Your organization, like many others, may be deciding on a roadmap to move applications to Microsoft cloud services, O365, M365, and Azure. As part of this process, you need to determine a pathway from an existing Open or Enterprise Agreement (EA) for licenses, or purchase through a Cloud Solutions Provider (CSP). Here are the many benefits in utilizing a CSP over an EA or Open agreement for Microsoft licensing.
More granular control over licensing flexibility and minimums
A Microsoft EA has substantial minimums that must be met and maintained for the life of the contract. With an EA you can always True-Up your agreement, but it is very tough to True-Down. CSP solves that problem and can be as granular as monthly. So, if your organization falls below the thresholds, an EA is not an option for your organization and this adds an unsubstantiated cost year over year for your contract.
A benefit of utilizing a CSP is that users and licenses can be changed at any time, and costs will adjust accordingly. An EA only allows for licenses to be increased during the life of the agreement, but reductions can only be made on the anniversary date. The reductions can only be made as low as the contract minimums, which have increased to 500 users. CSP allows your organization to meet your changing business conditions; if you need to be leaner on licensing in difficult times or in a growth mode you can change licensing to easily accommodate the business needs and control spending. A partner like Peters & Associates can make the licensing changes you require, often in a matter of minutes.
For example, your organization signed an EA for 600 users in January 2019, and during the year reduced the user environment to 400 users. At the January 2020 anniversary date, user licenses can be reduced to 500 users, the program minimum, resulting in paying for 100 unused licenses. A CSP can provide licensing for as low as one user.
Open Licensing is no longer going to be offered for new or renewals and is expected to be GOING AWAY ENTIRELY IN 6 MONTHS. CSP is a flexible and more cost-effective mechanism for the licensing that you desire for your business, getting you the licensing you need when you need it, keeping you current and supported.
Billing Flexibility is Provided through Peters & Associates as your CSP
Similar to the user licensing minimums, there is also a contract minimum amount associated with an EA. Once you are billing, the Microsoft licensing becomes difficult to decrease your spending year over year. In addition, the EA could have requirements to maintain software assurance (SA) and support plan levels that will increase the cost of the contract. An EA is usually a three (3) year contract. If there is a substantial change in organization size or spending habits, there could be some financial concerns associated with the EA. CSP agreements generally provide more flexibility in billing allowing adjustments, depending on the licensing, on a monthly or yearly basis with little or no penalty.
Peters & Associates can support you through a CSP
An EA requires the organization to provide first level support and purchase support from Microsoft for escalation. In this scenario, Microsoft is providing a level of contact for any issues that cannot be resolved by the organization. A CSP will provide a support contract along with licensing. The support provided by a CSP, in many cases, is more proactive with resource monitoring and security management. A CSP also has the option of a built-in escalation agreement to Microsoft for additional support.
Enterprise Agreement (EA) Changes that restrict further investment with Azure
Microsoft has made some significant changes to the use of Azure consumption within an EA. As of October 1, 2019, an enterprise customer that has not previously purchased Azure consumption through their EA can no longer use their EA for these services. The options for these enterprise customers are to utilize a CSP for Azure consumption, or to sign a separate Microsoft Cloud Services Agreement directly with Microsoft. The benefits of utilizing a CSP rather than a second Microsoft contract can be weighed by some of the additional points to follow.
Hybrid Benefit Changes that offer savings, but over time will be decreasing the discounts
Microsoft does offer an Azure Hybrid Benefit when utilizing EA licenses for Windows Server Operating Systems on Azure virtual machines. So you can use your EA licensing in concert with the CSP licensing for Azure consumption. This has been gradually decreasing over time, but it still offers substantial savings. The trend is that this benefit will continue to decrease for currently supported operating systems, and will only remain when extending the supportable life of operating systems that have reached End of Support (Windows Server 2008, for example). For virtual machines that run workloads at a consistent level, there is a far greater benefit to purchase through a CSP and utilize Reserved Instances. Reserved Instances provide a savings over pay-as-you-go, and can be paid for monthly with a minimum annual commitment.
There are some cases where an (EA) Enterprise Agreement may make the most sense for your organization:
- An organization with thousands of users where tiered pricing may be less expensive than CSP pricing. CSP may not be able to provide licensing for the same price, depending on the level of discount, but it will come in a similar price range.
- An organization that has users under multiple affiliate companies. This can be taken into account when using a CSP, but it may require multiple contractual agreements for each affiliate, depending on how the organization needs to account for each affiliate’s consumption.
Whether you decide to enroll in an EA or CSP, Peters & Associates can help. Our licensing management structure provides an overview of your licenses, identify risks and opportunities, and flexible pricing. We will also help you chose the Microsoft licensing type that is best suited for your business goals. Contact us today at email@example.com for help managing your licenses throughout product lifecycles!
To learn more about CSPs and Microsoft Licensing, check out this blog from our partner at Interlink.