4 obstacles to your successful SPLA business
As a provider, you're in business to make a profit. Of course, you are also on a mission to improve the world and create the most sustainable environment. But your business needs to make money to achieve its objectives. And in the Service Provider business, a few obstacles are in the way of making that profit.
1. You are undercharging for your services.
If you don't understand the structure of your licenses, if you're underpaying Microsoft unknowingly, you may be undercharging your end clients for the services you provide. If you don't see a clear picture of your inbound costs, how do you know if you are making a profit?
2. You are overpaying Microsoft.
We often see that providers are underpaying for some licenses and overpaying for others.
In almost every case, SPLA audits, and audit readiness exercises find both non-compliance and overpayments.
3. Audit penalties.
Non-compliance leads to penalties. A Microsoft SPLA audit is inevitable. If you haven't had one yet, start preparing for it today.
If an auditor discovers non-compliance, the penalties are hefty: 125% of the list price for all the under-reported licenses for up to 5 years backwards plus auditor fees.
4. Microsoft is using audit results to push Azure.
How? If your non-compliance is too high, Microsoft will probably pursue the penalties. It's their right. They want their revenue.
But if it's more or less a reasonable number, you may end up in negotiation: "Fine. We will forgive you this if you lift some of your end-customer workloads and shift them to Azure."
And that activity is especially prominent in regions where Microsoft deploy new Azure presences.
You may want to do this. You can continue your service provider business whilst using Microsoft data centres.
But do you want to? That is the question.
Do it now
Get your SPLA management under control.
Get a good understanding of your SPLA and non-SPLA scope.
Isolate different workloads and services into dedicated clusters.
Check your contractual compliance with SPLA.
Make sure you have all the necessary evidence for a SPLA audit.
If you'd like to know more, please send us a message. Our senior management will get in touch with you as soon as possible.
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We have specialised in SPLA for years and saved our clients over $500 million in audit fees and license costs.
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