One of the models that Microsoft uses globally to help drive its online services out to a broader SMB customer base is syndication. In some markets this model is offered alongside the direct and more recently launched Open subscriptions, which means an informed customer or partner can choose the right license for the customer’s long term goals. There has also the option of the syndication partner being the exclusive provider for that geography, which is what SMB partners and customers in Australia only have available, but on Friday afternoon Microsoft Australia released some information that things were going to change in the first half of the next calendar year.

To say that this announcement was unexpected isn’t the truth, the biggest mystery has been when it would happen. The announcement left many details out, but it’s a step in the right direction, and it means that it gives Microsoft Australia a much better story to tell when it comes time to discuss Office 365 with their channel at this month’s national roadshow. Why the move away from a syndication only model for SMB? Let’s start with some of the potential issues that could be encountered.

One Customer, Two Tenants

From a technical perspective, this one has been a headache for many of us in the channel, as the commerce platform that syndication partners work from doesn’t allow additional Microsoft Online Services sold by Microsoft to be added into their tenant, unless the syndication partner also happens to sell them. The issue doesn’t really affect Office 365 itself, but rather anyone who wants to add something like Windows Intune to their existing Windows Azure Active Directory Environment.

Microsoft’s support article You cannot subscribe to Windows Intune if you have an existing Microsoft cloud services subscription covers what is primarily the main technical issue around accounts created under a syndication partner.

Let’ start with the cause…
This issue occurs if you’re billed for your Office 365 subscription by a third party instead of directly by Microsoft. In this case, you can’t use your existing Microsoft cloud services Global or Billing administrator’s user ID to complete the Windows Intune subscription process.

Up next, the workaround…
To work around this issue when you subscribe to the Windows Intune service at, create a new organization instead of using your existing Microsoft cloud services user ID.

And finally, what is impacted…
Active Directory Synchronization
Exchange Active Sync (EAS)-based device management
Common user identities and credentials that exist between Active Directory Domain Services (AD DS) and Windows Intune (single sign-on)
AD DS groups for targeting of software distribution

I’ve had several conversations both locally and abroad about when this issue will be resolved, and like most things, it’s not as simple a fix as we would like it to be. It’s also not the type of issue that is mentioned in the usual talking points, instead catching you by surprise when you first encounter it.

Leveraging Current Distribution Partners

While syndication partners such as telcos can reach out to an extremely large number of SMB customers, they don’t always have the same appeal to Microsoft’s channel. Microsoft’s channel tends to buy either through Microsoft’s Authorized Distributors or through sub-distributors, and in a country where Office 365 can only be provided by the syndication partner, these distributors are effectively eliminated from Office 365 opportunities and conversations.

This is a multi-part problem. It’s not just that the traditional distributors can’t sell the product, it’s also effectively eliminates any reason for them to raise awareness of the Office 365 offerings, as they would effectively be supporting a competitive product. While you could try to argue that the growth of Office 365 would help sell licenses in other products as well, such as Office 2013 on the desktop, that’s not a great argument to make when your competitor can also sell that a similar product as a subscription.

Alienating your distributors by withholding the product offering that has been highlighted as one of the key pillars of Microsoft can lead to several different conversations. The first, and least likely, “we don’t sell it, you need to talk to someone else” is not the likely one to occur. Instead the discussion can turn into the promotion of alternative Microsoft license types (still good for Microsoft) or competing cloud products that can be sold (not so good for Microsoft).

Missed Attach Opportunities

To confuse matters somewhat, we have the option of buying Windows Intune directly from Microsoft, but not from a syndication partner, which leads to the “One Customer, Two Tenants” point above. This leaves Windows Intune in something of a weird no man’s land, with a small but dedicated group in at Microsoft Australia who have it in their care, but they don’t have the scale partners like Telstra or the traditional Microsoft distributors to further their cause.

On its own, Windows Intune might be a great way for one of the traditional Microsoft distributors to dip their toe into the Microsoft Online Services world and get prepared for the inevitable availability of Office 365 subscriptions through a broader set of partners. If this were pre-GFC boom times, I’m sure it would be a more attractive option, but in the current economy it’s not something I can see happening without being able to offer Office 365 alongside it. I don’t think a comparison of being offered fries with your burger is that far-fetched, even though there are some people who choose to forgo the delicious burger and the immense pleasure it provides.

Now that there is a plan to deliver Office 365 through Open, hopefully this means that more of the Microsoft Online Services will also become available through Open, allowing the traditional distribution channel to really stand alongside Microsoft in the delivery of their online messaging.

Tenant Migrations

What happens in the future when the need arises to move a customer’s subscription to or from a syndication partner? In this case, we probably have it a little easier – we can gather the best practices from other countries in preparation. I’m not suggesting that once Office 365 subscriptions become available through alternate methods in Australia that there will be a rush on migrations – there are many Office 365 customers who aren’t and possibly won’t be affected by any of this. Some of this is already being encountered by those who jumped into BPOS or Office 365 prior to it becoming an option on their Enterprise Agreement, but now we are really talking about very small subset of the Australian market.

Once the option of buying through Open becomes available, we will have migration conversations with some of our customers, but we need to take into consideration things such as cost and the potential impact of tenant migration versus the benefits that the add-on services provide.

Exclusive and Time Limit should go hand in hand

I have no problem at all with Microsoft’s initial decision to go sign up Telstra as the exclusive partner at the time it was done, the issue is that times have changed drastically since then. I worked at Microsoft at the time this decision was made, and it was known there would be some issues. The usual one that was first raised were by those not wanting to transact through Telstra, which was not a concern of mine, nor a concern of my employer, Paradyne. When Telstra were signed up as the syndication partner, the majority of the Microsoft channel weren’t convinced about the timing of the aggressive push Microsoft wanted to make with BPOS, and Telstra did what they needed to do – they built a channel, some of it with existing Microsoft partners, some of it with their existing partners, and some of it with new partners.

The Telstra relationship has been a great benefit to Paradyne, and that is something that was established well before I joined the company. Loryan Strant aka The Cloud Mouth was even accused of donning a cheerleader outfit while writing a piece on Telstra over a year ago. I know that rumour is not true, as I started it while drinking a few too many fine Czech pilsners. He was just lucky that my Photoshop skills did not match my level of inebriation, otherwise there would have been a great deal of explaining to do.

There are important lessons to be learned here. Exclusives should be for while a product is being initially launched, while a product is still classified as being in incubation, or while a very small portion of the channel are capable of deploying it effectively. Office 365 does not meet these criteria, and has not for quite a while now.

I Don’t Like You In That Way

Including telcos as syndication partners on a global basis definitely has some benefits in terms of reach and scale, but there can be downsides to having your product attached to someone else’s reputation. If you feel you have a reason not to engage with that syndication partner, whether real or imagined, it still means you aren’t going to engage with that partner. In both my time at Microsoft and now at Paradyne I think I can say that I have heard most, if not all of the reasons that people give for avoiding Telstra.

Some of them I’m willing to accept as legitimate, but these are few and far between. This could be based on my arrogance and ignorance, but I’m certain it’s neither. Or perhaps it’s both in equal servings. The end result though is that some of Microsoft’s long term loyal partners who have chosen to sit out these offerings until they see a different distribution landscape.

I do have one additional issue related to this though. When I do some gentle digging into the reasons why some haven’t gone down this path for solutions where I think it was the right thing for the customer, all too often I see this being used as a delay tactic. No doubt there will be others thrown in once this blocker is removed, but of course by then the NBN will be successfully rolled out, so nobody would dare raise the issue of bandwidth, but that’s a topic for another day.