Microsoft Exec Discusses Plan To Offer Customers Free Office 365 Migration Services

Microsoft will start offering customers free migration services sometime this fall when they switch from on-premise software to its Office 365 suite of cloud apps. But when that happens, Microsoft partners who've built thriving businesses around providing these services could have their worlds rocked, and not in a good way.

It's all part of Office 365 FastTrack, a program Microsoft launched last year that is supposed to give customers a quick way of signing up and using its cloud apps. Microsoft shared some details about a coming program update last week at its Worldwide Partner Conference, and early reactions in the channel are not positive.

Sources familiar with Microsoft's plans told CRN the company is hiring between 250 and 600 new engineers to provide "on-boarding" services for Office 365, which cover basic tasks involved in switching customers from on-premise to cloud apps, such as Active Directory integration, cloud services activation and provisioning users.

Microsoft also is planning to use this engineering team to provide free Office 365 migration services to customers on deals of 150 seats or more. All of this could potentially take a big bite out of many Microsoft partners' businesses, but Microsoft says it's providing these low-end services so partners can focus on higher-value services.

Related: Microsoft Offers Details On Coming Office 365 Price Hike For Enterprise Customers

Tanuj Bansal, Microsoft's director of partner and channel Office marketing, confirmed in an interview Monday the new engineering hires but declined to provide a specific number. These are engineers and not consultants, he said.

The engineers will work closely with partners and customers around the world to provide Office 365 on-boarding services, Bansal said. Eventually, Microsoft plans to provide on-boarding services for Office 365 in eight languages, and some of the engineers will operate in a support center setting.

"Microsoft is providing tools and guidance, and we're automating consistent, repeatable tasks," Bansal told CRN. "We're like a proactive support center, working with partners and their customers on-site for things that can be automated."

If a customer isn't already working with a partner, Microsoft will try to connect them with one, Bansal said.

Once the on-boarding services are completed, customers can have Microsoft handle Office 365 migration services free of charge. Or, they can have a partner do the migration work with funding from Microsoft.

For the latter scenario, Microsoft will pay partners $15 per seat for up to 1,000 seats, and then $5 per seat after that, with a limit of $60,000 per customer. Bansal said Microsoft will not pay $15 for each Exchange, SharePoint and Lync workload, as has been rumored.

It's not clear when the FastTrack program changes will take effect; sources told CRN Microsoft is planning to launch it Sept. 1, but Bansal declined to offer a time frame more specific than "late fall."

Microsoft shared details on the FastTrack changes with partners last week at WPC, in a tension-filled session that was scheduled for one hour but ended up taking more than two and half hours. Some partners loudly voiced their frustration directly to Microsoft representatives, according to sources who attended the session.

NEXT: What Happened When Microsoft Revealed Its Plans To Partners

None of the dozen or so partners CRN spoke with for this story would comment on the record, as they're still trying to sort out what the FastTrack changes mean for them.

But many partners are upset because a few years ago, Microsoft urged them to provide Office 365 migration services and not to rely on commissions from selling its cloud services. As a result, many "born-in-the-cloud" partners" emerged with new cloud-oriented business models.

In some cases, Microsoft has used born-in-the-cloud partners as case studies for others to follow. Now, many that provide Office 365 migration services are feeling betrayed by what they interpret as an incursion on their turf.

"I'm very disappointed and feel it will impact us a great deal," one Office 365 partner told CRN. "The price point is bypassing partners on deployment funds for business that we invested in heavily."

"The free Office 365 migration option looks like a slippery slope to me," said another Office 365 partner. "It looks like every customer is going to have Microsoft engage with them to do some level of provisioning, enabling the tenant and doing Active Directory synchronization."

However, Bansal said Microsoft is handling Office 365 migration services so the channel can focus on high-value cloud business such as managed services, application integration and line-of-business integration.

Microsoft is limiting its free migration work to email for now, and what it's planning to offer appears to be fairly basic. Microsoft is providing cutover migrations, in which all on-premise mailboxes are migrated in preparation for moving a customer's entire email organization to the cloud.

Microsoft's engineers won't migrate archive data or external contacts, said Bansal. Customers that need this sort of higher-end work can get a partner to do it with funding from Microsoft, he added.

"Microsoft is handling core email scenarios that are repeatable and which can be automated. For Microsoft, if it's not consistent and repeatable, doing it for every customer would be challenging," Bansal told CRN. "If it can be automated, we will aspire to do that. But some things are impossible to automate."

Microsoft also is planning to do free SharePoint and OneDrive migrations at some point, as well as Active Directory remediation. Microsoft will publish a list of the services its engineers will be handling "very shortly," according to Bansal.

Why is Microsoft doing this? Partners told CRN this is the software giant's way of dealing with Office 365 seats that customers have purchased but not deployed. Microsoft views unused seats as a threat because it thinks these customers could still be snatched by Google and other cloud rivals.

"Google makes it really easy to get to their cloud," one partner said. "With Microsoft, if you're on Exchange 2003, getting to Office 365 is not an easy process."

"They have a new internal metric that is driving the need to deploy Office 365 seats as quickly as possible," another partner said.

NEXT: More Reasons Why Microsoft Is Making These Changes

Sources said Microsoft also feels some partners are charging too much for Office 365 migration work, and this could potentially hinder sales of its cloud services.

"Microsoft has recognized that a lot of partners have made a lot of money based on the complexity of Office 365 product. If you're a partner that built a business completely around Office 365 deployment, you’re on a sinking ship," one partner told CRN.

The problem with Microsoft's free Office 365 migration service, bare bones though it may be, is that it could create an impression in the marketplace that all migration services should be free, sources said.

"When word gets out that Microsoft is doing this for free, it will devalue the services that we're delivering," one partner with a thriving Microsoft cloud business told CRN. "Partners already have a compelling reason to deliver a great experience to customers, but this damages the integrity of our process."

Microsoft's Bansal said the Office 365 FastTrack program update isn't about competing with partners, but giving customers a quicker way to get value from the cloud services they've bought.

"There are three goals: allowing customers to get value out of services fast, engaging partners and helping them deliver high-value services, and attaching a partner to every customer that doesn't have one," Bansal told CRN.

That may be true, but many Microsoft partners told CRN they consider this to be another example of the company doing a poor job of communicating major changes to the channel.

Some partners see parallels between Office 365 FastTrack and changes Microsoft made to its Advisor Enterprise Agreement Deploy program in January, which caused some partners' fees to drop more than 50 percent.

"Microsoft promised to be more transparent and give more notice in the future after the partner-of-record fee cut in January. Breaking that promise causes a lot of mistrust," said one disgruntled partner. "The bottom line is that this is tremendously impactful to many Microsoft partners that make their money from email migrations."

PUBLISHED JULY 22, 2014