Richard Smith, Microsoft’s General Manager in Commercial Licensing sector just announced the cancellation of Pay-As-You-Go model in Azure for new customers. They have to go through Microsoft certified Cloud Service Provider programme. Existing customers shall still be able to use Pay-As-You-Go through MPSA (Microsoft Products and Services Agreement) said by Richard. This is a sign that Microsoft is working something to build up a partner-driven strategy for Microsoft Azure specifically in mind opinion.

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To make these buying choices easier, as of February 1, 2017, MPSA customers purchasing Azure for the first time will be guided to CSP, and pay-as-you-go Azure will no longer be available for new Azure customers through the MPSA. Customers currently purchasing Azure through the MPSA can continue to do so.

What is Pay-as-you-go?

Pay-as-you-go payment model is inevitable in the world of cloud computing, giving you a flexible way of paying for what you you. It means you do not have to pay for cloud resources you are not using. Normally pay-as-you-go model charges you per hour but Microsoft Azure gives a better chance that only charges per minute. This option is good for organizations with no commitment on cloud, or just use cloud for testing purpose. If you are a DevOps developer who wants to quickly develop application and showcase to your prospective customers, then Pay-As-You-Go model is very well beneficial to you.

Why stopping Pay-As-You-Go?

The first reason per my understanding is that Microsoft really needs to drive its Azure customers to certified CSP partners because those partners have committed investment with Microsoft on offering Azure professional services. I’ve seen many organizations using Azure without good understanding of Azure pricing model. The pricing calculator that Microsoft provides does not work in a real-world scenario. Internal IT team in those organizations do not really care about the cloud cost. They just care about technical stuffs (e.g. VM creation, monitoring…). Getting a good support from certified CSP partner is truly an added value among three parties. Here is the list of 20 points to considering CSP for both Azure customers and partners.

The second reason would be personally to drive new customers to using ARM (Azure Resource Manager) because ARM is only available in Azure CSP. I often propose ARM to organizations who get started with Azure adoption especially the migration of on-premises infrastructure to Azure IaaS; of course if proposed services are available in Azure CSP. With demonstration using ARM template, I quickly show to those organizations the automated provision and deployment. Scripting is very important for large deployment in cloud when you do want to achieve 3-S (Speed – Simple – Standard).

Read here for more information and terms used in Azure Resource Manager: Azure Resource Manager overview

Next reason flashed in my mind is the development of Azure consulting partner and start-up companies. Realizing the fact that if you open a new business, seeking new Azure customers then you have to enroll Azure CSP partner. Microsoft asks for your commitment and investment to Azure. And of course budget for such an enrollment can be seen well, from developing technical competency with Azure certificates to building a business community and market to approach new customer.

In a tiny nutshell, the announcement does give us clearly that Microsoft needs more Azure CSP partners to help them. Right now Microsoft is having to serve for hundred of thousands customers every day with a massive number of enquiries. Engaging more partners to help Microsoft is a good strategy.

Bhavesh Goswami shared his thoughts on pros & cons of stopping Pay-As-You-Go via this article: Microsoft’s latest decision to stop pay-as-you-go model in Azure: Master stroke or a big mistake? 

Payment Consideration

I did wonder with a few friend of mine in the past the payment model if a partner provided cloud hosting to its customers. Imagine if Azure customers do not have to add credit card to Azure billing portal but pay directly to Azure CSP partners, then how do those partners control the payment if they overuse cloud resources unexpectedly?

Azure CSP partners have to figure out the pricing model to offer its customers. Unless they would take responsibility in financial while cash flow is still taken by Microsoft. By this matter I would see zero benefit to Azure CSP partners, excepting professional services the partners can offer to Azure customers. I heard of somewhere I can’t remember that Office 365 CSP partners did not gain money after enrolling. I’m not sure whether this case happens to Azure CSP partner by this way.

Conclusion

Just a few line of thoughts on Pay-As-You-Go model that Microsoft is going to stop to new Azure customers. When Microsoft does it, they would aim to controlling qualified partners and incoming investment budgets from those partners. This is good for Microsoft, but not really good for small companies who want to go with Microsoft on Azure competency.