CSP Perpetual Licensing – Good or Bad?

Microsoft announced a new way for traditional enterprise clients the ability to purchase perpetual based licensing through the CSP program.

Historically, perpetual licensing fell into the Open Licensing or Enterprise Agreement bucket in which customers were offered volume discounts and software assurance benefits for Microsoft software they purchased.   A customer can still purchase under these programs, but it is clear Microsoft is heading towards CSP across all licensing programs.  You can read about it here (you will need a Microsoft account to sign in) https://partner.microsoft.com/en-us/resources/collection/software-in-csp#/

Is this a good thing?  I think it provides flexibility regarding who you purchase from and options for products you cannot move to the cloud.   This opens the door for VARs to sell into enterprise accounts that traditionally were only sold through the larger LSP resellers.   In addition, there’s no partner incentives or support included when an enterprise customer purchases licenses through an Enterprise Agreement or Open program like there is with CSP.  In a lot of ways, CSP makes a lot of sense.   So what are things that you should watch out for when looking at CSP over an EA?

CSP perpetual licenses are sold without Software Assurance (SA).  SA is a key ingredient if you want to move workloads to the cloud.  With CSP perpetual, this is an on premise solution as oppose to cloud.  That being said, under the same CSP agreement, you could buy Office 365 or Windows Server subscriptions which will allow flexibility for hybrid type environments.

The other thing to consider is upfront payments.  With traditional CSP, you are buying a subscription versus buying perpetual.  With CSP perpetual, you are paying upfront and you own that license.  There’s no minimum requirement and of course no maximum.   In short, this means there are no volume discounts.

There’s a lot more information coming with this new announcement.  We will certainly keep you updated.  I will be curious on your thoughts!  Drop us a note or leave a comment below.

Thanks for reading,

CSP Man

CSP Direct v Enterprise Agreements

Have an EA up for renewal and don’t know what to do?  Listed below is a brief breakdown of what you can get.  I like CSP Direct over an EA for a lot of reasons, the main being flexibility.  CSP Direct is like an a la carte model; you do not pay upfront for the whole year.

CSP Direct

  • 1 – year commitment
  • Pay as you go versus yearly.
  • Minimum 20 seats
  • Ability to fluctuate user counts
  • Account support – Partner provide support as well as leverage their Premiere Support agreement with Microsoft at no additional costs.
  • Decrease user counts
  • Increase user counts
  • Products – all cloud subscription licenses
  • Self – Service – Partner (LAR) will provide a platform to manage your subscriptions

EA

  • 500 seat requirement
  • 3 – year commitments (annual billing)
  • Annual true ups
  • Microsoft credits
  • Support – basic support (additional for premium)
  • Decrease – once per year. Cannot decrease perpetual products or reduce your O365 subscriptions below your original commitment
  • Increase user count – Anytime
  • Products – All Microsoft Products.
  • Self -Service – O365 portal and VLSC

If you are under SPLA, CSP Indirect may make the most sense to reduce your costs.  Check out www.mscloudlicensing.com to learn more or www.splalicensing.com 

Thanks for reading,

CSP Man

Common Terms for CSP Resellers

Licensing is always confusing, ensuring you receive incentives can be just as complex.  You are already selling the Microsoft Cloud, you should get credit for it.  Below is a list of terms you should be aware of and understand what each one means.

DPOR


Digital Partner of Record (DPOR) associates servicing partners to a Microsoft cloud
subscription. It is an on-line capability to attach a partner to a customer’s Microsoft online subscription. Partners can qualify for competencies and incentives by being the
DPOR and enables them to help customers optimize their usage for desired business
outcomes.


PAL

Partner Admin Link (PAL) enables Microsoft to identify and recognize partners who
drive Azure customer success.  Optimized for managed services where your organization is acting on behalf of the customer, PAL allows you to associate your MPN ID with the credentials that you use to deliver services within the customer’s Azure tenant. Microsoft can attribute influence and Azure consumed revenue to your organization.


CPOR

Claimed Partner of Record (CPOR) Online Services Usage Incentive program (OSUM365)
for Microsoft 365. CPOR enables you to create customer associations,
measure your impact, and get rewarded for successfully driving usage with your
customers

Cloud Solution Provider Indirect Reseller Incentive


Designed to reward indirect reseller partners for driving Cloud Solution Provider
revenue to end customers, with a focus on customer adds and strategic cloud
products and solutions.


Eligibility:

• Active MPN ID
• CSP Indirect Reseller
• Silver or Gold: Cloud Platform, Cloud Productivity, Small & Midmarket cloud solutions,
• 11 Competencies qualify for the CSP indirect reseller incentive
• Bank & Tax profiles


Incentives:
• 4% on O365, M365 & Azure billed revenue
• 6% on D365 billed revenue
• 10% on Azure Reserved VM Instances (RIs) consumption
• 1.25% on Software in CSP subscription billed revenue
• 6% on Strategic Software in CSP subscription billed revenue
For more information see the FY20 CSP Indirect Reseller Incentive Guide

New Website for CSP’s and Service Providers

One thing that we can all agree is Microsoft licensing is complex. Over the years, many organizations have asked for more in depth analysis and easier to read use rights. From this feedback, we created a new free website dedicated to helping SPLA and CSP partners understand the different program options and use rights available to them. The new website is www.mscloudlicensing.com.  The site includes:

Document Library: Easy to read whitepapers on licensing and best practices. What really happens in an audit? How are other service providers handling CSP and Azure? AWS licensing? https://mscloudlicensing.com/document-library/

Forum: Experts always review and answer your licensing questions. https://mscloudlicensing.com/forum/

Articles:  Most of the splalicensing.com articles you are used to reading and many more on CSP, Azure, AWS, and other cloud providers.
https://mscloudlicensing.com/subscription/

Hope you find it helpful!

CSP Man

The CSP Sales Motion

Here are a few guidelines to follow if you have an Enterprise Agreement with Microsoft and looking to decide whether or not to renew or work with a CSP partner to help you with your licensing needs.

Enterprise Agreement

The EA is a legacy program by Microsoft and in the current licensing world in which we live, is designed for organizations who are the largest and most complex environments.  In most of these customer situations, there are amendments, exceptions, and additional terms that need to be negotiated.  If this is you, a CSP model is probably not ideal for your situation.

Other hot buttons that will help you make the case to sign an Enterprise Agreement

  • All affiliates to be included in one agreement
  • Multi-tenant solutions
  • Fixed price requirement for 3 years
  • Existing agreement with existing licenses that will qualify them for discounts such as “From SA” or “Add-On” licenses

Cloud Solution Provider Program

The CSP program is designed to help customers move to the cloud.  The case for CSP can be summarized this way  – how dated is it to buy software that you have yet to deploy?  Many organizations make upfront commitments for licenses they will never use to get a better discount.  CSP is a program that supports pay as you go and deploy (or use) with little commitment.  Why pay for something that you haven’t used?

Other hot buttons that will help you make the case for CSP:

  • Less than 500 USL licenses
  • Partner requirement to help deploy and manage
  • Fluctuation in user count
  • Simplified workloads
  • Pay for consumed services (Azure) on a monthly basis

Without question this post is a generalization, but hopefully it will give you an idea of what to look for and questions to ask if you are signing a new agreement.  CSP or EA, it doesn’t matter, Microsoft still gets their fair share.

Thanks for reading,

CSP Man

 

 

The New Microsoft Cloud Agreement

In this article, we will provide a short brief on the changes to to the Microsoft Cloud Agreement (MCA) and what it means for all Cloud Solution Provider subscriptions and licenses paid in full.

What is the MCA?

MCA is the end customer agreement for CSP.  It details all applicable use rights and governs the end customer’s use of Microsoft cloud solutions.

How often does it change?

Agreement terms are published yearly.

Does Microsoft provide it directly to my end users or is it something I need to provide?

MCA is always provided by the CSP provider, not Microsoft.

What’s new?

Downgrade rights are now available for CSP customers permitting customers the right to install previous versions.  Similar to SPLA, the use rights that are in effect when the customer orders software will apply to the customer’s use of the version of the software that is current at that time.  All future versions, the use rights that were in effect when the products are first released apply.   In addition, customers can now transfer licenses that are fully paid (perpetual licenses) to an affiliate or third-party due to merger or a divestiture.

Any gotchas?

Microsoft has the right to verify compliance.  If unlicensed use is 5% or more, the customer must reimburse Microsoft for the cost of the audit and acquire the additional licenses owed for the bargain price of 125% more than the actual price.  Similar to SPLA, they can use independent auditors and contractors to determine compliance.

Does the MCA ever expire?

No.  The existing agreement remains in effect until the termination or renewal of the customer’s subscription.

My customer accepted the prior MCA terms.  Do I need to have them sign this new one?

If the customer is not creating new subscriptions, no.  The terms of the existing MCA continue to apply.

Are there templates I can use?

Yes. Go to the Microsoft partner center for details.

Does my customer need to sign off on this?

They have to agree to it but not sign it.  Similar to the End Customer Terms and Conditions in SPLA, you must make it available to your customers.   As part of CSP, I would make it part of your overall managed services agreement.

Where can I get a copy?

You can get a copy here

Thanks for reading,

CSP Man

 

 

 

 

 

 

 

How to License Azure in CSP

In this article, we will explain how Azure works in the CSP program.

Azure can be sold through various channels and programs.  If your company would like to purchase Azure, you can continue to purchase through a volume licensing agreement. If you’re a hosting provider and you would like to leverage Azure as your datacenter provider, you can also purchase it through volume licensing leveraging the Microsoft Hosting Exception found in the Online Services Terms (OST).  Last, if you are a solution provider, you can resell Azure to your end customers through the Cloud Solution Provider (CSP) program.   Let’s highlight how this would work operationally with links to the appropriate documents you should be aware of.

Azure in CSP Direct (Tier 1)

  • The end customer is the licensee.  They are the one to sign off on the Microsoft Cloud Agreement and follow the Online Services Terms.  They would also sign your own support agreement with the customer with SLA’s and other terms.
  • The CSP provider is the reseller.  As a CSP, you will sign the Cloud Reseller Agreement.  Your responsibility is to resell the licenses to your end customer, provide the support for the consumption, and provide proper billing services.
  • CSP is the reseller in this model, each end customer would be required to have their own Azure tenant.

Azure in CSP Indirect (Tier 2)

Same rules apply as above, however the Tier 2 provider would provide the platform and support for CSP.  The managed service provider (or reseller) would be responsible for the billing and overall management of the end customer.

Azure in SPLA

If a service provider would like to run a multi-tenant hosted solution to their end customers, they could leverage SPLA for all user based applications and Azure through the volume licensing Hosted Exception found in the Online Services Terms.

Thanks for reading,

CSP Man

Multi-Channel Partnerships…Good idea?

CSP by its nature is designed to provide different licensing and support options for the channel.  In this post, I want to highlight a couple of those options and how you can partner with other CSP providers to satisfy your end customer.

According to the Microsoft Cloud Solution Program Guide, the CSP direct partner must invoice the licenses directly to the end-user.  That’s fine in many instances, but what happens if you have customers globally, but only authorized in the USA?   In other words, if you are authorized in US, but have a customer in Australia, how can you resell CSP to that end user?   In walks our friend ‘Multi-Channel”.

Option 1: The end customer in Australia could set up shop in the US and use an US address to receive licenses leveraging your CSP USA authorization .  The problem with this (especially in Australia) is latency issues and billing.  The address on the invoice is where the datacenter location will be but the users will still be in Australia.

Option 2:   The CSP authorized reseller in the USA could partner with a CSP reseller in Australia to procure the licenses.  In this model, the USA CSP partner would provide all the support for their Australian customer, but another partner would provide the licenses.

I like option two the best.  Most MSP’s and other solution providers do not make money from the licensing, they make money from supporting the solution.   Leveraging another partner will take care of the customer and both parties will be happy.  What do you think?  Is Multi-Channel a good idea?

Thanks for reading,

CSP Man

 

 

CSP Rules for International Billing

Disclosure – There are always updates and revisions to every licensing program.  This blog is for educational purposes and will update accordingly. 

CSP is one of the few programs (outside of SPLA) in which end customers have access to Microsoft technologies but really don’t know how they are licensed.  In the end, that’s one of the values of outsourcing your IT management to a CSP provider.  If a CSP provider is doing their job, the end customer shouldn’t know that they are buying CSP.  All they should know is they are buying a managed service.  The rest is on you, the CSP provider, and with every other Microsoft program, there are rules you must follow to maintain compliance and make CSP as seamless as possible.  In this article, we will look at how billing works internationally.

The first thing to remember is you can only sell to customers in your region/market.  The good news?  There are several countries per region.  In other words, if you (as a CSP partner) have an account in a country, you could use the account for every country in that region.  As an example, if you have an office in the UK, you can transact with a customer in Italy because by Microsoft’s definition, Italy and UK are in the same region.  What happens if you are not authorized in your customer’s region?

Let’s provide an example.  Manage IT Services is CSP indirect authorized provider in the US.  They have an end customer who wants to switch from their current provider in Australia.  The existing domain is attached to the customer’s local physical address in Australia.  How can the Manage IT Services support this customer?

They have three options:

  1. If they are CSP authorized in Australia, they can manage it from their Australia office.  CSP is regionally authorized, so a transaction via the partner portal (in country) would be required.  The customer’s invoice location listed on the AU tenant would also mean the CSP partner would also have to be listed as a CSP provider in region.
  2. If they are not CSP authorized in Australia, they can partner with another CSP partner in AU.  The CSP partner would provide the licenses, Manage IT Services would provide the support.   This is not a very viable solution for several reasons (explanation further in this article).
  3. Have the end customer use a physical US address (if they have one).   CSP is a monthly contract, so they could discontinue the AU tenant and start a new one in the new location.  They would have to prove to Microsoft they in fact do have a US location.  The problem remains that they are in Australia.  There would be concerns over latency issues and support due to challenging time differences.

To sell into different markets outside of your own, your organization must create multiple accounts.  Like other Microsoft programs, they require a physical address.  In the case of CSP, the physical address must be attached to each domain.  In the example above, the end customer has a domain tied to their AU location, making it very challenging for the US provider to transact CSP.   If you are a service provider who operates globally, you might want to consider becoming CSP authorized in other regions.

I mentioned earlier that a CSP provider in the US can partner with another CSP partner in Australia to manage the licenses.  There would be a two-step process for resolution support.  The local partner in Australia would have to be listed as an additional delegated admin on the end customers tenant to be able to escalate to Microsoft for support.  The bigger issue is latency and time challenges.  To add another layer to this complex solution, the customer would receive multiple bills (CSP and you the MSP).  Sounds fun, doesn’t it?

Thanks for reading,

CSP Man

Office 365 Licensing Scenarios Part 1

 

This is a new series on csplicensing.com called “Office 365 Scenarios.”  The goal is to provide the reader with a licensing scenario for a typical Microsoft enterprise customer.  Enjoy!

 Scenario 1

 M & A Corporation is a large private equity firm with 500 employees worldwide.  They currently have the Enterprise CAL suite under an Enterprise Agreement.  They have one datacenter for mostly Exchange and SharePoint.

Current Needs

  1. Free up IT resources to focus on other projects besides managing a datacenter
  2. Identify a cloud partner to outsource their server environment.
  3. Senior executives need to have both On Premise and cloud solution for the same device.
  4. Find a collaboration tool to enhance communication between departments.
  5. Identify a solution for compliance and legal hold and email retention.
  6. Needed the solution yesterday and do not have time to wait for their agreement to expire.

Solutions

  • Issue 1&2 – Free up IT resources/Cloud Partner – The best way for M&A to free up IT resources without jeopardizing performance is to outsource their server environment to a third party.  Office 365 plan E3 provides SharePoint, Exchange, Office Pro Plus, and Skype for Business.
  • Issue 3On-Premise and cloud deployment for the same user- Office 365 has dual access rights.  This means that if an end user who has a USL (user subscription license) has the equivalent of an on premise CAL.  It does not include the server license.  If M&A wants to continue to run on premise workloads using the dual access right, they must own the server license.  Secondly, if they want decide not to use Microsoft datacenters for Office 365, they can use their Office 365 User SLs (as covered above) to access their servers deployed on third party shared servers/datacenters via License Mobility through Software Assurance.  Again, they would need the server license with SA.
  • Issue 4Collaboration tool – Transitioning to Office 365 E3 will give them access to Skype for Business Plan 2.
  • Issue 5Compliance and Legal Hold – Office 365 E3 will give them Exchange Online 2 which includes Legal Hold; archives email for more than 10 years.
  • Issue 6Agreement doesn’t expire. Since they have the ECAL, they can use the bridge CALs to transition from on premise to cloud for workloads not offered through Office 365 (Windows/SQL).

Thanks for reading,

CSP Man

Disclaimer

The purpose of this article is for informational purposes only.  The names are fictional and created by the author’s imagination.  Any name or resemblance is pure coincidental.