Mixing Enterprise Agreement and CSP: How a Hybrid Licensing Approach Can Save Money

Mixing Enterprise Agreement and CSP

Introduction: Why Some Enterprises Mix EA and CSP

Microsoft’s software licensing is at a crossroads between long-term commitments and pay-as-you-go flexibility. Many large organizations have an Enterprise Agreement (EA) for core licensing needs, locking in discounts with a multi-year contract.

Meanwhile, the rise of the Cloud Solution Provider (CSP) program offers monthly subscription flexibility through partners. Read our complete guide to choosing between Microsoft EA and CSP.

Rather than framing it as “Microsoft CSP vs. EA,” some enterprises combine both via a hybrid licensing strategy to get the best of both worlds.

Instead of choosing one or the other, they combine EA and CSP to balance cost savings and agility.

A hybrid approach acknowledges that different parts of the business have different needs. Headquarters might rely on an EA for stable, full-time staff who need the same licenses year-round.

Meanwhile, branch offices or project teams with variable or seasonal workforce can use CSP for on-demand licensing.

This dual-channel Microsoft licensing strategy leverages EA’s volume discounts vs. CSP’s flexibility.

Companies pursuing this route should be aware that Microsoft’s sales teams often favor EA lock-in, so it’s on the organization to weigh the benefits of flexibility over vendor incentives.

When EA Works Best

An Enterprise Agreement makes the most sense when your user count and software needs are steady. Organizations with a stable core workforce benefit from EA’s fixed pricing and coverage.

For example, if all 1,000 of your headquarters staff need the same Microsoft 365 license year-round, an EA can provide a significant volume discount and price protection for those seats.

EA is also ideal for predictable IT budgets. The three-year term locks in pricing and spreads payments annually, so finance teams know what to expect.

Large enterprises with stable, long-term license demand get the best value from EA’s discounts and added benefits like Software Assurance.

In short, EA works best for the core, permanent workforce where you want licensing predictability and are willing to commit to a long-term contract.

Read our guide to MCA, Microsoft Customer Agreement (MCA) Explained: Is It Replacing EAs and How to Adapt?.

When CSP Adds Value

The CSP program shines when you need flexibility. It’s ideal for a seasonal or contractor workforce, because you can scale licenses up or down month-to-month.

If your retail team doubles in size during the holiday season or you onboard contractors for a 3-month project, CSP licensing covers those users only for the time needed. This avoids the need to pay year-round for temporary staff.

CSP also adds value in scenarios where an EA isn’t practical. Smaller subsidiaries or new acquisitions may be too small for an EA, but they can be equipped via CSP subscriptions.

Additionally, if you’re testing or piloting new Microsoft services, CSP lets you try licenses in small quantities without a long commitment.

In short, CSP is best for dynamic or unpredictable needs you trade the volume discount for the ability to adjust licenses on the fly.

Read about other MS agreements, Beyond EA and CSP: Understanding MPSA and Other Microsoft Licensing Programs.

Hybrid Licensing Scenarios

Common ways to mix EA and CSP in one organization include:

• EA for headquarters, CSP for branch offices: Large headquarters or core business units with hundreds of users stay on the EA for maximum discount, while smaller branch offices use CSP to remain agile. This way, the branch teams get the licenses they need on demand without the HQ having to overspend or commit to those smaller groups.
• CSP for non-EA workloads: Even with an EA in place, there are services or niche products you might not have included in the EA. For example, if a department wants to try a new Azure Marketplace app or a specialty Microsoft service not covered in your EA, you can buy it via CSP. The CSP route lets you pilot these non-EA workloads short-term, rather than amending your EA mid-term.
• Short-term projects via CSP alongside EA: A hybrid strategy can support one-off projects or spikes in usage. If you need 50 extra licenses for a 6-month project, you can provision them through CSP instead of permanently increasing your EA commitment. After the project, you simply cancel those CSP subscriptions. This short-term CSP licensing avoids long-term cost while your EA continues to cover your regular staff.

Managing Two Models in One Tenant

Using a hybrid model means you’ll have EA and CSP subscriptions active in the same Microsoft 365 tenant.

Fortunately, Microsoft tenant license coexistence is fully supported – you can mix EA and CSP license pools within one Office 365 environment and assign them to users as needed.

However, you should implement good management practices to avoid confusion. For example, make sure each user gets one appropriate license for a product (don’t accidentally assign a person an EA-based Office 365 license and a CSP-based Office 365 license at the same time).

Governance is key to a dual-model approach. Your procurement and IT teams should coordinate so that license additions are done thoughtfully.

Some companies set internal guidelines: use an EA license first if one is available for a new hire, or otherwise provision a CSP license if that role is temporary.

Regularly audit usage to ensure you’re not overspending – the goal is to use CSP’s license agility without losing track of costs.

With clear processes, a hybrid EA+CSP environment can be managed in one tenant without duplicate licensing or billing surprises.

Financial Optimization with a Hybrid Approach

The primary reason to pursue a hybrid EA+CSP model is cost optimization. By tailoring each segment of your workforce to the most suitable licensing channel, you avoid overpaying.

For instance, you might commit to a smaller base of licenses under the EA (to cover all permanent staff) and rely on CSP to flex for the rest.

This keeps your EA commitment – and its upfront cost – lower than it would be if you tried to cover everyone in the EA. Meanwhile, CSP’s pay-as-you-go model catches any overflow in usage. It’s a strategic way to ensure you’re not buying more licenses than you actually need.

A hybrid approach can also minimize “shelfware” (paid licenses sitting unused). Instead of buying extra licenses just in case and letting them linger, you can always add a CSP subscription when a new need arises, then remove it when it’s no longer required. This means fewer wasted dollars on idle licenses.

At the same time, monitor your CSP usage over the year. If certain CSP seats become consistently occupied (meaning those users have turned into long-term roles), consider folding them into the EA at the next renewal.

Moving stable usage into the EA will grab the volume discounts and simplify management. Conversely, if you anticipate layoffs or downsizing, resist the urge to lock those users into the EA – keep them on CSP so you can scale down without penalty.

Hybrid licensing even helps with EA true-up management. If you experience sudden growth in users, you can cover it with CSP usage instead of immediately triggering an EA true-up mid-term.

This reduces the shock of a big true-up bill, because your EA usage stays within its committed range until you adjust it at renewal time.

Overall, the hybrid model acts as a financial safety valve: you pay the lower EA price for what’s predictable and use CSP as a flexible buffer for everything else.

Comparison Table: EA vs CSP vs MPSA

Before diving into managing a mix, it is helpful to understand how each licensing model performs on its own.

The table below compares a pure EA approach, a pure CSP approach, and Microsoft’s Products & Services Agreement (MPSA) – a transactional volume licensing option with no long-term commitment.

Checklist: Adopting a Hybrid EA + CSP Strategy

1. Review workforce segmentation: Break down your organization by departments, roles, or business units. This helps identify groups that have different licensing stability or requirements.
2. Identify stable vs. variable users: For each segment, determine which users are permanent (steady license need) versus those that fluctuate (temporary, seasonal, or project-based).
3. Map EA licenses to core staff, CSP for seasonal: Assign your long-term EA licenses to the stable core staff who need year-round coverage. Use CSP subscriptions for users who are seasonal, contract-based, or might only need licenses for part of the year.
4. Align CSP usage tracking in the tenant: Set up monitoring for CSP licenses in your Microsoft 365 admin center or via reports. Keep an eye on how many CSP-based licenses are active each month so you can manage costs and avoid overlap with EA licenses.
5. Reassess the mix at EA renewal: Before renewing your EA, evaluate the past year’s CSP usage. If many CSP users become permanent, consider adding them to the EA to get better pricing. Likewise, reduce your EA commitment if some roles would be cheaper to leave on CSP going forward.

FAQ: Hybrid Microsoft Licensing

Q1: Can EA and CSP coexist in the same tenant?
A1: Yes. Both license pools can be assigned to users within one Microsoft tenant simultaneously.

Q2: Is CSP more expensive than EA?
A2: Yes. CSP’s price per license is higher, but its flexibility offsets the cost for variable users.

Q3: Can CSP usage influence EA negotiations?
A3: Yes. CSP spending can be bundled into an EA deal or used as negotiation leverage at renewal time.

Q4: Should seasonal users always go on CSP?
A4: Usually yes. CSP’s month-to-month billing means you only pay when seasonal staff are active, avoiding year-round costs.

Q5: Can I migrate CSP users into EA later?
A5: Yes. At EA renewal, you can convert stable CSP users into EA licenses for consolidation and better pricing.

Q6: Can CSP help reduce EA true-up costs?
A6: Yes. If you use CSP for short-term spikes in usage, you won’t need to true-up your EA mid-term. This keeps EA costs steady until renewal.

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