What are the Main Office 365 Billing Challenges for CSPs?

2 min read
09 September 2019

Office 365 is the most widely used cloud service by user count. More than half of organizations around the world currently deploy Office 365. Microsoft expects this uptake to rise 66% through 2019.

As a fast-growing business staple, Office 365 is a fundamental offer for global IT providers. However, margins on the resale of this subscription line of services are low. This is an issue that can get further compounded by the costly billing challenges associated with managing Office 365.

Let’s look at these billing challenges in detail.

What Your ERP Solution Can and Can’t Do

Many CSPs rely on their existing ERP systems to manage their Office 365 billing, and this works to a certain extent. ERP systems can, for example, be set to manage recurring contracts. What most ERP systems can’t do, however, is track and pro-rate changes made to subscriptions during the billing cycle. This means that the sales or support team have to regularly step in to manually add or take away licenses on behalf of customers. This creates a confused mess of sales orders and commentary in the ERP system, which becomes increasingly unsustainable as more cloud services and customers are added. 

The Hazy Office 365 Audit Trail: Who Did What When?

Manual changes to Office 365 licenses are made in the Microsoft Partner Center which runs independently from your ERP system. This means that, once a subscription has been updated in the Partner Center, the person doing the modifying also has to log this change in your ERP solution. This creates a problem when someone outside the usual remit—an IT engineer, for example—adds a new SKU on behalf of a client, not realizing that she also has to record this action for billing purposes. 

This lack of integration between two important systems creates a weak link in the system and is a common cause of leaked revenue for CSPs. Without a clear top-down view of who in the business is making each change, it’s also very difficult to trace and repair any mistakes.

Microsoft’s Complicated Recon Files Cause Accounting Headache

When it’s time to bill each month, your accounting team receives a long and very detailed reconciliation file from Microsoft which contains all of your customers’ usage data for Office 365. This information, which can be thousands of billing lines long, has to be painstakingly sifted through to unpack and rationalize the costs for each customer. Due to the high level of attention to detail required, this manual process is error-prone and such an onerous a task that your team is often stretched to bill customers in time. This can mean that some of your customers receive late invoices or even incorrect bills, putting them off renewing their contracts for another term.

Consolidate Your Systems and Processes to Create Back-to-Back Reconciliation

The common issue that runs through the challenges raised here is poor trackability and poor visibility of costs. The Partner Center and business systems aren’t integrated, and manual proration and Microsoft billing reconciliation are time consuming and error prone.

Systems should to be able to share essential data and be designed to manage the high transaction numbers that cloud subscriptions generate. Also, automation, rather than people, can take over the administration of labor-intensive vendor reconciliation files.

By consolidating your systems and processes, it is easy to resolve the Office 365 billing pains described here. And with the right solution, you can even give low margins a huge boost by partly or fully automating the sales cycle for Microsoft services.


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