5 Benefits of Using a CSP for Microsoft® Cloud Consumption
Your enterprise is building a roadmap to move applications to Microsoft® cloud services, both M365 and Azure. How will you determine whether to utilize an existing (or new) Enterprise Agreement (EA) for licenses, or purchase through a Cloud Solutions Provider (CSP)? This blog provides some questions to ask yourself along with some of the benefits for utilizing a CSP over an EA agreement.
1. Enterprise Agreement (EA) Changes
Microsoft has made some significant changes to the use of Azure consumption within an EA. As of October 1, 2019, an enterprise customer that has not previously purchased Azure consumption through their EA can no longer use their EA for these services. The options for these enterprise customers are to utilize a CSP for Azure consumption, or to sign a separate Microsoft Cloud Services Agreement directly with Microsoft. The benefits of utilizing a CSP rather than a second Microsoft contract can be weighed by some of the additional points to follow.
2. Hybrid Benefit Changes
As recently as January 2019, Microsoft was offering up to an 80% Azure Hybrid Benefit when utilizing EA licenses for Windows Server Operating Systems on Azure virtual machines. This has gradually decreased over the past twelve (12) months to up to 40%. The trend is that this benefit will continue to decrease for currently supported operating systems, and will only remain when extending the supportable life of operating systems that have reached End of Support (Windows Server 2008, for example). For virtual machines that run workloads at a consistent level, there is a far greater benefit to purchase through a CSP and utilize Reserved Instances. Reserved Instances provide a savings of approximately 70% over pay-as-you-go, and as of September 1, 2019, can be paid for monthly with a minimum annual commitment.
3. Licensing Flexibility
For anyone that has been involved with a Microsoft EA, you know that there are substantial minimums that must be met and maintained for the life of the contract. Therefore, if your organization falls below the thresholds, an EA is not an option. The other benefit of utilizing a CSP is that users and licenses can be changed at any time, and costs will adjust accordingly. An EA only allows for licenses to be increased during the life of the agreement, but reductions can only be made on the anniversary date. The reductions can only be made as low as the program minimums. For example, if your organization signed an EA for 600 users in January 2019, and during the year reduced the user environment to 400 users. At the January 2020 anniversary date, user licenses can be reduced to 500 users, the program minimum, resulting in paying for 100 unused licenses. A CSP can provide licensing for as low as one user, though most would have some level of minimums but much lower than 500.
4. Billing Flexibility
Building on the previous point of licensing flexibility is billing flexibility. Similar to the user licensing minimums, there is also a contract minimum amount associated with an EA. In addition, the EA could have requirements to maintain software assurance and support plan levels that will increase the cost of the contract. An EA is usually a three (3) year contract and if there is a substantial change in organization size or spending habits, there could be some financial concerns associated with the EA. CSP agreements generally provide more flexibility in billing. Allowing adjustments on a monthly basis with little or no penalty.
5. Support Through CSP
The final area to address is support. An EA requires the organization to provide first level support and purchase support from Microsoft for escalation. In this scenario, Microsoft is providing a level of contact for any issues that cannot be resolved by the organization. A CSP will provide a support contract along with licensing. The support provided by a CSP, in many cases, is more proactive with resource monitoring and security management. A CSP also has a built-in escalation agreement to Microsoft for additional support, if needed.
Situations where an EA would make the most sense. Though in many cases utilizing a CSP for Microsoft consumption would provide the most benefit to an organization, some areas where an EA may be the best choice could be:
- An organization with thousands of users where tiered pricing may be less expensive than CSP pricing. CSP may not be able to provide licensing for the same price, depending on the level of discount, but it may be able to be negotiated.
- An organization that has users under multiple affiliate companies. This can be taken into account and be a non-issue when using a CSP, but it may require multiple contractual agreements for each affiliate, depending on how the organization needs to account for each affiliate’s consumption.
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