The Economics of Microsoft’s Cloud Solution Provider Program: How a CSP Can Help You Generate Significant Savings
You’ve already decided to build your next great idea in the Microsoft Azure Cloud or to take advantage of a new feature with Microsoft 365, but a big decision still looms: What is the best way to procure these Cloud offerings? You have several options, such as EA, CSP, MPSA, Pay-as–you-Go, and they all come with implications in service and cost. Which direction should you choose? After looking at the alternatives, more and more clients are choosing the one that offers the most economic flexibility and cost savings - is to engage with a Microsoft Cloud Solution Provider (CSP).
For years, many larger organizations chose to engage with Microsoft through an Enterprise Agreement (EA). EAs allow you to buy Cloud services and software licenses under one agreement for a 3-year commitment. EA pricing is based on a scaled volume discount, so in general, the larger the size of your organization, the less you’ll pay for each license. At the onset of the agreement, Microsoft and your organization will work to estimate your needs based on number of users and/or an expected dollar amount of Azure consumption each year for those 3 years. At anytime in the agreement you reserve new cloud licensing or utilize new copies of the software that you are licensing. Then once a year you can “True Up” and add user subscriptions or software licenses without having to place individual purchase orders. And this once a year renewal time is the only time in the agreement year that you can “True Down” any licensing for the cloud that are no longer needed.
While the EA may work well when you have a growing need for resources, cutting back is problematic since you can’t recover those costs if you don’t use the estimated Azure consumption or if the number of subscription licenses you own was greater than the number of employees. Losing the flexibility to meet changing business needs is a major drawback of the EA, especially in a year like 2020 with the pandemic. That’s why many companies have chosen to partner with Microsoft CSPs and benefit from the cost savings of a much more flexible contracting agreement. Numerous mergers and acquisitions have found value in this flexibility.
Economic Benefits of Using a CSP
With an Enterprise Agreement you are working with one of 12 global Licensing Solution Providers (LSP) that Microsoft has allowed to transact the EA agreement. With the CSP, almost anyone can become a CSP. So choosing a partner who is a good fit for your organization becomes more important. You’ll want one that has extensive licensing and service capabilities to support your needs. The CSP provides a number of significant advantages, one of the most important of which is the amount of savings you can recognize – from license reductions to a more customized support experience with a partner that knows you well. This is why partnering with an expert CSP who knows your environment and organization is crucial. Learn what questions you should be asking a CSP.
One of the key benefits of CSP is the flexibility and ability to just pay for what you need. You are not locked into a defined number of users, so you can increase or decrease as your business demands with no payment penalties. You pay for what you license with no minimum requirements or long-term licensing commitments (A few CSPs ask for a one year or three year commitment).
This is a key financial benefit for you if you have a business with activity peaks and valleys. Without the requirement of a one-year upfront commitment, you can be extremely flexible with your workforce. As staff members come and go, you can work quickly with your CSP to add or remove licenses as needed. This is a cost-effective method of managing your Cloud resources. Customers with seasonal workforces, intern programs, or who are active in mergers and diversitures can benefit tremendously.
With Interlink’s CSP program, you are billed month-to-month based as opposed to an EA contract where you are required to pay upfront annually for the full year. The CSP model dramatically improves your cash flow since you are not paying a year in advance for services you may not use. Plus, as new technology is rolled out you can purchase for users as they have services turned on and not before.
Your costs for support are also more manageable and more closely tied to your usage with a CSP agreement. Both models offer support built into the licensing costs. With an EA, you would contact Microsoft general support, or you could purchase an additional annual Premier support / Unified Support contract with Microsoft on top of the annual EA cost. This is usually an expensive option, which start at $40,000+ per year. With the CSP program, you work with your Microsoft Partner for administration tenant level support that is built into the cost of the license or could buy a support program that can be tailored to your particular needs if you need to cover other workloads, i.e. end user help desk. Interlink also has the top level support agreement from Microsoft and utilizes it for their clients. This provides your organization the benefit of having a dedicated partner to help resolve issues to keep you up and running with fast access to Microsoft – so you limit the impact of technical issues.
How Interlink Can Help
When choosing between Cloud Solution Providers, there are a lot of factors to consider when selecting the best partner for your organization. So why Interlink?
- Interlink’s Service Desk Will Be Your Primary O365 Support Team with Access to Escalate Directly to Microsoft Tier 3
- U.S. Based — English is our primary language
- We know your account and keep detailed notes on your environment
- It’s likely that we helped your organization setup Office 365, so we know what third-party products may be in your environment that could be impacting Office 365. If we didn’t, we will include a no-cost tenant review at the start.
- Interlink is a Top Partner for CSP
- Top 20 in the US for CSP sales by systems integrators
- One of a few partners who purchase directly from Microsoft ensuring that we have the best pricing
- Microsoft Licensing Expertise
- We have four Microsoft Cloud Licensing Experts on staff to help you navigate the complexity of licensing.
- Our no-cost Licensing Health Check helps ensure that you are not overpaying for licensing (and most people are)
- Office 365 Administration: License adds, reductions, assignment, etc.
- Our billing department is based in Ohio — they know CSP licensing inside and out, including invoicing with detailed usage dates
- Requesting a change with licenses is as easy as sending us an email — we will promptly get back to you
- “Escalate to the Engineer”
- The same people that know your environment and performed much of your POCs, assessments, and migrations can be engaged for further diagnosis — all that information is stored and documented
This process can be challenging to navigate but Interlink is available as a resource to provide guidance or additional information to help with decision making. If you’re debating between a CSP and EA, contact us today to discuss your options, and we’ll give you the information that you need to determine the best option for your business.
Interested in learning more? View our similar blog: Microsoft Enterprise Agreement (EA) vs. Cloud Solution Provider (CSP) - Knowing Which is Best for Your Organization.
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