Trending: Microsoft invests $1 billion in OpenAI, vows to build AI tech platform of ‘unprecedented scale’
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. The company says it will preserve partners’ 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.”

PREVIOUSLY: ‘We can’t afford this’: Partner cloud costs blindside Microsoft, but company’s solution causes uproar

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.

Each year we review how we engage with partners and evolve our approach to ensure we provide best-in-class support to you and stay ahead of market changes. As we move forward, we commit to providing even more advance notice and consultation with our partner community to mitigate concerns and address issues up front. We will continue to invest in our partner program to ensure we create opportunities for all our partners.

Our decision to rescind these changes required a thorough review, and a key determining factor was the connection and trust we have with you, our partners — a valuable asset we do not take for granted. Together, we can continue to be a catalyst for digital transformation industry wide.

It looks like a bigger-picture view prevailed inside the company, but it wouldn’t be a surprise to see a different change in the future to address the issue, with better communication, no doubt. The company holds its Inspire partner conference in Las Vegas next week.

Like what you're reading? Subscribe to GeekWire's free newsletters to catch every headline

Comments

Job Listings on GeekWork

Find more jobs on GeekWork. Employers, post a job here.