FY15 Commercial Distributor Incentive Guide

Commercial Distribution
Incentives
SMB | FY15 Incentive Guide v1.5
July 1, 2014 – June 30, 2015
Contents
Contents ..............................................................................................................................................2
Overview ..............................................................................................................................................5
Purpose of the incentive & alignment to Microsoft's business strategy.................5
Summary of FY15 program changes ....................................................................................5
Commercial Distributor Eligibility ...............................................................................................7
MPN Eligibility Criteria ...............................................................................................................7
Microsoft Agreement .................................................................................................................8
Microsoft Authorization ............................................................................................................8
Revenue and License Eligibility ...............................................................................................8
Treatment of Public Sector .................................................................................................... 11
Incentive Structures & Rates ..................................................................................................... 12
Incentives Structure Overview .............................................................................................. 12
Incentive Definitions and Requirements ............................................................................... 12
Accelerators ................................................................................................................................ 16
Global ....................................................................................................................................... 16
FY15 DISTI Solution Accelerator (DSA) ......................................................................... 18
Earnings & payments ................................................................................................................... 20
Incentive Calculation Example ............................................................................................. 20
Earning and usage periods.................................................................................................... 21
Payout and Coop Claims ........................................................................................................ 22
Coop................................................................................................................................................... 23
Eligible activities ........................................................................................................................ 23
Alignment to Microsoft priorities ....................................................................................... 24
Payment Frequency.................................................................................................................. 25
Resources ......................................................................................................................................... 26
Useful links .................................................................................................................................. 26
2
FAQ ............................................................................................................................................ 26
Other incentives .................................................................................................................... 26
Version
1.0
Modification
First release
1.1
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1.2
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1.3
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3
Addition of Azure via Open as an eligible product under Cloud
table “Cloud Product Categories for Commercial Distributor
Incentive”
Inclusion of Azure via Open SMB Incentive Promotion
STB CAL Suites is changed to CnE CAL Suites in the Core and
Growth Product Categories in “On-Premise Product Categories for
Commercial Distributor Incentives”
Cloud product chart updated for all cloud products and license
types sold via Open license.
Eligibility clarified to state that DISTI becomes eligible for
incentives once they become an Authorized Commercial
Distributor.
Cloud product chart updated
o Addition of new Office 365 SKUs released in Sept 2014
o Removal of O365 Small Business Premium via ESD as this is
documented under Table 5 Office FPP/ESD Product
Categories for Commercial Distributor Incentives
Additional clarification section Special Azure via Open Incentive
for SMB Promotion Announcement
Azure workload added to DISTI Solution Accelerator (DSA)
DSA eligibility for H2 updated to reflect changes to MPN competencies
CRM Online via Open added to Table 2 - Cloud Product
Categories for Commercial Distributor Incentives. As of February
1, 2015, CRM Online via Open will earn the standard base
incentive rate of 8% consistent with other Cloud via Open
products.
New H2 Global Windows Server Accelerator rates, terms and
conditions announced.
1.4
-
Added SQL Server Premium, SQL Server Standard, SQL CALs to the
eligible products table for the H2 Global Windows Server Accelerator.
1.5
-
Added H2 Office 365 Global Accelerator that will run from
February – June, 2015
Updated Cloud Growth exclusion in (Table 7)
Campus replaced with School in the Cloud via Open eligible
revenue (Table 2)
Update to payment for cloud recurring revenue
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4
Overview
At Microsoft, Commercial Distributors continue to be strategically important
partners that make significant contributions to our success, especially in the Small
and Mid-sized market segment and for growing opportunities for Cloud-based
solutions. To reward the efforts of these partners and motivate them to drive
more growth, Microsoft offers a set of incentives to qualified Commercial
Distributors as compensation for the value they deliver and the work they
perform in helping us achieve our business objectives. This document outlines
Microsoft’s fiscal year 2015 partner incentives for Commercial Distributors.
Purpose of the incentive & alignment to Microsoft's
business strategy
Microsoft’s eligible Commercial Distributors can leverage the incentives to fund
key investments that enable them to better execute on their business strategies
and deliver sustainable growth and increased profitability for their companies.
Some of the specific areas of focus can include:

Increase and accelerate the partner ecosystem that sells Open licenses
(Reach) and Cloud-based offerings that are sold via Open license
agreements (Cloud Open).

Improve the Frequency that partners sell Open licenses and Cloud
Open offerings and the Yield realized on each order to drive revenue
and profitability growth.

Build partner value and increase the sales of key workload solutions
that address critical customer requirements.

Optimize Microsoft product launch efforts with partners.
Summary of FY15 program changes
Microsoft’s objective is to maintain the existing incentive framework and optimize
the impact by continuing to offer both rebates and coop marketing funds as
incentive components in order to enhance the profitability of our Commercial
Distributors and drive targeted joint investments/activities. We will continue to
offer incentives to Commercial Distributors using a similar model to the one
offered in FY14, with increased focus on Cloud Open offerings, Open annuity
agreements and products in the Growth and Incubation category.
5
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


New and Renewal Open license contract revenue will be included in the
incentive calculation
All recurring revenue will be excluded from the incentive calculation,
with the exception of recurring revenue associated with Cloud products
as defined in Table 2. Recurring Cloud product revenue will be
included in the incentive calculation.
The incentive for Open licenses for on-premise revenue will be paid on
eligible revenue sold to SMB customers as designated by Microsoft.
Open license revenue sold to customers classified by Microsoft as a
Tier 1 Reseller and/ or is in the Corporate Accounts (CA) and Enterprise
and Partner Group (EPG) segments is excluded from the incentive
calculation for the global component of the incentive. This is also
applicable for Local Accelerator component unless specifically stated
otherwise for your region/Area.
Incentives for Cloud Open revenue are calculated and paid for revenue
sold into customers in all market segments and all managed and nonmanaged resellers (all Tiers)
The Office (Open) accelerator offered in FY14 is removed, and Office
(Open) will be incented at Core product rates. This change is made to
support the Office 365 strategy as the preferred method for customers
to purchase Office.
For the purpose of this document, fiscal year 2015 is the period running from July
1, 2014 to June 30, 2015. It can be designated as FY15. In addition, the first fiscal
half of fiscal year 2015, running from July 1, 2014 to December 31, 2014, may be
referred to as H1FY15, while the second fiscal half of fiscal year 2015, running
from January 1, 2015 to June 31, 2015, may be referred to as H2FY15.
The remainder of this guide provides details on the FY15 incentives. Specific
terms and conditions, as well as accelerators and associated rates that apply to
each partner can be found in the Master Channel Incentive Agreement (MCIA)
and Exhibit document that is sent to each distributor from the Regional
Operations Center (ROC) in July. In the event that there are any changes to the
Accelerators or Rates during FY15, these will communicated via an Amendment
Letter to the MCIA and/or via the Readiness APP and Distributor Weekly Report
6
Commercial Distributor Eligibility
In an effort to ensure consistency across Channel incentives and enhance clarity
for partners participating in multiple programs, Microsoft has created a standard
format for Eligibility Criteria.
To be eligible to participate in the Commercial Distributor incentives, a partner
must meet the criteria documented in Figure 1.
Figure 1: Eligibility at a Glance
MPN
Enrollment
Eligibility
Type
Eligibility Requirement
Program Specific Criteria
Enrollment Status
Active MPN ID
Partner Status &
Performance
Microsoft Channel Agreement
Microsoft Agreement
Commercial Distributor Agreement,
Master Channel Incentive Agreement
(MCIA)*
Commercial Distributor
Microsoft Authorization
Sell Finished Good Product
*The MCIA is sent during the month of July to all partners that have an active Commercial
Distributor Agreement as of July 1, 2014. If a company is authorized as a Commercial Distributor
during the course of the fiscal year, they will be on-boarded upon completion of the eligibility
requirements detailed in Figure 1.
MPN Eligibility Criteria
Eligible partner organizations must hold an active MPN membership and an
active MPN ID.
7
Microsoft Agreement
Partners must hold an active Microsoft Channel Agreement and Commercial
Distributor Agreement.
Once a partner has been designated by Microsoft as a Commercial Distributor,
they automatically become eligible to earn and will receive a Master Channel
Incentive Agreement. Partners can “Opt out” of the incentive program by
notifying Microsoft in writing
Microsoft Authorization
Partners must have channel authorization to sell finished goods products.
A partner needs to have an active Commercial Distributor agreement detailing
the licenses products (Open, Fully Packaged Product (FPP), Electronic Software
Download (ESD)) they are allowed to sell.
Revenue and License Eligibility
The following products sold under Open Licensing as on-premise products are a
primary component of this partner incentive reward model (see Table 1). They are
categorized as Core, Growth, and Incubation Products.
Table 1 – On-Premise Product Categories for Commercial Distributor
Incentives
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On-premise Open License agreements sold to customers classified by Microsoft
as Tier 2-4 SMB customers will be eligible for the above Global incentives. Open
license agreements sold to customers classified by Microsoft as a Tier 1 Managed
Reseller and / or as a Corporate Account (CA) or Enterprise and Partner Group
(EPG) customer will not be eligible for incentive earnings.
In most cases, Open license agreements sold to customers that Microsoft
classifies as Corporate Account or EPG are sold by Tier 1 resellers, whose Open
license sales revenue is already excluded from the commercial distributor
incentive calculation for the products documented in Table 1. Instances where a
sizeable Open license agreement (250+ seats) is being sold by a Tier 2-4 partner,
or greater than 5 servers are on an agreement, is an approximate measure that
the purchasing company is a CA or EPG account and, thus, not eligible for
incentives. Partners will have access to Open license revenue sales classified as CA
or EPG. This will be available on the Channel Incentive Tool (CHIP). Prior to an
Open license agreement transaction, Distributors should not contact their
Regional Operations Center or Partner Sales Executive, as these resources will not
have accurate visibility of the customer segmentation for a specific transaction.
The previous section described incentives for on-premise products sold via Open
License Agreements. Table 2 documents the Cloud products sold via Open
Licence agreements. This table has been updated to include the following Office
365 offerings that were launched in September, Office 365 Business, Business
Essentials, and Business Premium, as well as Azure and CRM Online via Open. All
other Cloud related incentives sold through FPP and ESD are documented in
Table 5 below (Office FPP/ ESD Product Categories for Commercial Distributor
Incentives).
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Table 2 – Cloud Product Categories for Commercial Distributor Incentives
Cloud Open offerings are incented under this program at defined rates that are
different than those offered specifically for Core, Growth, or Incubation products
under Table 1. In addition, Cloud Open incentives are paid on the revenue of all
resellers from customers in all segments (no Tier 1 reseller or CA/EPG segment
exclusions). Cloud ESD incentives are paid on the revenue of all non-managed
Retailers.
Table 3 – License Categories for Commercial Distributor Incentives
NOTES:
1. Azure via Open is being added to the eligible Cloud via Open product list
as of August 2014 and will earn the standard base incentive rate of 8%
consistent with other Cloud via Open products. Microsoft Azure is
purchased as a prepaid monetary commitment with a 12 month
consumption period upon redemption. The rate of consumption is
10
completely dependent on usage and the metered rate of the specific
Microsoft Azure services consumed. Unused balances expire at the end of
12 months and cannot be rolled over into future periods. Calculators are
provided to model expected usage scenarios for customers, in addition to
configurable alert e-mails for low balances.
2. CRM Online via Open is being added to the eligible Cloud via Open
product list as of February 1, 2015 and will earn the standard base
incentive rate of 8% consistent with other Cloud via Open products.
SPECIAL AZURE VIA OPEN INCENTIVE FOR SMB PROMOTION
ANNOUNCEMENT
Microsoft is offering an incremental promotional incentive of 12% for Azure via
Open sales to SMB customers between August 1, 2014 and March 31, 2015, in
addition to the Global incentive base rate of 8% for FY15. The incremental 12%
promotional incentive will follow the same Coop/Rebate apportionment as the
Global incentive base incentive. Microsoft Azure via Open sales to SMB
customers will therefore earn a total 20% incentive through March 31, 2015.
Notes:
i)
ii)
Sales to CA and EPG customers are excluded from this promotion.
Distributors that are located in a Subsidiary that has selected
“Cloud Open” as a Local Accelerator may have an opportunity to
earn additional incentive on Azure via Open sales. Please refer to
the Exhibit section of the Master Channel Incentive Agreement for
further details.
Distributors that are eligible for the DSA workloads Virtualization
and Management or Virtual Desktop (BYOD) have an opportunity
to earn additional incentive on Azure via Open sales under certain
criteria. Please refer to the updated section on FY15 DISTI
Solution Accelerator (DSA) in this incentive guide.
Treatment of Public Sector
All Public Sector revenue booked via Open and Academic License agreements will
be included in the Commercial Distributor incentive calculation per the terms and
conditions of this incentive as defined in this document.
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Incentive Structures & Rates
Commercial Distribution partners earn both Rebate and Coop Funds. Guidelines
for incentive rates are defined by the Microsoft Worldwide Partner Group (WPG)
Partner Incentives team and are shared with the Partner Teams in the Microsoft
field locations (Areas and Subsidiaries). Based on their budgets and market
objectives, the field teams determine the final partner incentive mix and rates to
apply to locally-chosen accelerators within their subsidiary. The rates that apply
for the Commercial Distributors in a specific Area or Subsidiary are
communicated to partners via the Master Channel Incentive Agreement (MCIA) at
the start of H1 semester from the appropriate Microsoft Regional Operations
Center (ROC).
Incentives Structure Overview
The Commercial Distribution incentive framework is made up of two elements; a
Corporate-defined component and Locally-selected accelerators (from a defined
menu of available accelerators). A key point is that the locally-chosen accelerators
are selected by the subsidiary leadership teams based on the key local priorities
and market opportunities. Knowing this, partners should work with their Partner
Sales Executive and the local teams to align investments and coop fund usage
against these priorities and the issues addressed by the chosen accelerators.
In FY15, there will continue to be a globally-applied accelerator for the sale of
specific IT Academy products sold under an OVS license (see details later in this
document).
In addition, a DISTI Solution Accelerator (DSA) will continue to be available for
the sale of defined solutions for commercial distributors that attain the required
MPN Competency certification related to each defined solution. This opportunity
is detailed later in this document.
Incentive Definitions and Requirements
The Commercial Distributor Partner Incentive model includes the following
guidelines:

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The incentives reward Core, Growth, and Incubation Product sales on
new and renewal Open Licenses sold to SMB customers, generated by
Tier 2 to Tier 4 channel partners (resellers). Cloud via Open revenue
(including Office 365) will be incented for revenue produced by all
resellers (no Tier 1 exclusion) and sold to customers classified as SMB,
CA and EPG (except as called out separately for special promotional
incentives). Office FPP and Office ESD incentives (See Table 4) are
calculated against the revenue of all reseller Tiers. Revenue for
Managed Retailers and OEM High Volume Resellers (HVR) is not
eligible for incentive.
13

The model is not target-based.

Annuity licenses are incented at higher rates than non-Annuity
contracts.
Table 4 – Corporate Defined Components of FY15 Commercial Distributor
Incentives
Note:
1. This represents the Global Initiative for Open License agreements
2. Coop/Rebate splits for US-based distributors will differ slightly from
the global guidelines.
The volume licensing revenue produced by Tier 1 resellers in each Microsoft
subsidiary is exempted from the incentive calculation for the Open License
portion of the Global incentive (except for Cloud Open revenue). The definition of
Tier 1 partners is:
1. The top set of the largest resellers in each Microsoft Subsidiary that
are responsible for just less than 50% of the Open License revenue
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in the subsidiary in the trailing 12 month period of May 1 2013 –
April 30 2014).
The list of Tier 1 partners in each Microsoft subsidiary is defined once per year
and communicated to the distributors by the ROC as an appendix to the Master
Channel Incentive Agreement (MCIA).
Note: Core product rates offered to commercial distributors in the US may be
subject to threshold requirements. Please refer to your specific FY15 incentive
agreement for details, or discuss with your partner account manager.
In addition, incentives are paid under this program based on the pricing levels
and licensing types as documented in Table 4.
Table 5 – Office FPP/ESD Product Categories for Commercial Distributor
Incentives.
The following products sold under Office FPP or Office FPP via ESD Licensing are
eligible for incentive earnings:
Office SKU
Rate
Rebate
Coop
Office 365 Personal
(FPP, ESD)
5%
50%
50%
Office 365 Home
(FPP, ESD)
5%
50%
50%
4.5%
50%
50%
Office 365 Small
Business Premium (ESD)
8%
67%
33%
Office Home & Business
2013
1.5%
50%
50%
Office Professional 2013
(FPP, ESD)
1.5%
50%
50%
Office Home & Business
2011 for Mac (FPP, ESD)
1.5%
50%
50%
Office 365 University
(FPP, ESD)
(FPP, ESD)
The revenue produced by Managed Retailers is removed from incentive
calculation. In addition, OEM High Volume Resellers (HVRs) are also excluded
from all of the above incentives with the exception of O365 Small Business
Premium. These lists are defined by the corporate retail group and OEM group,
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and are communicated to the distributors by the ROC as an appendix to the
Exhibit section of the Master Channel Incentive Agreement (MCIA).
Accelerators
Global
Every eligible partner participating in Commercial Distribution incentive is eligible
for the following globally-applied, Corporate-defined accelerator.
Table 6 – Global IT Academy Accelerator for Commercial Distributors
Commercial Distributor
Measurement
IT Academy
OVS and Open Academic revenue sold to Tier 2-4 resellers
of IT Academy part numbers 54R-00141, 54R-00142, 54R00159, and 54R-00160
Site pack of 500 Microsoft
Office Specialist (MOS) exams
Microsoft Academic
Certifications
Site pack of 250 Microsoft
Technology Associate (MTA)
exams
Class pack of 30 Microsoft
Certified Professional (MCP)
exam vouchers
Rebate
Portion
Rate
7%
100%
0%
OVS-ES (Level E)
H5T00004
7%
100%
0%
OVS-ES (Level F)
H5T00005
7%
100%
0%
OVS-ES (Level E)
H5T00007
7%
100%
0%
OVS-ES (Level F)
H5T00008
7%
100%
0%
OVS-ES (Level E)
H5T00001
7%
100%
0%
OVS-ES (Level F)
H5T00002
7%
100%
0%
Open Academic
H5T00010
7%
100%
0%
New in FY15 - the Learning Experiences Team has added Microsoft Academic
Certifications, including Microsoft Office Specialist (MOS), Microsoft Technology
Associate (MTA) and Microsoft Certified Professional (MCP) exams available
through Open Academic and OVS-ES to the Global Accelerator referenced in
Table 6. Both the IT Academy and Microsoft Academic Certifications accelerators
are offered to all subsidiaries and will be paid out to all segments (SMB and
CA/EPG) as classified by Microsoft and to Tier 2 – 4 resellers. Attaching these
products to academic software agreements provides institutions a comprehensive
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Coop
Portion
technology, training and certification solution that supports student
employability.
NEW IN FY15 H2 – GLOBAL WINDOWS SERVER ACCELERATOR
Microsoft is offering an incremental accelerator from January 1, 2015 thru June
30, 2015 to commercial distributors for Windows Server and SQL Server SKUs
sold through Open license and Academic agreements (for specific eligible license
categories, see Table 3 – License Categories for Commercial Distributor
Incentives). This offer will provide an additional incentive for qualified sales made
these Open and Academic license agreements sold to SMB customers per the
chart below. The incentive will be paid on eligible revenue sold to all resellers (no
exclusion of Tier 1 reseller revenue).
Eligible Products
Non-Annuity Contracts
Annuity Contracts
Windows Server Standard, Windows Server CALs,
Windows Server Other
1.5%
2.5%
Windows Server Datacenter, SQL Server Premium,
SQL Server Standard, SQL CALs
2%
7%
The incentive will be made as 67% rebate and 33% coop funds. The earned coop
funds will be available to claim against approved activities per standard coop
program guidelines.
NEW IN FY15 H2 – GLOBAL OFFICE 365 VIA OPEN ACCELERATOR
Microsoft is offering an incremental incentive in February-June FY15 (February 1,
2015 thru June 30, 2015) to commercial distributors for Office 365 products sold
through Open licenses to SMB customers. This offer will provide an additional
4% incentive for qualified sales made during this period. The eligible license types
and products for this accelerator are those found in Table 2, except for Azure via
Open, CRM On-line via Open, and Office 365 Small Business Premium (sold via
ESD). The incentive will be paid as 67% rebate and 33% coop funds, which will be
available to claim against approved activities during H1 FY16 (per standard coop
program guidelines).
Local Accelerators
The subsidiary/Area augments the corporate-defined incentives through local
accelerators, selected to address local market conditions and opportunities. As an
example, if the number of resellers that are actively selling Office 365 is lower
than the local Microsoft team feels is optimal, they can choose and deploy the
Cloud Partner Reach accelerator. Please note:
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
All accelerators are compliant with EU/EFTA laws, including a consistent
set of rates across all EU/EFTA Areas

Accelerators are applicable to the Tier 2 to Tier 4 partner segments
(except as noted or communicated otherwise in the MCIA).
Accelerators are paid 50/50 rebate and coop (except where noted or
communicated otherwise in the MCIA).


Any changes to the list below is at the discretion of WPG, Local
Subsidiary and Operations and will be communicated in the Master
Channel Incentive Agreement.
Table 7 - FY15 Accelerators for Local Selection
FY15 DISTI Solution Accelerator (DSA)
In FY15, Microsoft will offer all of its commercial distributor partners the
opportunity to earn an accelerator for the new Open license revenue associated
with the sales of defined workloads of strategic solutions sold to customers in all
customer segments. In order to qualify for the incentive accelerator in one or
more of the workloads, the distributor must attain a MPN Competency that is
associated with each workload (Silver or Gold Level) in each Microsoft subsidiary
in which it wants to qualify.
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The relevant MPN Competencies must be attained at the Microsoft subsidiary
level by June 13, 2014 to be eligible for the related workload accelerator in H1
FY15. In addition, if a competency expires after June 13, 2014 but before the start
of H1 it must be renewed prior to July 1, 2014 to qualify for H1 eligibility. To
attain H2 eligibility for the solution accelerator for any of the workloads, the MPN
competency required must be attained at the Microsoft subsidiary level by
December 15, 2014.
In the EUFTA region, commercial distributors will be required to earn certification
at the Microsoft subsidiary, but will be incented on eligible Open license sales
made into any EUFTA country, in compliance with EUFTA regulations.
The workloads definitions and the minimum requirements for a qualifying sale
can be found in Table 8 below. Note that new workloads have been introduced
for FY15, Business Analytics (online) and Azure via Open.
Table 8 – Solution Workload Definitions and Details
Important: A product qualifying for multiple DSA workloads on a single order will only be paid once for incentive earnings.
A product qualifying for multiple DSA workloads on a single order will only be
paid once for incentive earnings. Qualifying sales will earn an accelerator of 10%
of the qualified invoice value for the certified distributor. There is no Tier 1
reseller or CA/EPG segment exclusion for this accelerator. This accelerator is paid
in addition to the incentive earnings for qualified sales under the standard
commercial distributor incentive.
Note – starting in August, 2014, a workload for Azure via Open has been added
to the DSA incentive. Table 8 has been updated to include this workload and the
details for earning the incentive related to this workload. For this workload, any
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Distributor that is currently eligible for one or both of the DSA workloads
Virtualization & Management or Virtual Desktop will automatically get 10%
incentive for qualified Azure via Open sales. A sale qualifies when an eligible
Distributor first sells an eligible DSA workload to a reseller and that reseller sells
that workload to an end customer. Both that workload and all of the follow up
sale of Azure Open to that end customer through the same reseller and eligible
DISTI during Fiscal year 2014 will qualify for the 10% incentive. The sale will be
retroactive to launch date of Azure (August 1st, 2014).
Example:
1. DISTI A has MPN Competency in Virtual Desktop and sells this DSA
Workload to End Customer B through Reseller C.
2. DISTI A receives 10% on this order
3. End Customer B later purchases Azure via Open through the same
Reseller B in a separate order
4. Reseller B purchases this Azure order through DISTI A
5. DISTI A receives 10% on this Azure Open and any other Azure Open
order placed via Reseller B in H1 FY15
Note – In October 2014, MPN Competencies were updated. These changes
impact the eligibility for the DSA incentive. The chart in Table 8 has been updated
to reflect the new MPN Competencies that are required for eligibility for each
DSA workload. To attain a new DSA eligibility for H2 FY15, a distributor that was
not eligible for the targeted workload for H1, but wishes to attain eligibility for
H2, needs to attain Active status in the aligned competency by December 15,
2014. If the competency was attained under the previous naming convention
prior to the launch of the new competencies prior to October, the partner will be
eligible for the incentive in H2. Otherwise, to be eligible for H2, the partner will
need to attain the competency documented in Table 8 by December 15, 2014.
Earnings & payments
Commercial distributors will earn incentives per the program definitions
documented earlier in this guide. Payment details are provided later in this
section.
Incentive Calculation Example
Table 9 below provides an example of an earning scenario for a commercial
distributor with the FY15 incentives. It displays how Corporate-defined
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components and Local accelerators are calculated. The performance levers exist
for incentives on Core, Growth and Incubation products for Tier 2-4 Resellers,
while the incentive for Office FPP/ESD rewards all reseller Tiers and non-managed
Retailers. Two local Accelerators have been chosen.
In this example, if a Commercial Distributor sold $11.95 M during the earning
period, the incentive would be $372,050 (3.1% of revenue). This incentive would
be split into rebate ($243,664) and Coop ($128,387).
Note that the percentage for the accelerators is for illustrative purposes only.
Table 9 – Earning Example
Earning and usage periods
Commercial Distributors perform against both Corporate-defined objectives and
locally-defined accelerators and are awarded according to the published
incentive percentages for revenue they sell in each product category based upon
their purchases from Microsoft. These earnings are distributed as Rebates and
Coop Marketing Funds, and as shown in Figure 2, are earned over a 6 month time
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period which is known as the Accrual (Earning) Period. At the end of the Accrual
Period, partners are awarded on what they have earned, after meeting the
eligibility and compliancy criteria. Partners then are credited with rebates and can
begin to claim coop funds. Coop funds require a partner to complete a coop
activity before they claim reimbursement for the related costs. The coop funds
claim will be paid within 45 days after Microsoft’s approval has been given. Below
are details on how the Earn, Award and Claim periods work.
Earning and Usage/Claims are on fixed 6-month cycles, based on the Microsoft
financial calendar dates.
During the earning period, the Distributor’s sales performance is evaluated, and
its performance is posted to the partner’s interim earnings statement within CHIP.

The Distributor can access their earning details on the Channel
Incentives Tool (CHIP). The earnings are refreshed on a weekly basis
(Every Monday)

At the end of the earning period, if the partner meets the compliance
requirements, it becomes eligible for rebates and coop fund awards.

Commercial distributors who fail to meet the program rules will not
receive all of their incentives earnings. As an example, the partner has
issues meeting some of the compliancy criteria like on time invoice
payment, they will be deducted 1/6 of incentive earnings for each
month in a semester period that they are late invoice payments.
Payout and Coop Claims
Commercial distributors can begin to perform marketing, demand generation,
and readiness activities in accordance with the Distributor coop marketing
guidelines. Coop funds must be claimed during the six-month usage period that
follows the Accrual period. Funds not used for reimbursement payments for Coop Eligible Activities conducted during the Coop Funds Usage Period will expire
and will no longer be available to Company after the end of the Coop Funds
Usage Period.
22
Figure 2 – Commercial Distributor Earning and Usage Schedule
Partner is eligible to earn rebates
and coop funds through sales of
eligible licenses and products
during the Earning period (6-mo)
When partner meets requirements,
rebate and coop funds are then
AWARDED for Payment & Usage.
Rebates are paid automatically and
coop funds are paid against
eligible activity claims.
Partner claims earned coop funds
after an eligible market
development, demand generation,
or readiness activity is performed
during the 6-month USAGE period.
In addition, Partners have 45 days after coop claiming deadline to close out any
claims that are in a status of “Pending POE” or “Action Required” Failure to do so
will result in the claim being moved to status of “non-compliant” and payment
will not be processed. Advance notification on the upcoming deadline date will
be published in via the Readiness App and in the Distributor Weekly Report.
Coop
Eligible activities
The eligible coop activities and related redemption requirements are
documented in Table 10 below. The Coop Guide, available in the Activation Kit
(http://partner.distribution-coop-activation-kit.com/ ), provides a comprehensive
list and detailed description of eligible activities. Please note that these activities
can be leveraged to develop new business for on-premise or cloud-based
Microsoft Solutions.
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Table 10 –Marketing Activities Eligible for Coop Funding
Alignment to Microsoft priorities
Microsoft has defined key priorities for the upcoming fiscal year (overview in
Table 11 below). Microsoft will be developing and launching sales and marketing
campaigns supporting these priorities, worldwide. Commercial Distributors need
to attempt to align their planned investments and activities that they use earned
coop funds for around these priorities in order to best leverage Microsoft’s
investment.
Many of the investments related to these priorities will be driven at the local level
as promotions, offers, and activities. Commercial Distributors should work with
their PSE to understand local initiatives that they can align with, or tie into, and
the scheduling of those initiatives throughout the fiscal year.
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Table 11 – FY15 Microsoft Priorities for Coop Activity Alignment
Payout Mechanics
Rebates are paid via a credit memo to the Distributor (where applicable) within
45 days after the semester end date. Partners do not have to claim their rebate
earnings.
Coop Funds require a partner to complete a coop activity (see examples above)
before claiming the cost during the six-month “usage,” or claims period that
immediately follows the Accrual period. The Coop Funds Claim will be paid via a
credit memo (where applicable) within 45 days after it is approved by Microsoft.
Payment Frequency
At the end of the Earning period, partners are paid rebates and coop funds are
made available once all of the eligibility requirements and revenue eligibility
criteria have been checked and verified. Once the coop earned and accrued funds
become available, the Distributor can commence claiming the funds against
completed eligible activities. The expected payment frequency for rebate is once
every 6 months. For Coop, the payment is made monthly against the activities
that have been conducted and approved by Microsoft.
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Resources
Useful links
The following are resources related to these Incentives:

Microsoft Partner Network - https://partner.microsoft.com

Incentive resources are posted on the Activation Kit at
http://partner.distribution-coop-activation-kit.com/

Coop Eligible Activities can be submitted for pre-approval by email at
[email protected] before they are performed. All Coop
activities must meet the requirements as further defined in the Coop
Guide.
FAQ
A FAQ document is accessible at the Activation Kit site.
Other incentives
Commercial Distributors may also be eligible to earn OEM incentives, Channel
Developer (for Advisor support) incentives, and SPLA incentives.
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