Microsoft FY27 Partner Strategy: Why we may see more Business Central Partners Moving from Direct to Indirect CSP
- Jenn C
- 1 day ago
- 4 min read
If you’ve spent any time talking to Microsoft partners lately or hell even opened LinkedIn, you’ve probably noticed a common theme: direct versus indirect licensing.
On the surface, it sounds like a licensing conversation. But I don’t think that’s what it’s really about.
What we’re witnessing is a much bigger shift in Microsoft’s partner ecosystem. FY27 isn’t simply changing how licenses are sold, it is changing how partners think, how they support their clients and where the focus and this Microsoft wants to ensure its partner channel has the support they need and to ensure people selling licenses are informed when talking to customers.
Direct vs. Indirect: What’s the Difference?
For customers, there is virtually no difference. If I asked many of mind I would bet they don't know or care who sold them their licenses. A Dynamics 365 Business Central license is the same whether it’s purchased through a direct CSP partner or an indirect reseller.
The difference is entirely on the partner side.
A direct CSP partner purchases licenses directly from Microsoft, manages billing, meets Microsoft’s operational requirements, invests in security and compliance, and provides the support expected under the CSP program. They take on the overheard and knowledge needed to bill direct and for many big firms this is a great way to go and works well for them.
An indirect partner purchases through a distributor such as Sherweb, Companial, TD SYNNEX, Pax8, Ingram Micro or Crayon. Many of the operational responsibilities are shared with the distributor, allowing the partner to spend less time managing Microsoft’s program requirements and more time serving customers. This is helpful for partners who are ok with a little less margin but also a lot less headache. Partners are not just experts in ERP anymore its ERP, Add ons, everyone's favourite AI ;) and all everything else...
Neither model is inherently better. The right choice depends on the size of the organization, its goals, and where it wants to invest its resources.
Microsoft Isn’t Forcing Anyone to be clear
Microsoft has never announced that partners should become indirect. Instead, they’ve steadily raised the bar for remaining direct.
Every year the expectations seem to grow which has made it hard for some to keep up and therefore make the change to indirect. Things like:
Increased security requirements
Higher operational standards
Greater automation
Expanded support obligations
Marketplace participation
AI readiness
Continuous investment in partner capabilities
For many organizations, maintaining direct status has become a significant business function in itself and they just don't have the skillset to maintain.
That naturally leads some partners to ask an important questions, "Are we investing our time the right way to best support our customers", "How can we keep up with technology AND licensing" or "am I focused the way I need to be?"
For many small and mid-sized Business Central partners, the answer increasingly points toward the indirect model.
FY27 Is a lot to do with AI as you can imagine.
If there’s one word that defines Microsoft’s FY27 strategy, it’s AI.
Every keynote, announcement, incentive, and partner conversation seems to come back to the same thing.
Microsoft wants partners to do more than simply deploy ERP software. They want partners who can help customers transform their businesses with AI.
That means understanding:
Microsoft Copilot
AI Agents
Power Platform
Data and analytics
Business process automation
Security
Industry-specific use cases
ERP is becoming one piece of a much larger business transformation story.
Marketplace Matters More Than Ever
Another noticeable shift is Microsoft’s continued emphasis on the commercial marketplace. Marketplace is no longer just another sales channel. It’s becoming a central part of Microsoft’s growth strategy, incentive programs, and co-sell motion.
Partners who embrace marketplace transactions, packaged offerings, and scalable services are likely to find themselves better aligned with where Microsoft is investing.
Customers Are Asking Different Questions
Five years ago, a customer might have asked “Can you implement Business Central?”
Today, the questions sound very different.
Can you automate our processes?
Can AI eliminate manual work?
How do we connect Microsoft 365?
What should we do with Copilot?
Can you improve forecasting?
Can you integrate our manufacturing systems?
How do we secure everything?
Customers aren’t just buying ERP anymore. They’re buying business outcomes.
No Partner Can Be an Expert in Everything
I say this all the time. I have always felt being a vertically focused partner and working with clients only when we are the best fit is the best strategy. Now it isn't just about industry. We need to learn more than ever to support or customers at lightning speed and the Microsoft ecosystem has become incredibly broad.
Today’s customers expect expertise in manufacturing, finance, warehousing, AI, Power Platform, security, Microsoft 365, Azure, analytics, integrations, and industry-specific best practices. That can be increasingly difficult in the SMB space and we cannot realistically be world-class in every one of those disciplines and THAT IS OK!
In fact, I believe that’s exactly why partnerships are becoming more important than ever.
Whether that’s working alongside an AI specialist, partnering with an ISV, collaborating with another Business Central partner with expertise in a different area, or even considering mergers and acquisitions, the strongest organizations won’t necessarily be the ones trying to do everything themselves. In my humble opinion the strongest ones will be the ones to leverage partner to partner relationships. They’ll be the ones building ecosystems of trusted experts around their customers.
Over the next few years, I expect we’ll see:
More Business Central partners moving from direct to indirect.
Greater investment in AI and automation practices.
Increased specialization by industry.
More mergers, acquisitions, and strategic alliances.
Continued growth of marketplace-based solutions.
Partners differentiating themselves through expertise rather than size.
Direct versus indirect is ultimately just one business decision.
Microsoft is redefining what success looks like in its partner ecosystem. Success is becoming less about administering licensing programs and more about delivering measurable business outcomes.
The partners that thrive won’t necessarily be the largest or the ones with the most certifications. They’ll be the ones that combine deep expertise, embrace AI, collaborate with others, and remain relentlessly focused on helping customers succeed.
If you're thinking about moving this is a great article posted by MSDW to help with the decision
Comments