Direct-bill Microsoft Cloud Solution Provider (CSP) partners have likely heard that Microsoft is raising the bar for CSP eligibility effective October 1, 2025. These changes – while significant – are intended to strengthen the ecosystem, not to push partners out.
In my role at SoftwareOne (formerly Crayon), I want to offer clarity (not alarm) about what’s coming. By understanding the new requirements and their implications, you can start making strategic decisions now to adapt.
In FY26 (beginning October 2025), Microsoft will introduce stricter authorisation criteria for partners who sell CSP directly (Direct Bill partners). The most notable update is a much higher revenue threshold. Direct Bill CSP partners must have at least USD$1 million in CSP revenue over the trailing 12 months (up from the current USD$300k). But revenue is just one piece. Microsoft is also adding new capability and compliance requirements.
Once the program updates take effect, Direct Bill partners will need to:
Maintain > $1M in annual CSP billed revenue (trailing 12 months) by FY26.
Have an active Microsoft Advanced Support for Partners (ASfP) or Premier Support plan and satisfy Microsoft’s Partner Center security requirements (e.g. achieving a passing security score).
Attain at least one Microsoft Solutions Partner designation (e.g. Modern Work, Security, Azure) as evidence of advanced competencies.
Complete Microsoft’s yearly CSP partner assessment of your billing, provisioning, support, compliance, and security capabilities.
For distributors (indirect providers), the bar is even higher – USD$30 million in CSP revenue per region – but our focus here is on direct partners. Meanwhile, the smallest tier (indirect resellers) will continue to have minimal requirements (e.g. a $1,000 TTM revenue floor and basic vetting/security).
In short, Microsoft is laying the foundations to ensure that well-resourced firms with the financial chops to invest at the speed of change are Direct Bill CSP partners. For smaller cloud partners, the opportunity is found in re-gearing business models to drive growth and success through distributors (and of course, SoftwareOne is a rock-solid place to call home).
If your CSP business already exceeds the new thresholds and you’ve invested in support plans and skills, the impact may be minimal. Large direct partners over \$1M in CSP sales will mostly face added administrative steps (like annually confirming you have a support plan and passing an assessment).
However, if your trailing revenue is well below $1M or you lack the resources to meet the new criteria, you’ll need to pay close attention. Microsoft’s changes could put your direct CSP authorisation at risk if requirements aren’t met. In fact, our friend Dr. Joseph Sweeney at IBRS noted in a recent media interview that many smaller direct partners “won’t have the time, people or capital” to satisfy the new criteria, resulting in loss of direct status. This means losing the direct relationship (and some margin) with Microsoft and transitioning to a reseller role under a distributor.
This scenario is understandably concerning for partners who have enjoyed the autonomy of direct billing. Yet it’s important to keep a calm perspective. Microsoft’s intent isn’t to punish partners, but to ensure every CSP customer is supported by a partner with sufficient scale, skills, and support infrastructure. From Microsoft’s viewpoint, a smaller partner may actually thrive more in an indirect model where a distributor can shoulder heavy operational lifts and provide value-added services. As Gartner’s analyst Domenico Scriva has also noted in the press, if a current direct partner must move to Tier-2 (indirect), “the only real issue is the loss of margin.” Your ability to serve customers can continue largely unaffected if you choose the right indirect provider.
The new requirements kick in on October 1, 2025. Existing CSP partners will be evaluated on their first anniversary date after that for compliance (so not everyone is hit at once). This gives you some runway to plan. The key now is to assess your situation early. Determine if you’re on track to meet the $1M revenue and other benchmarks by late 2025. If not, it’s time to start considering alternative strategies – for example, transitioning to an indirect model – well before any deadline.
In the next part of this series, I’ll offer some thoughts on how you can proactively prepare for these changes. Whether your plan is to double down and meet the new requirements or to pivot to an indirect model, there are concrete steps you can take now.
Change doesn’t have to be disruptive if you approach it strategically. With thoughtful planning (and the right guidance), you can navigate Microsoft’s new CSP landscape and continue to grow your cloud business confidently.
Microsoft’s channel strategy is changing – but with the right approach, it doesn’t have to be disruptive. At SoftwareOne, we’ve built the people, platforms, and experience to guide partners through this evolution.
If you want to stay competitive in the Microsoft ecosystem, now is the time to act.
If you want to stay competitive in the Microsoft ecosystem, now is the time to act.
