Microsoft CSP vs. Enterprise Agreement
- Flexibility: CSP offers month-to-month billing, while Enterprise Agreement requires a multi-year commitment.
- Pricing: CSP typically provides pay-as-you-go pricing, while Enterprise Agreement offers discounts for large volume purchases.
- Management: CSP focuses on smaller businesses, and EA is for larger enterprises with dedicated account management.
- Licensing: CSP supports smaller deployments; Enterprise Agreement is tailored for large-scale deployments.
Microsoft CSP vs. Enterprise Agreement: Key Differences
The decision between Microsoft’s Cloud Solution Provider (CSP) program and the Enterprise Agreement (EA) can be crucial for organizations navigating their software licensing strategy. Each program has benefits and is tailored to different types of businesses based on size, scalability, flexibility, and long-term IT strategies.
Understanding each program’s core characteristics, pricing models, support systems, and overall flexibility can help you make an informed choice.
In this article, we will compare Microsoft CSP and Enterprise Agreement in-depth, helping organizations choose the best option for their needs.
Core Program Characteristics
Enterprise Agreement (EA)
The Enterprise Agreement (EA) is Microsoft’s traditional volume licensing model. It’s designed primarily for large organizations with 500 or more users or devices. EA has been a staple for large enterprises for many years and is favored by companies that require a comprehensive licensing structure with long-term strategic planning.
The EA requires a three-year commitment. Organizations must agree to an initial order, including licensing for their entire infrastructure needs—software and cloud services. This program is ideal for enterprises with predictable IT environments.
EA allows businesses to buy licenses in bulk, often at a discounted rate, which is ideal for companies with large-scale software deployment requirements. This pricing model can make EA a cost-effective option for enterprises.
EA provides significant customization opportunities, allowing organizations to tailor their licensing terms to their needs. This flexibility is particularly valuable for large enterprises that require specific terms and services based on their unique business environment.
Cloud Solution Provider (CSP)
Microsoft introduced the Cloud Solution Provider (CSP) program in 2015. This program represents a more modern, cloud-first approach to licensing. It gives businesses greater flexibility and scalability when purchasing Microsoft products and cloud services.
Unlike the EA, CSP does not require a three-year commitment. Instead, it offers more flexible subscription terms, ranging from monthly to annual, with businesses able to switch between these options as needed. This makes CSP an ideal choice for companies that need the flexibility to scale up or down based on real-time demands.
CSP involves direct interaction with Microsoft-authorized partners, which provides businesses access to support services, technical advice, and managed services. This partner model offers an added assistance layer, particularly beneficial for businesses with varying technical expertise.
While the EA covers traditional software and cloud services, CSP primarily focuses on Microsoft’s cloud offerings, such as Microsoft 365, Azure, and other cloud-based solutions. CSP best suits businesses looking to modernize their IT infrastructure and move to the cloud.
Contractual Structure and Terms
Agreement Duration
The EA requires a three-year contract, generally considered a longer-term commitment. Businesses with well-established IT infrastructure often use this contract and anticipate little fluctuation in their software requirements over the next several years. The fixed-term commitment offers predictability, crucial for large organizations managing extensive software deployments.
In contrast, CSP offers greater flexibility. Businesses can opt for monthly, annual, or three-year subscription terms, starting anytime. This evergreen model allows companies to adjust their licensing as needed, giving them more control over their software expenditures and enabling them to scale according to business fluctuations.
CSP is an excellent choice for companies that may be growing rapidly or facing uncertainty in the size of their workforce or IT infrastructure.
Price Protection
EA offers price protection for the three-year agreement for all products included in the initial order. This means businesses can lock in pricing for the entire period, helping them predict costs over the next several years. Price protection provides financial stability, especially for organizations with tight budgets or those that need to plan long-term investments.
In contrast, CSP provides price protection only until the end of each subscription period (monthly or annually). This means that while businesses can benefit from a fixed price for their subscription term, they may experience price increases when they renew or upgrade their subscription.
This offers less predictability for long-term budget planning but allows organizations to switch plans or adjust the number of licenses based on immediate business needs.
Documentation and Contracts
The EA’s structure is based on several official documents, including the MBSA, Enterprise Agreement, and Enterprise Enrollment. These agreements can be complex and tailored to meet the specific needs of large organizations.
The CSP program, on the other hand, uses the Microsoft Customer Agreement along with Product Terms documents. These are simpler than the EA framework and focus primarily on cloud services and subscription-based terms.
Pricing and Payment Structure
Volume Discounts
EA is known for its volume discounts, which are offered based on the number of licenses an organization commits to. The program offers four distinct discount levels (A, B, C, and D), with higher discounts awarded to larger commitments. This makes the EA cost-effective for large enterprises with substantial licensing needs. The more licenses you commit to, the more you save.
CSP does not offer predefined volume discounts. Instead, CSP partners may offer custom pricing based on their relationship with the customer, providing potential discounts or flexible pricing options. However, these discounts are not structured or guaranteed across the board, and each deal will vary based on the customer’s needs and the terms negotiated with the partner.
Billing Model
The EA uses an annual payment model. Organizations typically pay for their initial order licenses upfront or over a year. Additional licenses added during the year require upfront payment. This can help large organizations predictably manage their budgets.
CSP’s billing model is significantly more flexible. Depending on the customer’s preference, it offers monthly or annual billing and options to pay-as-you-go for cloud services. This allows organizations to control their cash flow more effectively, as they are not locked into large upfront payments. Monthly billing is especially useful for smaller businesses or those with fluctuating licensing needs.
Support and Management
Partner Ecosystem
EA support is typically provided directly by Microsoft or through Licensed Solution Partners (LSPs). While these partners offer expert advice and support, Microsoft is the primary point of contact. This can make EA support more rigid and less personalized than the CSP program.
One key benefit of CSP is the support provided by Microsoft’s authorized partners. CSP partners offer end-to-end support, including direct billing, 24/7 technical support, customized solutions, and simplified license management. They can also provide more tailored solutions and become trusted advisors for businesses looking to optimize their Microsoft investments.
Flexibility and Scalability
The EA has more rigid requirements, such as the minimum user count of 500 and the annual true-up process. Organizations are also limited in how much they can reduce the number of licenses during the term, making it less flexible than the CSP model.
CSP offers unparalleled flexibility. Businesses can scale their licenses up or down as needed. There is no minimum user requirement, and licenses can be adjusted monthly. This flexibility makes CSP ideal for businesses experiencing growth, seasonal fluctuations, or digital transformation.
Read about Microsoft CSP Benefits.
Cost Considerations
Financial Impact
Large organizations with predictable IT needs benefit from the EA’s volume-based pricing model, often resulting in better pricing than other options. The three-year commitment and price protection can provide cost savings and budget stability, particularly for organizations looking for long-term financial predictability.
CSP, by contrast, offers a pay-as-you-go model with no upfront costs, making it more accessible for smaller businesses or those with unpredictable cash flow. CSP’s flexibility in scaling services up or down also provides financial advantages for organizations that prefer to avoid upfront capital expenses and opt for more operational expenditure models.
Making the Choice
Choosing between EA and CSP depends largely on the size of the organization, the nature of its IT environment, and its strategic goals:
- Enterprise Agreement is ideal for:
- Large enterprises with 500+ users or devices.
- Organizations with stable, predictable IT environments have little need for frequent adjustments in their licensing needs.
- Businesses seeking volume-based discounts and long-term price protection.
- Companies require comprehensive software assurance benefits that provide access to the latest product updates and support.
- Cloud Solution Provider is optimal for:
- Smaller organizations or businesses with fewer than 500 users or fluctuating device counts.
- Businesses that require greater flexibility in scaling licenses and services monthly.
- Companies want to move to the cloud and adopt modern, cloud-first solutions.
- Organizations that require strong partner support, customized solutions, and the ability to adjust their licensing model based on business needs.
FAQ: Microsoft CSP vs. Enterprise Agreement: Key Difference
What is Microsoft CSP?
Microsoft Cloud Solution Provider (CSP) program allows resellers to manage subscriptions, billing, and customer support. It offers flexible payment options through month-to-month plans.
What is an Enterprise Agreement?
An Enterprise Agreement is a Microsoft licensing program for large organizations. It provides volume licensing over a 3-year term, standardized pricing, and the option for cloud services.
Who is eligible for CSP?
CSP is best for small—to medium-sized businesses that need flexibility in licensing. It offers a pay-as-you-go model and low upfront costs for cloud services.
Who is eligible for an Enterprise Agreement?
Enterprise Agreements are designed for large organizations with over 500 users or devices. They offer discounts on volume licensing and support.
What is the primary difference between a CSP and an Enterprise Agreement?
The main difference is contract flexibility. CSP is pay-as-you-go with month-to-month billing, while an Enterprise Agreement requires a longer-term commitment, usually three years.
Can businesses switch from CSP to Enterprise Agreement?
Businesses can switch to an Enterprise Agreement if they scale up and require volume discounts or longer-term commitments.
What are the payment terms for CSP?
CSP provides flexible month-to-month billing, enabling businesses to scale services up or down as needed.
What are the payment terms for Enterprise Agreements?
Enterprise Agreements typically require a 3-year commitment with the option for annual or upfront payments, often with volume discounts.
Does CSP include support?
Support for CSP is provided through Microsoft partners, depending on the reseller’s service offering.
Does an Enterprise Agreement include support?
Enterprise Agreements offer direct support from Microsoft, ensuring dedicated assistance for complex enterprise needs.
Which program is better for small businesses?
CSP is better for small businesses due to its flexibility and lack of long-term commitments, making it ideal for startups and SMEs.
Which program is better for large enterprises?
Enterprise Agreement is more suitable for large enterprises, offering volume licensing, discounts, and direct Microsoft support.
Can CSP customers access Microsoft Azure?
Yes, CSP customers can access Microsoft Azure services and other cloud products like Microsoft 365.
Does an Enterprise Agreement include Azure services?
Yes, Enterprise Agreement customers can access Microsoft Azure with the potential for additional savings on cloud services.
How do CSP billing cycles work?
CSP billing cycles are monthly, with the ability to add or remove services, providing flexibility in usage and payment.
What are the advantages of an Enterprise Agreement?
Enterprise Agreements offer lower per-unit pricing, centralized management, and the ability to consolidate licenses for multiple products under one agreement.
