Sherweb's Microsoft updates for MSPs — August 2026

Short on time? Here’s a quick audio breakdown of the top six updates this month. To learn more, you can jump ahead to where the audio left off.

Most of what Microsoft announced this month lands in 2027, which makes August a good month for planning rather than scrambling. There is one thing to handle now though: if you have customers on Microsoft Defender Threat Intelligence, credits are heading to your partner account and passing them through to affected customers is on you.  

Here’s that update and everything else on the radar this month, along with what each change means for you and your customers. 

TLDR: Deadlines and pricing 

Short on time? Here’s what’s time-sensitive and what’s changing. 

Dates to watch 

• September 30, 2026: Microsoft 365 E3, E5 and Copilot FY27 promotions end. (Jump to section.) 

• October 2026: Partner margins drop 5% on select legacy and standalone products. (Jump to section.) 

• December 31, 2026: Microsoft 365 E7 and Copilot Business promotions end. (Jump to section.) 

• January 1, 2027: First annual local currency pricing update takes effect. (Jump to section.) 

• February 1, 2027: Azure reservation exchanges end for Savings Plan-eligible services. (Jump to section.) 

• Early 2027: The 30-day grace period on partner benefits renewals is removed. (Jump to section.) 

Pricing and program changes 

• Action required: Microsoft Defender Threat Intelligence credit memos need to be passed through to affected customers. (Jump to section.) 

• Now in effect: MDTI standalone SKU retired, with capabilities available at no extra cost through the Defender portal. (Jump to section.) 

• New: Windows 365 GPU Frontline Select 256 GB SKU available as of August 1. (Jump to section.) 

• Program shift: Local currency pricing moves to a single annual update each January. (Jump to section.) 

• Program shift: FY27 CSP incentives reward growth, premium products and AI over flat run-rate volume. (Jump to section.) 

Microsoft partner program updates 

What’s changing with the Microsoft benefits renewal process in 2027? 

Microsoft is updating its benefits renewal process to create a more consistent renewal experience across partner programs.  

Beginning in early 2027, the renewal window for eligible partner benefits and designations will open 30 days before the anniversary date and must be completed by that date. 

Key changes: 

• The current 30-day post-anniversary grace period will be removed. 

• If renewal is not completed by the anniversary date, the offering and associated benefits will expire the following day. 

• The new renewal process will apply to Partner Launch, Partner Success Core and Partner Success Expanded benefits packages, as well as Solutions Partner designations. 

No changes are being made to ISV Success, Support Services or Training Services designations, which already follow this renewal model. 

Next steps:  

Microsoft recommends reviewing anniversary dates in Partner Center and planning renewals ahead of time to avoid interruptions in benefits access. Learn more. 

MCAPS Start for Partners FY27: Powering Frontier Transformation together 

At MCAPS Start for Partners FY27 in July, Microsoft outlined its vision for the next phase of AI adoption, Frontier Transformation. The focus is on helping organizations move beyond AI experimentation and operationalize AI across their business through Copilot, agents, automation, governance and AI-powered workflows. 

Key highlights from the event include: 

• Increased FY27 investments across the Microsoft AI Cloud Partner Program, focused on Build, Go-to-Market and Co-Sell motions. 

• New AI-focused certifications and specializations, including the Frontier Transformation Engineer badge and Frontier Partner specialization. 

• Expanded partner benefits featuring Microsoft 365 E7, Microsoft 365 Copilot Business, Agent 365, Dragon Copilot and enhanced security offerings. 

What this means for you: 

Microsoft’s FY27 strategy reinforces that AI is now a core business priority, not just an emerging opportunity. Partners that can help customers deploy, govern, secure and scale AI solutions will be in the best position to benefit from Microsoft’s long-term investments and incentive programs. 

Recommended actions: 

• Invest in AI-focused skilling and certifications for sales and technical teams. 

• Align customer conversations around business outcomes, adoption and AI transformation initiatives. 

• Review FY27 incentive opportunities tied to Microsoft 365 Copilot, E5, E7 and customer growth motions. 

Learn more. 

FY27 CSP incentives: Key takeaways from MCAPS Start for Partners 

Microsoft has introduced significant changes to its FY27 CSP incentive program (July 1, 2026 – June 30, 2027), placing greater emphasis on customer growth, premium Microsoft solutions and AI adoption. 

Key changes: 

• The flat Modern Work (Microsoft 365) rebate has been removed. 

• Incentives now prioritize: 

• Premium SKUs (Business Premium, Microsoft 365 E5/E7, Copilot) 

• Year-over-year growth through net-new sales and upsell opportunities 

• Azure incentives remain focused on consumption and growth 

• Effective October 2026, Microsoft will reduce partner margins by 5% on select legacy and standalone products, including Office 365 E1/E3, Exchange Online, SharePoint, OneDrive Extra Storage and Microsoft 365 Apps. 

What this means for you: 

The strongest opportunities now lie in premium offerings like Business Premium, Copilot, E5 and E7, and in net-new growth and customer upgrades. The October margin change is worth planning for now if you carry a lot of legacy or standalone product volume. 

Microsoft recommends: 

• Prioritizing Microsoft 365 Business Premium as the security and productivity foundation for SMB customers. 

• Leading AI conversations with Microsoft 365 Copilot and bundle opportunities to drive both customer value and incentive eligibility. 

• Identifying upgrade opportunities from legacy SKUs to Business Premium, E5, E7 and Copilot-enabled solutions. 

• Focusing on customer growth through upsell, cross-sell and AI adoption strategies, as FY27 incentives increasingly reward expansion over run-rate licensing. 

• Reviewing customers on impacted legacy products ahead of the October 2026 margin changes to help protect profitability and create modernization opportunities. 

• Expanding service offerings around AI deployment, governance, security and agent-based solutions, areas where Microsoft is increasing investment and customer demand is expected to grow. 

For a full breakdown of the FY27 incentives changes, read our blog. 

Microsoft 365 Copilot specialization updates 

Microsoft has updated the Copilot specialization to better align with market demand. As of July 2026, Microsoft renamed the specialization to Microsoft 365 Copilot specialization and introduced updates across performance, skilling and validation requirements. 

• The performance requirement has shifted to account-only for paid monthly active usage (MAU) growth. 

• The skilling requirements have been refreshed.  

• • The Microsoft 365 Certified: Administrator Expert (MS-102) certification has been removed, and the Agentic AI Business Solutions Architect (AB-100) and AI Agent Builder Associate (AB-620) certifications have been added to address the retirement of the Create custom agents with Microsoft Copilot Studio (APL-7008) applied skill.  

• • The Prepare security and compliance to support Copilot (APL-4002) applied skill is also retiring and the Implement information protection in Microsoft 365 (SC-401) certification will be required. 

• The customer references requirement has been replaced with a third-party capabilities audit. This audit update is part of a shift to an independent, objective validation process and helps ensure that partners meet a consistent, verifiable standard for Microsoft 365 Copilot capability.  

The badge you earn with this specialization is a visual indicator to customers that you have proven expertise and can deliver the results they need. 

Learn more.

Product and feature updates 

Microsoft Defender Threat Intelligence end of life on August 1, 2026 

Microsoft has retired the Microsoft Defender Threat Intelligence (MDTI) standalone SKU as of August 1, 2026. All MDTI capabilities are now available at no extra cost through the Microsoft Defender portal to any customer with Microsoft Defender or Microsoft Sentinel.  

What this means for your customers: 

• Customers don’t need to take migration action. Features are already available to them. 

What this means for you: 

• If you have CSP customers with active MDTI subscriptions, Microsoft will issue a credit memo to your partner account for any remaining subscription term past August 1.  

• You’re responsible for passing that credit through to your end customers. Make sure your billing team is aware and is prepared to process this. 

• For customers on Volume Licensing (Enterprise Agreement), Microsoft handles refunds directly. 

Learn more. 

New Windows 365 GPU SKU available as of August 1  

Windows 365 GPU Frontline Select 256 GB SKU is now available. This Graphics Processing Unit (GPU) SKU provides a more powerful Cloud PC experience for customers running graphics-intensive workloads like design, visualization or advanced development. As of August 1, you can resume and close opportunities that require GPU-enabled Windows 365 configurations. 

What this means for you: 

• Position Windows 365 GPU capabilities as able to support high-performance workloads and advanced use cases. 

• Re-engage customers who paused evaluations or purchasing decisions. 

• Reconnect with customers who expressed interest in GPU-enabled scenarios. 

• Continue selling the full Windows 365 portfolio to meet a range of customer needs for extra performance for complex and graphics-heavy work. 

Learn more. 

Dynamics 365 Customer Service and Contact Center updates 

Microsoft has announced new advancements in Dynamics 365 Customer Service and Dynamics 365 Contact Center around workforce engagement management and real-time coaching. These updates strengthen the supervisor experience and give customers AI-agent and human-agent planning in one view in Dynamics 365.  

What this means for you:  

• Position Dynamics 365 Contact Center to your customers as a broader service transformation platform.  

• With new specialized skills for contact center agents around real-time guidance, automation and operational intelligence, you can show value around real-time productivity, coaching, quality management and AI-enabled service operations. 

Learn more. 

Pricing updates and promotions 

FY27 promotions for Microsoft 365 and Copilot 

As highlighted last month, Microsoft has extended select CSP promotions and added new Copilot promotions. This aligns with Microsoft’s continued focus on helping partners speed up AI adoption. 

Microsoft 365 E3, E5 and E7 

• All Microsoft 365 E3 and Microsoft 365 E5 promotions are extended until September 30, 2026. 

• Microsoft 365 E7 promotions will be live through December 31, 2026. 

Microsoft 365 Copilot and Copilot Business 

• Both Copilot one-year promotions are new for FY27 and run through September 30, 2026.  

• Microsoft is also introducing a new Microsoft 365 Business Basic and Microsoft 365 Copilot Business promotion and extending the Microsoft 365 Copilot Business standalone promotion through December 31, 2026. 

What this means for you: 

• Prioritize the right customers: Target accounts with existing Microsoft 365 E3, Microsoft 365 E5 or Microsoft 365 Business investments, budget clarity, AI readiness and active or successful Copilot pilots. Use ASPX for customer targeting data. 

• Lead with commitment: Position the three-year term promos for customers with budget clarity and a plan to expand Copilot across more users. Use the one-year promos for those still validating early adoption. 

• Grow every deal: Use the promotions to expand seat counts, increase deal size and secure long-term AI commitments. 

Learn more. 

Annual local currency pricing updates for Commercial Cloud 

Beginning this fiscal year (July 1, 2026), Microsoft will transition to annual local currency pricing updates every January for its Commercial Cloud services, providing customers with greater pricing predictability while continuing to account for sustained fluctuations in foreign exchange rates.  

What this means for you: 

• The next local currency update will be effective January 1, 2027, and occur annually on this date (except in exceptional circumstances).  

• Guidance on the upcoming year’s pricing updates will be issued in advance every November. 

• Any product-specific price adjustments and/or any consumer price adjustments will continue to be communicated separately.  

Next steps: 

• No action is required at this time.  

• Partners should review the upcoming pricing schedule and plan budgets and customer conversations accordingly. 

• Detailed guidance on the January 2027 update will be shared in November 2026. 

Read the Microsoft blog to learn more. 

Other updates 

FY27 Cloud & AI Platforms go-to-market resources now available 

Go-to-market resources for Cloud & AI Platforms for FY27 have started rolling out as of July 2026.  

Access discussion guides, updated product pitch presentations and more to align conversations to FY27 priorities and move faster into market. These resources help you uncover customer priorities, connect Microsoft Cloud and AI solutions to business outcomes and accelerate growth opportunities. 

Explore the new resources. 

Agentic Apps Power Platform + Copilot Studio partner practice guide 

Microsoft has released a new Agentic Apps Power Platform + Copilot Studio partner practice guide, a complete playbook for partners building, scaling and monetizing a low-code and agentic AI practice. It includes checklists, templates and a partner resource cheat sheet. 

Use this guide to: 

• Formalize your AI and low-code practice strategy 

• Assess practice maturity 

• Develop capability and offers 

• Define your GTM to grow Power Platform and Copilot Studio 

Learn more. 

Updated Business Central learning materials 

Updated Business Central Launch Edition (BCLE) 2026 learning materials have been released. This slide deck and videos help partners understand and present the latest Business Central capabilities to customers. 

Use these resources to: 

• Refresh sales and delivery teams on the latest Business Central enhancements 

• Support customer-facing presentations, discovery sessions and upgrade conversations 

• Show customers how Business Central continues to evolve and why modernization remains important 

Download the BCLE 2026 release wave 1 deck and watch the BCLE 2026 release wave 1 videos. 

Azure reservation exchange policy update 

Beginning February 1, 2027, Azure reservation exchanges will no longer be available for services that are eligible for Azure Savings Plans. 

What this means for you: 

• Review customers currently using Azure reservations for compute and database workloads. 

• Help customers determine whether Azure Savings Plans or Reserved Instances are the best fit for their environment. 

• Use this change as an opportunity to provide cost optimization, workload assessment and cloud strategy guidance. 

• Proactively engage impacted customers before the policy takes effect. 

Learn more. 

Webinars and events 

Sherweb webinars

• Microsoft FY27 incentives: Key changes and what they mean for MSPs (On demand) 

• The latest Microsoft 365 threats and how to shut them down (On demand) 

Microsoft webinars and events

Technical training 

• Certification weeks for Microsoft AI Cloud Partner Program 

• Deal Ready Demo Accelerators 

• Microsoft Partner Skilling Hub 

• Microsoft 365 Copilot + BSKUs (SMB) – Project Ready 

• Microsoft Agent 365 & ME7 Partner Skilling – Project Ready 

Sales training 

• Sales & Tech Deal Ready skilling 

• Microsoft Agent 365 & ME7 Partner Skilling – Sales Ready 

Other events 

• Monthly Canadian MSP & Reseller Copilot Community Call | August Edition (August 12) 

Join Microsoft’s monthly community call for Canadian MSPs and discover how to unlock new growth with Microsoft 365 Copilot. Hear the latest product updates, explore go-to-market resources and investments, and learn practical strategies for AI selling and building your Copilot practice. 

Staying ahead of Microsoft change 

If you have questions about how any of these updates affect your Sherweb account or your customers, reach out to our team. We’re here to help you turn Microsoft’s changes into opportunities for your business. 

Catch up on past updates: July 2026 | June 2026