An Enterprise Agreement (EA) is the traditional way that customers have purchased their Microsoft licensing and is designed for companies with 500 seats or above that want to license software and cloud services for a minimum three-year period.
How does the Microsoft EA work?
With a Microsoft EA, companies can buy cloud services and software licenses under one agreement for three years.
At the start of your contract, pricing is based on a scaled volume discount system, meaning the larger the size of your organization, the less you’ll pay for each license. With regards to Azure, Microsoft will estimate the amount of consumption a customer will need for the first year.
Over the lifetime of an EA, once a year, you can add hardware, devices, or users with software and online services you’ve already licenced in a process usually known as ‘true-up’. You can do this without having to place individual purchase orders and note these changes in the annual process.
Scaling down can be more problematic. If expected consumption is not met by the end of the first year, then the deficit value is not recoverable by the customer. For Azure, the customer does, however, have the ability to “true down” this amount in year two, but this isn’t true of other Microsoft products.
The most flexible time to change the terms of an EA is at its renewal date, when you will have the opportunity to freely make adjustments based on current and future needs.
What is the Microsoft Cloud Solution Provider (CSP) program?
The Microsoft Cloud Solution Provider program is an increasingly popular alternative to EAs that drastically improves the flexibility of purchasing and managing software licensing and Microsoft services. Rather than a three-year commitment, stipulated by a Microsoft EA, Microsoft CSP is done entirely on a month by month basis. This enables customers to add or take away licenses as needed, so you only pay for what you actually use.
How does the CSP program work?
Through the CSP, you have a partner engaged from day one who will have knowledge of your environments, architecture and configuration as well as supplemental support of non-Microsoft technologies and third-party ISV’s.
Microsoft partners like Ensono manage the client relationship through support and managed services. Customers pay a predictable monthly bill through the partner based on their exact usage of Microsoft cloud services, such as Azure and M365 and D365. The relationship is governed by Microsoft’s strong service level agreement which defines the crucial aspects of the service like quality and availability between the service provider and the customer.
Greater flexibility afforded by the CSP program means organizations can save significantly both in the short and long run. While for very large organizations the discounts in CSP are not always as large as the ones available through the EA program, Azure costs are usually on par, and more importantly, there is no up-front commitment; CSP shifts what is essentially a capital expenditure into an operational one. You just pay for the licences that are required at any given time and can drop or add new users as you see fit.
In addition, through the CSP program, Partners can give their clients support through Advanced Support for Partners (ASfp) or Premier Support for partners (PSfp), which replaces the need for the client to purchase their own Premier Support contract which would otherwise be an added outlay with an EA. With CSP, customers benefit from a dedicated team that knows you and your business, so you never have to explain your problem from the beginning every time you need support.
The CSP program is a great option for organizations that desire the powerful features of this model, and also want their MSP’s support relationship to extend to Azure and M365 and D365.
What are the differences between the two?
The table below breaks down the main differences between Microsoft’s Enterprise Agreement and its Cloud Solution Provider program.
What advantages does CSP have over EA?
The CSP program has three major advantages over an EA:
Flexibility – CSP is dramatically more flexible, given that there is no large upfront cost and the contract can be cancelled at any time. EA contracts by contrast, anchor organizations to a commitment of three years.
Cost – more restrictive options for increasing or decreasing licences mean that it’s very easy to end up overpaying if there are sudden and unexpected shifts in demand. The fixed term of the EA contract can also contribute to significant avoidable costs, as can support charges.
Support – while EA does include a basic package of 24/7 support from Microsoft, CSP provides additional hands on support from a partner like Ensono. The knowledge your partner will have of your environments, architecture and configurations, as well as supplemental expertise, can prove to be extremely valuable.
With CSP, premier support is often included, and this offers the fastest response times and critical situation support for pressing cases. Support is also usually cheaper when compared to the fixed cost per VM model because it scales up and down based on overall Azure consumption and because of a reseller discount from Microsoft which some partners, like Ensono, pass onto the customer.
Which is right for you?
If you’re looking for a scalable solution that enables your organization to adapt over time, then it’s best to choose the CSP program. CSP lets you add or remove users and products instantly and you only pay for the licenses you use. By contrast, an EA contract curtails your ability to change licence numbers over time, and typically costs more too.
EAs are well suited to organizations looking for a fixed price for licensing for 3 years and for those confident that they won’t need to make notable changes to licence numbers over the period. That said, even among organizations that do fit these criteria, there’s often a strong argument to switch to CSP for its superior flexibility and reduced costs.
Can organizations use both models?
Organizations can and do make use of both licensing models where appropriate. Companies can leverage CSP for the entirety of their cloud usage, or to just supplement existing licensing such as an EA.