Summary
Though after 20+ years of its existence, the governance and tooling are still in their infancy.
Microsoft's Service Provider Licensing Program, or SPLA, underpins almost every Microsoft license used in hosting environments. When you rent virtual machines from a service provider, or "cloud provider" or "hosting provider", those machines will most probably be licensed through SPLA.
The core issue haunting SPLA in recent years is the potential decommissioning and replacement of it with alternative licensing programmes. We don't know the true reasons why Microsoft no longer likes it. What we know is that incentives have stopped, revenue is not recognised, and Microsoft is actively pushing alternatives, directly and via its partners. The problem is, there is no direct alternative, and a complete migration means changing the foundations of how traditional hosting services work from customer relationship to compliance and billing.
At the beginning of 2026, the uncertainty around where the market stands on the issue and what it thinks about the future of SPLA became impossible to ignore. So we decided to do something nobody's done before – run an anonymous industry survey targeting the SPLA niche with all its complexities and complications.
Read the complete survey results on SAMexpert Pulse
The poll measured 23 different metrics and angles, and the most insightful findings aren't the individual slices but cross-tabbings between them. In addition to logical and expected observations, there are paradoxes, like providers that call SPLA strategic being the ones most actively diversifying.
Key observations:
82% of survey participants expect SPLA to remain at least relevant through 2028.
Despite years in existence, SPLA remains largely under-governed and under-tooled.
Zero respondents call SPLA services loss-making.
45% have undergone a Microsoft compliance audit in the past 12 months.
Cloud migration is not replacing but complementing SPLA; providers diversify risks and services.
And that's not all.
The reports of SPLA's demise are slightly exaggerated
Despite the narrative actively pushed by Microsoft and its reselling partners, the programme is reported as strategically important by the majority of the survey participants. Reiterating one of the key observations, 82% expect SPLA to remain at least relevant through 2028. 59% treat SPLA as central to their strategy.
One of the key problems with the complete replacement of SPLA is that there is no feasible alternative. Yes, providers can migrate to a complete Bring Your Own License infrastructure, and if they first sell those licences to the end clients, the overall marginality of bundled services may be sustained. Yes, SQL Server databases may be moved from SPLA to Azure Arc billing, and as with BYOL, if the provider is the Azure reseller, the bottom line may not suffer, at least directly. However, the dynamics of the relationship will have to change. The services would have to be reviewed. For example, short-term virtual machine rentals become nearly unfeasible with BYOL, where a subscription term is at least a year, as opposed to one month via SPLA. And any sane person understands that moving workloads to Azure is another quite drastic change in business, involving new risks such as a complete loss of clients to Microsoft's direct relationship. Thus, the survey has shown us a market that is entrenched and diversifying.
SPLA is profitable, and spending is increasing
Zero participants reported SPLA services as loss-making, with the caveat that 19% of respondents said they don't measure SPLA profitability in particular. We don't know the reasons (we did not ask this time), but it seems reasonable to assume that if SPLA were eroding margins, people running SPLA-dependent businesses would know it and they would have said so.
Are any providers decreasing SPLA spending? Yes, 20% reported active or planned decrease. However, the share of those whose contributions to Microsoft's financial success are growing is significantly higher - 43%.
Notable cross-tabulations:
Even in the 19% respondents that don't measure profitability, 63% are planning to spend more on SPLA licenses.
In the highly profitable group, half expect their SPLA spending to stay flat.
Unsurprisingly, nearly three quarters of service providers who plan to spend more on SPLA, see the programme as their core platform or a part of a hybrid strategy through 2028. They are invested in SPLA financially and technically, and plan to increase their investment accordingly. Amongst the 20% who expect to cut spending, over a third said that the value of SPLA for them is declining significantly. The rest of them still see it as a part of a hybrid strategy, or an enabler for specific, niche workloads.
In both camps – increasers and decreasers – strategic value and budgets are aligned.
Sentiments towards SPLA are mixed (with caveats)
There is what can be considered a paradox in the survey numbers. The providers planning to increase their spending in SPLA are, for the most part, the most negatively affected by Microsoft's policy changes.
Read the complete survey results on SAMexpert Pulse
Some of the survey's results seen in isolation don't tell the entire story unless the responses are cross-tabulated with other questions, and the graph above is a great example. One of our analysts even proclaimed in private, "the labels lie", however, the truth is in the middle, and more nuanced.
The natural human assumption that "strategic enabler" and "core business driver" mean higher commitment to SPLA, more spend, and more deployment, and the "necessary cost centre" is a negative driver, would fail you. Roughly three in five providers who call SPLA a necessary cost centre, deploy the most new workloads to SPLA. Those calling it a strategic enabler, deploy the least.
We analysed and observed other cross-tabulations with the proclaimed strategic value, and the most prominent thread is that those who spend the most, profit the most, and see SPLA is strategic, are also the ones most actively diversifying. There seems to be a divide at a much deeper level, between actively developing, better governed and efficient businesses that also seek hedging and diversification, and more laid-back slow movers that are content with the status quo, and see SPLA as a necessary cost centre.
This divide seems to be the best explanation for another paradox in the numbers – the effect of Microsoft's licensing policy and pricing changes. The impact on the providers is hardly disputed. Only 15% of respondents chose to say they feel no impact at all. What's interesting is that the ones from the strategically invested camp (as described above) report the strongest policy pressure and still stay, and even increase spend. Yes, they are also hedging but not moving away, but budgeting for the programme, in which Microsoft keeps raising the cost and tightening the terms.
Cloud migration and alternative licensing are not replacing SPLA
When we asked providers about their migration from SPLA over the past year, we bundled every alternative together. The subject, however, is not as simple as lifting and shifting virtual machines from providers' data centres to Azure and other hyperscalers. Migration from SPLA to alternatives is also happening inside the data centres, when virtual machines are moving nowhere, but licensing arrangements change.
To unpack this, let's go on a knowledge update detour.
SPLA is not a static programme
Over the past few years, Microsoft has reshaped the SPLA program in multiple ways. It gradually removed licences – Dynamics is a good example – from the list of eligible SPLA products. It withdrew the right for providers to use their own SPLA licences on the major hyperscalers, the so-called Listed Providers, with effect from October 2025, with a major impact on a number of SPLA providers hosting legacy desktop ERPs for their end customers on hyperscalers, including Azure. Microsoft offered no direct alternative, effectively making previously legitimate solutions non-compliant.
There have been changes to the SPLA agreement related to reporting additional customer details and submitting per-customer consumption report, which received a strong pushback from European providers, and the requirements as a result were relaxed, but not completely removed. The programme only seems static. In reality, it changes all the time.
Bring-Your-Own-License underwent a complete overhaul in October 2022. Flexible Virtualisation Benefit (FVB) extended BYOL to almost every product and every subscription license and allowed almost every provider (unless they use Listed Providers' infrastructure) to accept BYOL – the right previously limited to License Mobility and QMTH partners. FVB came with a hidden price tag, though. The previous programme had clear guidance on compliance verification. The new one left it to the providers, now often caught out during compliance audits conducted by Microsoft's appointed independent auditors from the Big Four.
Alongside these, Microsoft has offered financial incentives that steer providers toward newer models such as Azure Arc billing, and it has pulled back the incentives that once made SPLA attractive for resellers and distributors. Implementing Azure Arc does not require moving SQL Server database workloads to Azure. The instance remains on the provider's infrastructure, but the billing and licensing treatment changes from SPLA's monthly reporting model to hourly metering through an Azure subscription held by the end client. Under SPLA, the provider holds the licence, reports consumption, and bills the client as part of its own service. With Azure Arc, the end client needs an Azure subscription, billing runs through Microsoft, and the provider retains a commercial position only if it is also the Azure reseller. As you can see, it's not a like-for-like replacement, far from it, and it requires providers to restructure the entire service around it.
Readiness versus action
40% of respondents reported being ready to migrate workloads to the cloud at scale. However, only 14% have actually done so significantly in the past year. Readiness hasn't yet translated into action.
When we asked providers to name their barriers to cloud migration, we let them choose multiple reasons. The two barriers that came on top are both commercial: cost/profitability concerns and customer contractual obligation, tied at 51% each. Those ready to migrate at scale, also reported licensing uncertainty as a barrier.
Migrations may be driven by Microsoft's policies
Among the respondents who have migrated significantly, 83% report major impact from Microsoft's policy changes – the highest of any migration group. Whether that's the actual driver is impossible to establish from the survey clearly, but such a conclusion could be drawn, especially if you consider the other groups: limited migrators report mostly moderate impact, and non-migrators are the least affected.
The paradox of profitable migrators
The most profitable SPLA providers migrate most actively. It may be counter-intuitive, but it aligns with our general observation already stated above, but worth reiterating here. By looking at the survey as a whole, we observed the divide between high-margin quick movers actively diversifying and hedging and the more laid-back providers happy with their status quo and not actively investing time and money into governance, tooling, and platform diversification.
Migrating to the cloud and alternative licensing models does not mean leaving a falling business or abandoning a "inefficient" and "outdated" licensing programme. Half of the significant migrators call SPLA a core business driver – the highest share of any migration group. They are adding alternatives alongside SPLA, running multiple licensing models simultaneously across the same infrastructure, plus investing in cloud options.
The governance gap is concerning
Our survey's results have also brought into the spotlight the issues well known to practitioners, but that nobody's ever truly measured. Despite over 20 years of SPLA's existence and recurring compliance audits, its governance and dedicated tooling coverage are yet to leave the nursery. But how big is the gap?
Ownership: called strategic, staffed as an afterthought
Only 15% of respondents have a dedicated SPLA team, and they outperform the rest of the market on every dimension the survey measures. Seven in ten in this group achieve margins above 20%. They report the highest compliance confidence, the strongest governance, and the best dedicated tooling coverage.
The other 85% delegate managing SPLA to whoever is closest – in-house licensing managers, operations teams, service managers - none of whom have SPLA as their job description. In this group, 47% handle programme governance ad hoc. Nearly half the market does not appear ready for compliance audits (45% of the respondents underwent one in the last 12 months), and has a weak handle on client billing and SPLA reporting.
Even among those calling SPLA a "strategic enabler" (42% of the respondents), half have ad-hoc governance, only a quarter have a working and tested governance plan, and a fifth use fully manual reporting. Two thirds of the "necessary cost centre" group (31%) handle governance ad hoc, and close to a half report SPLA consumption manually as well. Only the "core business driver" group (17%) does not report manually – they use some sort of automated reporting – and over a half of them have a governance process they keep current.
Confident, but on what evidence?
21% of the survey respondents are "very confident" in their compliance position. There are visible correlations between their confidence and how they manage SPLA:
56% of them have current and tested governance plan.
77% use dedicated reporting tooling: 44% use internally developed solutions, and 33% have a specialised commercial tool.
The picture however is not as pristine as it may seem. There is a potential factor that affects current confidence. 78% of this group have been recently audited by Microsoft. A provider that has just undergone an audit, has been presented with a compliance report and a mitigation plan, and has resolved its non-compliance one way or another (or was found compliant already). Their numbers are recent, the effect is fresh. Such momentary confidence degrades in time if not supported by strong governance and specialised tooling.
Nevertheless, the trend continues down the confidence ladder:
Amongst the moderately confident respondents, only 27% manage governance with a good plan, and tooling approaches are spread evenly: some have commercial tools, some depend on internal solutions, and the rest are defaulting to Excel spreadsheets or other manual methods.
Not highly confident providers have even higher rates of manual reporting (64%) and ad-hoc governance.
Those who are unsure of their compliance position handle governance entirely ad hoc (100%), though they do not report manually.
The correlation is not linear, neither it is polished, but it is one of the sharpest in the survey.
Mildly concerning, 51% of all respondents have no purpose-built reporting tool of any kind. This number speaks for itself, and any expert comment here would only restate the obvious. However, the situation is not hopeless, as 71% of the not-highly-confident group and 40% of the moderates are pursuing tooling improvements.
The grassroots spoke. Hear! Hear!
Despite the challenges, the outlook for SPLA is positive. Unless Microsoft decides to shut the program down by flipping the switch without consulting with the grassroots – which they may, because they can – SPLA otherwise is not going anywhere. 82% of the survey participants expect the programme to remain relevant through 2028. The spend is growing. Nobody reports losses.
Yes, the governance gap is mildly concerning, but it's being noticed, and providers are at least planning to do something about it. The vector on closing the gap is positive.
For the first time, the SPLA market has a mirror. What it does with the reflection is the subject of the next survey in 2027.
Read the complete survey results on SAMexpert Pulse