Gavriella Schuster, the executive in charge of Microsoft’s partner program, at a previous partner conference. (Microsoft Photo)
In a sudden turn of events, Microsoft is reversing its controversial decision to take a key benefit away from its more than 300,000 partners, saying it will preserve their ability to use a wide range of its software in their day-to-day business operations without signing up for expensive traditional licensing plans.
The announcement follows a backlash from partners in response to the company’s decision to take away the internal use rights, commonly known as IUR, that had been granted to partners for many years as part of their participation the program. The rights give the partners experience deploying and running the technology, while also saving them money on software.
“Your partnership and trust matters to us,” wrote Gavriella Schuster, the corporate vice president in charge of Microsoft’s One Commercial Partner Organization, in a post Friday morning. “Given your feedback, we have made the decision to roll back all planned changes related to internal use rights and competency timelines that were announced earlier this month. This means you will experience no material changes this coming fiscal year, and you will not be subject to reduced IUR licenses or increased costs related to those licenses next July as previously announced.”
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Schuster told reporters earlier this week that Microsoft’s costs for delivering those internal use rights had skyrocketed, due in part to the growing use of cloud services by partners. The resources required to deliver cloud services are significantly more than adding additional licenses to traditional software, the company said.
Microsoft’s partners serve as consultants and technical gurus for many businesses, customizing and deploying software inside companies and organizations. Partners play a role in about 95 percent of the tech giant’s revenue, according to the company.
Mary Jo Foley of ZDNet reported on Thursday that the costs of the IUR program are in the range of $200 million annually, citing a person inside the company familiar with the numbers. Microsoft generates more than $120 billion in revenue annually, but Schuster said previously that the rising costs would have required the partner organization to cut back on other key initiatives.
In her post this morning, Schuster went into more detail on the decision-making process.
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