Understanding Microsoft's Enterprise License Agreement and Cloud Service Provider Agreements

Licensing software, whether for a government agency, an educational institution, or a commercial enterprise, is never for the faint of heart. Vendors are constantly changing how they license their products and services to accommodate evolving technology and customer needs. Cloud computing presents a new set of licensing opportunities and challenges. These market realities caused Microsoft to change the requirements needed for an Enterprise License Agreement.

Microsoft changes minimum requirements for Enterprise License Agreement

In July 2016, Microsoft changed the requirement to qualify for an Enterprise License Agreement by raising the user or device minimum from 250 to 500. Commercial Customers who fall into the 250 to 499 range and require a volume licensing agreement have the option of a Microsoft Product and Services Agreement (MPSA).
The MPSA provides a purchasing structure for a transactional license agreement for organizations that want to license on-premises or in the cloud as needed. There is no organization-wide commitment under a single non-expiring agreement. Software Assurance is an extra cost item and can optionally be added to your MPSA agreement.

Software Assurance

Software assurance is a set of tools and resources to help clients manage and maximize license purchases. Two features of software assurance that clients like best are license mobility and new version rights. With license mobility, clients can move licenses from on-premises to the cloud and back as needed. With new version rights, clients are entitled to version upgrades of software as they are released by Microsoft.

Licensing is different in the cloud

Before the cloud, it was commonplace for clients to determine how much software they were going to consume, commit to it, and make the purchase. For larger organizations, there was often a team of people working on this effort. They would determine how much hardware was needed, develop the budget and time line, then lock in a multi-year deal. Every year, clients would go through an audit and true-up process. If business needs were well understood, then this process worked well. Typically, this would only be the case for larger organizations with money, resources, and a well-defined technology road map. This change to the Microsoft Enterprise Agreement policy reflects the fact that for many organizations, especially smaller ones, this was not an optimal way to purchase products and services.
Organizations needing 250 to 499 users/devices (who don’t need any help from a Microsoft partner but still want to purchase perpetual licenses) now have the option of a greatly streamlined MPSA that requires no fixed term commitment.
Many organizations want the flexibility to acquire only the licenses they need, when they need them, and only pay for them as long as they are needed. In this case they can work with a Microsoft Partner like Navisite that has a Cloud Service Provider Agreement (CSP) in place with Microsoft.

Cloud Service Provider – consumption-based licensing

Working with a Cloud Services Provider (CSP) offers the ultimate in flexibility. The CSP’s clients can purchase and pay for the licenses and resources that they consume on a pay-as-you-go basis with month-to-month consumption-based billing. For example, a retail business needs to scale up for holiday shopping periods. By working with a CSP, retailers can scale up just the needed resources and licenses and only pay for what was consumed during the holiday period. When those additional resources and licenses are no longer needed, it is easy to scale back down. When resources are shut off, the meter stops running.
While pay-as-you-go is the ultimate in flexibility, it’s not always the most cost-effective way to buy and allocate resources. The act of migrating on premises applications to the cloud affords both opportunities to save money on licensing – and to spend too much on licensing. For this reason, working with a cloud managed service provider can bring real, tangible benefit when it comes to navigating and choosing the optimum software licensing strategy. Navisite’s Microsoft experts keep pace with the latest technology and license changes to make sure clients experience no unwanted surprises or unexpected charges.