Microsoft Enterprise Agreement (EA) vs. Cloud Solution Provider (CSP)

The Microsoft Enterprise Agreement (Microsoft EA) was once the contract model for large companies with over 500 workstations. However, the complex three-year agreement is increasingly being challenged. As cloud-based services like Azure and Office 365 become the norm, large enterprises are changing the way they buy products and looking for more flexible licensing options. The Microsoft Cloud Solution Provider (Microsoft CSP) Programme could be the answer.

The right choice is critical in business, but sometimes it is difficult to make the best decision for the business. This is also the case when it comes to contracting services for Azure and other Microsoft cloud services such as Office 365. For many years, companies signed an Enterprise Agreement (EA) directly with Microsoft. Now, however, there is a new option called Cloud Solution Provider (CSP). Here, companies sign a contract directly with a certified Microsoft partner.

Both offer similar services and similar prices. So how do you decide which is the right choice for your business? Below we take a look at the two types of contract in several key areas.

A Microsoft EA is a three-year contract and requires that at least 500 licences are purchased at any one time. For Office 365, the most commonly purchased licence option, the sum of all options (E1, E3 and E5 licences) is the total licence amount. Customers pay upfront for the entire year at once, which is initially unexpected for a cloud service. Usage licences added during the year are due for payment on the next annual billing date. Purchase volumes can increase at any time during the year, but can only decrease by giving notice 30 days before the annual billing. For example, if a company decreases the number of licences used in the first month after the annual billing, the licence may still be due for payment for another 11 months.

Microsoft CSP licensing is based on a monthly subscription and a contract with a Microsoft CSP partner. There is no minimum purchase obligation. Each licence used stands on its own. Customers pay monthly or, to simplify processing, annually. The purchase quantity can be adjusted at any time.

Microsoft EA

Microsoft recommends the Enterprise Agreement to large companies when

1. there is a need within the enterprise to negotiate contract terms with Microsoft based on purchase volume.
2. affiliated companies need to be included in the contract.
3. the company needs a 3-year fixed price for software and subscriptions for easy calculation within the company.

Microsoft CSP

Microsoft recommends that enterprises tackling their 3-year EA renewal take a closer look at CSP licensing options for Azure usage, Microsoft 365, Office 365 and EMS subscriptions, if

1. the company falls below the threshold of < 500 licences in the next period.
2. the company cannot predict the annual Azure usage and the number of subscriptions in Office 365 or Microsoft 365.
3. the company is at the beginning of using Azure, Office 365 or Microsoft 365 and cannot or does not yet want to provide all services to every employee.
4. the company needs a partner as a consultant for the implementation project and to provide customised support.