Microsoft Enterprise Agreement vs Cloud Solution Provider program

In today's rapidly evolving technology landscape, we are constantly looking for ways to streamline "digitally transformed" operations and reduce costs. I wouldn't probably be terribly wrong if I said that choosing the right Microsoft licensing program for Microsoft products is one of the toughest challenges you face when you procure licenses and services. And so, we have the burning topic of "EA vs CSP".

Most organisations are used to buying licences through the Microsoft Enterprise Agreement (EA) route. But there are also other options, including the relatively new Microsoft Cloud Solution Provider (CSP).

Microsoft license resellers and Microsoft CSP partners, if they haven't yet approached you with CSP offers, surely will. Some will be pitching CSP versus EA, and they will come prepared. Will you be prepared too? 

Are you prepared to face the question, "How do EA and CSP compare? And what does it mean for me?"

Don't worry. We got you covered. Bookmark this page and come back when you need it. It's a live article.

Agreement Comparison Chart: Microsoft EA vs Microsoft CSP

Table 1. EA vs CSP

Is the CSP the New EA?

Certainly not. The two agreements are too different for CSP to simply replace EA. Their fundamental principles, economics, and even software licensing terms are different. You must consider all of it when you are forced to switch to CSP or decide to do it voluntarily.

It may be pitched to you as a viable alternative to EA, and for many organisations, it may be. The question is whether it's right for you. 

EA has volume discounts. CSP program does not, and getting a reasonable discount when you have over 2400 users (EA Level A/B threshold) may be challenging. 

EA has a fixed term and price protection during the term. CSP program does not have similar price protection, but when you add licences to an existing annual or 3-year subscription, you add them at the initial price. 

EA requires you to commit to "standardising" all users and computers, demanding you to stick to one set of products for every user or device regardless of alternatives. The CSP program does not require that; it's flexible.

EA locks you in for three years; you can renew it after that. In CSP, you have a mix of monthly, annual, and 3-year subscriptions that start and end at different times. It's an entirely different challenge for SAM and license managers.

As you can already see, CSP is not the new EA, not by a mile.

The Need for Flexibility and Cost Management

The need for flexibility and cost management is probably the main driving factor for considering CSP, if not to replace Microsoft EA entirely but at least to augment it. 

While EA always lasts at least three years, in CSP, you have a choice of shorter-term subscriptions: one month and one year. If you need "elasticity" in your numbers, you may, for example, procure CSP licences on top of your "stable" EA quantities. Please pay attention, though, and consult with an expert on whether EA allows using non-EA licences for a particular product. It's not always permitted.

But as we discuss cost management, please remember that monthly subscriptions have no price protection and are 20% more expensive than annual subscriptions. So use them wisely. Sometimes, you may be better off reserving additional EA quantities.

Also, please be careful with 3-year CSP subscriptions. While they offer price protection, they have a significant drawback. Unlike in EA, annual right-sizing (reduction of licenses) is not permitted. Plus, they have no spread payments. You pay 100% upfront.

Value-Added Services in Addition to Licensing

One of the CSP program's most significant advantages is the value-added services available in addition to licensing. Strictly speaking, that is the main idea of CSP – to switch your mindset from "what licenses do I need" to "what services will help me run my business". 

And Microsoft did a good job. Very few end clients like you research CSP. It is "taken care of" by your trusted outsourcer – Cloud Solution Provider. It becomes pronounced if you look at Google search trends. EA still outperforms CSP on licensing queries. In fact, I should feel lucky that you have even discovered this article.

But scepticism aside, if executed properly, it's a win-win-win. Microsoft gets less headache selling and supporting licences. They also move the first line of defence against requests for discounts to their partners. Let the partners deal with negotiations!

Microsoft CSP Partners get a direct "value-added truster outsourcer" relationship with the client (with you). That kind of relationship tends to be more long-term than old-school license reselling. You know, "support", "looking after", "tailored services", and all that jazz and cuddly feelings.

And there's even a win for you. If you are comfortable with the price-per-value of your CSP partner's services, your license management headache is on them now. If they do their job right, you have one less complication to worry about.

Is Microsoft Enterprise Agreement going away?

Announcing the death of Microsoft EA may be too preliminary, even though such rumours have been circulating starting circa 2010. 

The only thing that has happened since then is the increase of the entry barrier to an EA from 250 to 500 qualified users. Industry expectations and rumours that the barrier will be raised to 1100 or even 2400 users haven't materialised. We can make no promises, however, as we are not Microsoft.

So, for the time being, EA is here to stay. 

But there is a trend worth watching. Microsoft approaches enterprises with direct Azure cloud services deals that work through the same agreement as Microsoft CSP – Microsoft Customer Agreement (MCA). Signing an MCA opens the door to further CSP expansion into large enterprises. And who knows, one day, they may start offering licenses through the same channel.

Is CSP right for you?

Here is when CSP is right for you, either as a substitute or as an additional option to EA:

• You need more flexibility with monthly and annual subscriptions for software and cloud services,

• You prefer value-added services from cloud solution providers with licenses included as opposed to pure licences,

• You like the monthly billing option as opposed to annual payments in EA,

• You don't need perpetual licences (they are "crippled" in CSP), and you are happy to procure everything on a subscription model,

• You are at peace with the fact that there are no discounts for large organisations (over 2400 users).

Is EA right for you?

If you are a large organisation with over 2400 users and even over 1000, we advise keeping your EA. Here is when EA is right for you:

• You want to benefit from programmatic discounts in EA,

• You want to stick to your traditional Enterprise Agreement Renewal Negotiation approach that still works nicely,

• You like the spread annual payments in EA,

• You benefit from [proper] perpetual licences,

• You need Software Assurance benefits, especially those with no equivalence in CSP, for example, BYOL on Amazon AWS, Google GCP and Alibaba Cloud.

EA vs CSP: It Never Hurts to Ask for an Expert Advice

Switching, even partially, from EA to CSP must be approached with care. Please be vary of the sweet salespeople's promises and assess your requirements thoroughly. Microsoft licensing is a stringent world where you must play by the rules established by the vendor. And as you hopefully learned from this article, CSP and EA are far from similar.

If you have any doubts, please let us know using the form below. We do not sell licences. Therefore, our advice is not influenced by our or anyone else's license sales targets. Your questions will be reviewed by a senior team member as soon as possible.