If Your Microsoft Azure Infrastructure is provisioned on a CSP agreement, Your Business Could be in Trouble
If you’ve invested in a Microsoft Azure cloud infrastructure, you could be part of a ‘cloud solution provider’ (CSP) agreement with your partner without even realising it. But a CSP is a proven driver of risk, over-spending, and a range of other challenges.
In this article, we explore what a CSP is and provide advice to help you avoid this common pitfall.
The cloud has gained widespread adoption in recent years due to the wealth of operational and financial benefits it offers businesses, from greater agility and efficiency to reduced IT costs.
But for any organisation subscribed to a Microsoft Azure cloud infrastructure, there’s a common pitfall which could be causing a number of unnecessary risks and problems. If you’re a Microsoft Azure cloud customer, you could be purchasing and paying for your monthly subscription via a ‘cloud solution provider’ (CSP) model.
The Microsoft CSP program is a way for Microsoft partners to deliver their managed cloud services on their own terms, without providing you with any insight into your monthly spending. Many businesses actually find themselves in this situation without even being aware of it. While it may seem useful and hassle-free to have a CSP agreement with a partner, it can result in significant problems down the line.
So, whether you’re aware of your CSP and seeking a way out, or you’re hoping to gain a better understanding of exactly what your cloud agreement looks like, we can help. In this article, we’ll go into detail explaining what a CSP is and how it works, the related risks and problems that may be affecting you, and provide advice for how to move forward.
** It’s worth reiterating that, unlike most of what we do here at IG CloudOps, this article is specific only to Microsoft Azure customers. While we also provide a range of expertise and services for the Amazon Web Services (AWS) cloud, any users of that technology don’t need to worry about potential issues with CSP discussed here.
What Exactly is a Microsoft Azure Cloud Solution Provider?
Many of Microsoft Azure’s end customers don’t know what type of management agreement they have with their partner, or even what a CSP agreement really means.
So, what exactly is a CSP?
According to Microsoft, “The Microsoft Cloud Solution Provider Programme enables partners to directly manage their entire Microsoft cloud customer lifecycle. Partners in this programme utilise dedicated in-product tools to directly provision, manage, and support their customer subscriptions. Partners can easily package their own tools, products, and services, and combine them into one monthly or annual customer bill.”
Essentially, this is a type of arrangement which holds back much of the transparency from your relationship with regard to your cloud spending and billing.
Your partner takes on all the responsibility for you, without giving you the option to retain some of it yourself. In doing so, you give up a lot of the control which would allow you to improve your cloud ROI.
And, in its own words, Microsoft positions this to their partners as a way to, “Own the customer lifecycle and relationship end-to-end, set the price and terms and directly bill customers, directly provision and manage subscriptions, attach value-added services, and be the first point of contact for customer support.”
Did you notice the parts there which could be problematic?
If you’re on a CSP agreement, you’ve bought your cloud infrastructure from your partner in a wrapper. You’re not working directly with the supplier, and the partner doesn’t have to give you detail of what’s included on your monthly bill.
You’re giving the partner control of your entire cloud environment, meaning there’s certain things you don’t have access to, don’t have control over, and perhaps don’t even know you’re paying for.
And this isn’t just administrative, either. It’s API-restricted, so there are technical barriers your own IT staff won’t be able to get through even if they wanted to.
In turn, your partner’s services are likely causing you to over-spend, and possible even miss out on opportunities to optimise your cloud usage.
Understanding Your Own Agreement
There are two different types of CSP, the direct (Tier 1) model and the indirect (Tier 2) model. Partners get the choice of one or the other, but can also choose both.
- Tier 1 – This requires the partner to have a robust infrastructure fit to enable end-to-end ownership of their relationship with you. There are many requirements to be met which mean most partners aren’t eligible.
- Tier 2 – This gives partners and re-sellers the chance to work with an indirect CSP partner who can provide the tools and resources necessary to help manage the relationship. This is the more common option.
Usually, Tier 1 partners create a bundle with all licenses, technology, and so on, and re-sell that to Tier 2 partners. This means there’s a wide market full of different CSPs all providing different types of managed cloud solutions.
So, while there are thousands of global partners delivering Azure managed cloud services in this way, that doesn’t mean there aren’t better alternatives available for your business to take advantage of.
The Related Risks with a CSP
If you’re operating under a CSP, your partner will have total control over the usage, spending, cost, and billing with your cloud environment. Looking back at more traditional IT hardware as an analogy demonstrates why this is a flawed approach.
In the past, placing your organisation’s physical servers into a data centre wouldn’t give that building owner the right to add extra services and costs without your permission. But with a CSP, you may find yourself in that situation.
You are on a custom model where the partner can set their own pricing and bundle in other services like support. It’s then very difficult to compare these costs against the native AWS & Azure costs as you might not have the details.
You could get unwanted surprises on your monthly bills which can amount to thousands of pounds of unplanned spending depending on the model you are on. On the other hand, the partner has no incentive to proactively control your costs because they’re the ones getting paid, often on an open model.
This inconsistent arrangement makes it difficult to adequately budget for your IT spending, and to cost out new cloud features or services you may require.
A CSP also leaves you vulnerable when it comes to Azure support. Your partner is in the middle, entirely responsible for the cloud services you’re receiving, which means you can’t get support from Microsoft directly in the case of an emergency.
End customers can’t register a complaint or take out a help ticket with Microsoft, so the partner holds all the power even if they’re the cause of the problem.
Of course, in a situation where your partner is also experiencing issues, or even if they’re simply too slow to react, you might not receive any support for an urgent issue. This is obviously an enormous risk for your business continuity…
In today’s digital landscape, business continuity should be a crucial priority for any organisation.
If your Azure cloud is supporting your most critical applications and processes, you must be able to ensure it will continue to function even in the face of a disaster. If a problem arises, you need to be able to fix it as soon as possible.
But with a CSP your business continuity isn’t in your own hands, it’s in your partners.
If you experience issues with your cloud deployment as a result of your partner’s own systems failing, there is no way to resolve that yourself. Microsoft won’t help you either, and your partner will be focused on getting themselves back up and running before anything else. Essentially, you’re tied directly to another business that you have no control or influence over.
It’s also possible to find scenarios where partners are unable to meet their own commitments to Microsoft, and so their systems are switched off until the bills can be paid. If this happens with a partner working with you as a CSP, the impact on your business could be devastating.
This level of risk is something no organisation should knowingly settle for. It’s wise to move away from a CSP for this reason alone.
Microsoft traditionally provides itemised bills which can include hundreds of line items detailing your cloud activity and spending.
However, this bill will go to your partner if you’re in a CSP agreement. The bill your business receives will look very different, with far less transparency into where your money is going.
One of the most important aspects of a successful cloud investment is the ability to closely monitor, manage, and optimise your usage and spending. But, in most cases, a CSP will provide a bill with simply one or two vague items covering the monthly infrastructure subscription and their own service fee.
Of course, this leaves you vulnerable for partners to mark up their support fees, and you’d have no way of knowing you’re being over-charged.
With a CSP managing and maintaining your cloud infrastructure for you, it also presents challenges when anything needs to be changed, added, scaled, or altered.
This can also prevent you from scoping and costing things yourself, with Microsoft’s cost management tools, if you’re looking to add new features or services. Instead, you’ll be entirely reliant on your partner.
Even worse, if you want to work with an additional partner for something new, you’ll also need to go through your CSP to gain approval. These limitations can prevent you from innovating with your cloud applications and can slow down business growth and scalability.
To build on the above point, migration away from your implementation can also cause significant problems. By working in a CSP model, you risk getting locked in with a partner, and any effort to move on may require a full migration that would be costly, time-consuming, and could even fail.
In fact, migration is sometimes not a viable option, with a complete re-build often required. Thankfully, Microsoft is working hard to fix this, as we’ll explain in the next section.
Microsoft Acknowledges the Issue
Even Microsoft has recognised the flaws with its Azure cloud solution provider model. The company has begun to make changes so end customers can move away from these CSP agreements more easily.
The Microsoft managed reseller incentive programme, how much the resellers get as a kickback has also been watered back as well. This means that Azure solution providers are less incentivised to sell Azure this way as there is less and less in it for them.
Rather than a complex re-build of the cloud infrastructure, which has often been necessary in the past, more end customers are now being enabled to simply migrate over to a new partner more easily.
However, these ongoing changes may make it more difficult for you to gain an understanding of exactly how your own individual agreement is managed.
Microsoft stated that, “All new customers and partners are invited to transact the new Azure offer (Azure plan) for CSP. Only existing customers and partners who have an established re-seller relationship, and together have an active previous Azure offer subscription, can continue to transact the previous Azure offerings.”
There will be three phases of change to this previous Azure model:
- Phase 1 started on July 21, 2021
- Phase 2 will start on February 1, 2022
- The start date for phase 3 is still TBC.
How to Know if You’re Working With a CSP
If you’re unsure whether your cloud infrastructure is managed under a CSP, the first place to look is your bill.
You’ll likely get a bill from your partner that only includes a handful of line items at most, with no visibility into your cloud costs or usage. CSPs tend to remove these to keep things as simple – and opaque – as possible. If this is the case, you could very well be over-spending every month.
However, if you’re still not entirely certain, or want a more concrete answer, the best way to gain more clarity is to ask your existing Azure managed service providers.
The Importance of Gaining Back Control
With Microsoft actively encouraging businesses to move away from CSPs, it’s clear there will be tremendous value in doing so.
The various problems we discussed earlier, such as insufficient support, business continuity risks, and opaque billing will be greatly reduced for businesses that move away from the CSP model.
With that will come opportunities to:
- Control spending and reduce costs
- Optimise your usage
- Add new features and scale seamlessly
- Harness the full potential of your technology
- Significantly increase ROI.
Time to Take Action
If there’s a chance your Microsoft Azure investment could have placed you into a cloud solution provider (CSP) arrangement, you must take action. Firstly, find out whether you are actually on a CSP.
Then gain insight into exactly what you’re being billed for each month, and get a cost comparison for alternatives to see how much you could be saving. What is the split between your Azure spend (cloud computing costs) and and value add Azure managed services like support?
As part of our services, we’re able to provide a no-obligation cloud assessment to demonstrate all the unnecessary over-spending from your cloud environment.
This is an effective way to find out where you stand with your current partner, and help you make the right decisions to find a better, more cost-effective situation.
CloudOps is designed specifically to give you full transparency, control, and support, for your cloud infrastructure. Get in touch with a member of our team to learn more, and we’d be happy to help!
Steve Rastall - Managing Director
Get in touch:Steve.Rastall@igcloudops.com