keen to this saying, like everyone's going to have Microsoft Office. I I don't need you to sell that for me. But. Not everyone is looking at how they could leverage Dynamics, Teams, uh flow, all of the other like interesting stuff that's in the Microsoft stack. The security features. Right? Like the security SKU is zero trust that you can do just with me five, like all these kind of things you can quickly do to add more. Add more value. You're right, it's tailored off that. And and the reason why I think that happens and what people always forget is, you know, Microsoft at the end of the day is a really good SMB company. With enterprise roots. Right? You know, they they still sell this technology to the the clientele of the clientele. Right? Every Fortune 500 is using a Microsoft product. Some kind somewhere. Like without a doubt. There might be some exceptions, but for the most part, somebody is buying something from Microsoft. Right? So they take this experience and they democratized it down the channel. Right? So I'll admit, sometimes the conversations even I have with these high-end Microsoft executives. Are almost confusing to me, right, because they talk about these things that these companies are doing. But in reality. The things they talked to me about four years ago are the things we're doing today every day. Right? Exactly. So I see this thing, so that's the reason why I do kind of have to drink the Kool-Aid a little bit. And I do. I think Microsoft's a great partner and you know, we appreciate their business and they're great to work with. But at the same time it it's, you know, we have to kind of trust a little bit of their guidance. And. Again, I I've just personal lived experience of Mike Slater, these things that that have been esoteric and like this will be the future. Has become the future in the last four years. Like I remember them telling me Azure was going to be the next biggest thing. And at the time I was a little bit like, we'll see, I mean, there's there's Amazon. There's so many people. Now our Azure numbers are have exploded in the last year or two, right, what we're seeing the channel produce in terms of IS is. Massive. Right? So I believe it now. Like these trends have have proven to be true. So that's the reason why like I do have to kind of trust a little bit that they have good direction. And again. Compare them to every other, like you said, channel vendor and really take everything with the grain of salt to be like, you know, is this really as bad as everyone thinks it is? Or is there just a perspective shift here? And it's not that, you know, both things can't be true. Right? Yeah. You know, I'm getting this downward pressure to change my business model. Which I don't like. But ultimately, this might be better for me if I do. Both things can be true at the same time. Right? Yeah, 100%. So I guess finally that kind of leads to the role of the distributor. And I think that this has been something that's that's certainly been evolving over the certainly over the last five years. And definitely over the last 10. And I think Sureweb stands as a as a pretty good example of this. Or of uh what the sort of the future distributor model looks like in in things moving away from traditional. Kind of box items and more sort of digital assets. But. I guess it does beg the question of what is the future role of the distributor. As sort of a go-between between some of the the relationships. Like. Could Microsoft work on this stuff directly, probably not. Right? Like I feel that that would be just a an absolute rat nest of of administrative overload. That they don't need and and cause a ton of confusion. So there's there's certainly. A role for the distributor as a as a go-between between the the vendors and the rest of the channel. I'm curious on kind of what your thoughts on how that's changed over the last year or two. And what you see is sort of the trajectory for those changes going forward. Yeah, so I I I think that wider. You know, there has been this big shift in distribution. Right? Just because, you know, you you have the traditional distributors that have been doing this for a long time. Right? Since the birth of the IT channel. But I I do feel like those folks are for the most part. And they much to their credit, still focus on their hardware games. Right? Because, you know, what I people always talk about, oh, you're so much better than the next XYZ distributor for this. Next XYZ distributor for that. Your interface, your platform. The staff level knowledge, like all these things are very different. I said, well, yeah, because, you know, this is the only thing we do. Right? If you're born the cloud, you deal with the cloud, this is our this is our bread and butter. But if you're a one of the big three. And you're selling a billion dollars of Cisco every single year like clockwork and you're getting your rebates on it. And then you get these deals. And this back ends. They're probably making a ton of money from it still. So they have to devote. Resources and time to logistics of being a distributor, which is frightening to me. Like I've never worked at a distributor. I've sold to a distributor. Right? As a supplier. Like a a broad line one. And the logistics involved is truly mind-blowing and I can only imagine in COVID how much worse that's gotten. No kidding. Yeah. So they're kind of focused on that. That's why me cloud distributors different is that we're just born to do this one thing. So for us. It's like it's more of a natural motion. Right? And Sure has been doing cloud for since cloud was web hosting. That was the first look at your thing we used to do. Right? 20 years ago, 22 years ago now. So for us. It's easy to transact and kind of do this stuff. And I think that's that's basically it. It's just that we have one focus. Right? Which is the cloud products. But then we have also understanding how the partners work. So you said commodity. Right? So if you sell a commoditized product, you tend to have commoditized relationships. Right? You know, and that goes from the partner to the end user, that goes from the distributor to the partner and that goes from the vendor to the distributor. Right? And telling the entire chain, there's people adding percentage points to get a box from here to here. Right? And that's it. Sorry, I just did a hand gesture. I know everyone can't see, but imagine it. Now in this case, right, with cloud it changes, right? We're just selling licensing, we're selling software. And that's why the conversation becomes more about enabling the partners. To do better in cloud. Because cloud. You know, enable the partners to do more. Right? They can basically sell these solutions that again, we talked about earlier, democratized enterprise solutions. That you can now sell to your customers that are a small law firm now have access to tools that 10 years ago. We're unmanageable in terms of quality and what they can do. Like you're literally removing head counts. That you don't need. Like I think the technology is like PSAs for MSPs. Right? It's this thing that removes the need to do invoicing, you know, for 10 hours a month every month. Like there's these great things that we have with technology. So I feel like that's a big change. And I feel like that's going to help the partners get better. As they're kind of shifting and they're and they're growing with everybody. So the software change has developed more of a partner enablement slant. I feel like that's what makes cloud distribution a little bit different. Yeah. I certainly see that. Because, you know. I I again, I have a long history in relationship and in partner channel management with Microsoft. And I used to be in that relationship where the group that I was running for the Microsoft channel was was quite good at this in in their region. And they they asked me to sort of help others sort of learn to do what we were doing. They were asking us as a partner to enable other partners. Which felt a little kind of weird. But. Like it was it was also ultimately really good and I understood their interest in doing this. But I see that as a much better fit for the the the partner distributors like like Sureweb. As as that that intermediary. Of like. We're going to bring you along, this is how you understand your relationship with Microsoft. This is how you you you can be successful. And and sort of the the best practices of the the strong partners. Leaning them into that direction of of that sort of that new that new channel engagement. Like I get it. That used to be your business model. Come with me. I'll kind of show you guys how to do this. Do some practice enablement and then you guys are going to be better off. And that's in everybody's interest. Your business as an MSP is more successful. Therefore, we're we're more successful as a distributor because we're increasing the licensing count. And Microsoft is happy with us because we're selling all the right products and the client is happy because you're leading them down a technology path. So. Despite the fact that some people feel like this is not what I want to do with my business. I think it's really important. And you you touched on this earlier that, you know, their crystal ball. Tends to be pretty good at this. Right? Very good. To some level, it is just a matter of trust. That, you know, some of these will not work out the way that we imagine. But a lot of them will. Yeah. I mean, there's a Windows phone everywhere. Sorry, Microsoft rep of mine. That's maybe listening. But you know, there's there's a product that doesn't work. But I think overall mainly it does. Right? And uh and one last thing I also want to touch on too as well, just just to go back to it. But what the difference is. Is that when you're dealing with just capital expenses and you're just buying a lot of hardware, you have to buy it from one of three people now. Right? So they all know that. So they're like. Even if you get upset at me, I'll have stock when someone else won't and you have to come back and buy it from you eventually. Right? That's their kind of policy. They have like a Coca-Cola, everybody's a customer at some point in their life. Attitude towards it. Right? Cloud distribution is earning partners business every single month. Like every single month is the first month. Right? If you don't do a good job. They can go. It's a little harder in NC to leave. Mind you, but you can still leave. You can still plan it and you can still do things, right, to to get out of that relationship if you want to. So that's the reason why I always say the difference between cloud distribution is all of us, especially the good ones. Which I think there are one or two of us that are that good. Are earning your business every single month on repeat and that's the big difference between. Traditional broad line that does a lot of hardware and a cloud distributor that does purely software. Yeah, and I guess just as a sort of a a final note on that as well. Is like. It's always interesting when I ask people like who they use as a distributor. And whether or not they're happy with them or not. And there's never any consistency to this. Right? Like I like I think the the cloud distributors. Tend to have a better swing at this than some of the traditional disties. But also, you know. I I certainly talk to a number of people that are using a traditional disty and are super happy with them as well. So I I find it really interesting. That it it does seem to be very circumstantial, but I I think what the point that I'm making here is if if you're not happy. You do have options. Right? Like there's some people you can reach out to. Like if if you were caught off guard by NCE and your distributor did not help you with this. Like that's maybe a call. To yourself to say, well, maybe I should get in touch with someone about this. Right? 100%. I mean, I that's that that's a real evaluation point. Because again, it it it's. And also if they still do the wrong information. Right? So we talked a little bit about in action, but I forgot to mention some of the bad action. So it's we even had. Other emails from other sources of distribution, mostly what I call sub distributors of other distributors. Right? People that you can imagine sometimes you have to buy hardware from because they have stock and you have no other choice. Right? They just straight up added blanket price increases and didn't explain why to anybody. Right? So they just went ahead and we're like, no, prices are now 30% higher on the SKU and that's the way it is forever. Like. That's Microsoft made this choice, not me. And then, you know. They talked to us, we say, well, actually that's not true, this has been coming for months now. Just. They're not licensing experts, they're just a buying gateway. So they're not going to explain to you what happened. So yeah, I agree. Like now if you experience either misinformation, which was rampant, especially in the early days during the NDA time. Me and you first talked. There was a lot of things going around. Or if you have experienced no action, no one talked to you, it's time to have that discussion about your distribution strategy. And pick somebody that's going to actually help you. Right? In the future and be proactive. Awesome. Well, I appreciate your time, Mike, and helping us sort of sort through this. And understand what the future path looks like as well. I think that's a really important piece to understand. Is there anything you'd leave people with? Any channels that they should check out or reaching out to you or your team? Yeah, find me on LinkedIn, Michael Slater over at Sureweb. I love having talks. I'll be on the road. So depending on when this comes out, if anyone's a channel partner Expo. In April. Let me know. I would love to meet up with you guys there. And I'm always out and about. Send me a mention on LinkedIn. I love to have a chat. I love to talk about industry stuff actually to the point where it annoys everybody I'm around when I do it. But let's connect and have a conversation. And I will back that up and say that you are actually quite genuine when you say that. Like some people will say these things on a show because it's it's part of their their job. But I get the sense that you actually genuinely enjoy this when I cornered you at IT Nation. I was a bit nervous that that you're going to be like, sorry, I can't tell you anything. And you were very delicate about what you could tell me, but I could tell that you were you were honestly really engaged in talking about this. Every time I've I've had these chats with you, you seem to one to really get it. But also to be really passionate about the channel. So I appreciate what you're doing and as far as advocacy and and information being available for for partners. Because it is necessary. It's it's a complicated world out there. Right? It sure is. And thankfully it is. Otherwise I wouldn't have a job. So. As much as much as MSPs don't like it, I'm not complaining. Yeah. Awesome. Thanks, Todd. Appreciate it, Mike.