Microsoft EA vs. CSP – Which is Right for You?

Software licensing can get expensive in a hurry. As the number of users in your organization starts to climb, you may find that your old methods of acquiring software and cloud services are no longer financially viable.

This software licensing issue may be a new problem for your company or one you've been wrestling with for years. Either way, understanding the two main options for licensing Microsoft software and services – Enterprise Agreements (EA) and Cloud Solution Provider (CSP) agreements – is essential to control this part of your operations.

We want to provide some perspective on both options and compare them side-by-side to help you determine which is best for you. While the CSP option is the newer of the two and has quickly gained popularity with many businesses, there is still room for the traditional EA in the right situation.

Let's take a closer look at this topic that can profoundly impact your bottom line and how your teams get work done daily.

If you have experience using Microsoft on an enterprise level, you're already familiar with a Microsoft EA. For years, this is how countless companies have licensed Microsoft products for use in their organizations. A Microsoft EA is likely your best bet if you need to access common software subscriptions like those in Microsoft Office 365, traditional infrastructure licenses, or utilize more advanced compliance or security functionality

A Microsoft EA delivers the most business value to organizations with 500 or more users or devices. The volume licensing program allows companies of this size to easily streamline their purchases under one agreement.

A standard Microsoft EA lasts for three years. At the start of that agreement, your organization determines what software and cloud services need to be licensed. Also, you set the number of users at the beginning of the agreement, which will impact the EA cost. A minimum of 500 users are placed on the EA option for a commercial operation and 250 users for a government entity.

The concept of an annual "true-up" is an integral part of the EA process. Once per year, you'll have the opportunity to true-up your agreement to align it with your current needs. In other words, you can adjust the devices, products, services, and users that Microsoft has included in your agreement annually rather than multiple times throughout the year.

SoftwareONE recommends an organization begin reviewing their Microsoft software, hardware, and online licensing purchases approximately 120 days before their contract anniversary date.

Throughout this review, Microsoft recommends an organization ask themselves a series of questions, including has your organization:

• Increased user or computer base in the last year?
• Made any new acquisitions?
• Clustered any servers or increased the number of servers used?
• Shifted to/from on-premises licenses to/from online services licenses?
• Reserved any online service subscriptions before utilizing them?
• Implemented any virtualized server or desktop environments?
• Deployed any desktop applications not used previously?
• Established warm or hot disaster recovery for any servers?
• Put any piloted products or applications into production?

Your organization should be prepared to submit your True Up order between 30 to 60 days before your anniversary date, as Microsoft requires.

Cost-savings have long motivated organizations to commit to the three-year term that comes with an EA. On the organizational level, accessing Microsoft products through an EA rather than just purchasing the software offers meaningful savings. Additionally, if yours is a large organization, the fixed pricing model of the EA may prove advantageous as your costs are spread out over three years.

Finally, a Microsoft EA empowers your organization with the agility to quickly meet your specific technology needs to be scaled to your business size and requirements.

With its business value, agility, and assistance from a Microsoft partner such as SoftwareONE, a Microsoft EA may be your organization’s ideal comprehensive licensing agreement solution.

The Microsoft CSP Program is a relatively new alternative to using a Microsoft EA to license your software and services. CSP represents an opportunity to work with Microsoft or a partner to secure the Microsoft products and services required by your organization. These agreements can come in different forms.

Smaller organizations (those with fewer than 3,000 employees) will derive the most value from CSP. There are no lengthy contracts and upfront costs, and it offers convenient monthly billing. Also, Microsoft CSP allows the flexibility to add or remove licenses as needed, which means you only pay for what you’re using.

While you’ll have access to the same Microsoft cloud offerings and Azure cloud services through a Microsoft CSP as with an EA, the experience is different. With a CSP, you'll look at a month-to-month subscription with a one-year agreement rather than a three-year contract. Gone is the need for an annual true-up since you'll be able to increase or decrease subscriptions monthly.

The CSP agreement will automatically renew yearly, but you can make changes with each new month. So, if your needs change regarding user numbers or you need to add a new product, you can do it immediately, and your agreement will adjust as necessary. This superior flexibility is often the first thing drawing organizations toward CSPs and away from EAs.

Another differentiating factor is the lower user number required to get started with the Microsoft CSP Program. The user requirement will vary based on the partner you work with for your agreement.

As you weigh your options and determine which of these two approaches suits your company, the discussion will often come down to flexibility and total Microsoft spend.

Microsoft designed the CSP program to be flexible, but it doesn't have all of the pricing advantages of an EA. The EA lacks the flexibility included in the CSP but may be a better budgetary fit in some circumstances. You'll need to weigh these two options carefully to determine which or a combination of the two is best for your company.

So, for those who value flexibility and need to keep their options open, the Microsoft CSP is undoubtedly a compelling path. A CSP offers you an efficient way to provide your teams with the software and services they require without locking your company into an agreement that might not make sense for your needs three years from now.

Alternatively, a well-established company with clear expectations for its long-term software needs may be comfortable with the three-year licensing agreement of an EA. There are price level discounts in an EA that Microsoft doesn't offer with the CSP, which is attractive for larger organizations.

Agreement Comparison Chart: Microsoft EA vs. Microsoft CSP

We created this handy comparison graphic to make it easier to see the differences between the two options:

As the chart illustrates, there are apparent differences between the two options. However, there are nuances to each option as well as subtleties within your business that may impact your bottom line. Partnering with an organization such as SoftwareONE can help clarify which option offers your enterprise the best business value.

It's nearly certain that you'll need support from a partner somewhere along the way. How you access that support and how your partner provides it will depend on which option you select. With the traditional EA, you'll work directly with Microsoft, and the level of support you receive depends on what you include in your agreement.

If you opt for a CSP agreement, you'll work with your chosen partner for support rather than with Microsoft. Some organizations prefer this model, as they can develop a close working relationship with the partner to ensure they meet all of their needs. What’s more, you may discover that a local partner will provide you with greater engagement and faster response times on tech and billing issues than you may receive from Microsoft.

When choosing a Microsoft Partner, there are several criteria you should consider:

Direct or Indirect Partner

A direct Microsoft Partner purchases products directly from Microsoft, which they resell to their clients. They also supply billing, provisioning, and support services. An indirect provider delivers billing and provisioning to the customer and technical support to the reseller. A CSP indirect partner makes it easier for a business to purchase the solutions they need over the long term from a vendor they trust.

A Dedicated Account Manager and Team Providing 24/7 Support

This ensures rapid onboarding, direction determining business goals, advice, guidance, and training on how to earn incentives back from Microsoft.

Automated Billing with Budgeting and Alerting Notifications

Automated billing ensures an error-free process, while budgeting and alerting notifications ensure predictable monthly invoices.

Depth of Experience as a Microsoft Partner

A Microsoft CSP partner should have established experience via a long-term relationship with Microsoft. They have the infrastructure in place to manage your accounts properly.

Value-Added Services in Addition to Licensing

Look for a partner who adds value to the licensing experience, including expertise in managing cloud spend, securing and backing up data to the cloud, and managing your software in the cloud, including consumption, tagging, and analytics.

We're not here to tell you which of these two options is "better." After all, both approaches can work well when applied to the right organization in the right manner. Your main concern is determining how an agreement can meet your organization's needs most effectively and at the best price. Whether that comes in the form of an EA or a CSP is secondary to ensuring you have the right software and services to move your organization closer to its goals.