Microsoft SPLA vs CSP: Which Is Better?

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By Redress Compliance

Key Takeaway:

  • Service providers and independent software vendors can license Microsoft software for hosting and delivering their applications through Microsoft’s Service Provider Licensing Agreement (SPLA).
  • With SPLA, customers pay for the use of software monthly without needing to buy licenses upfront and there is no traditional “entitlement”. Providers can deploy as many instances and create as many user accounts as needed to provide services. At the end of each calendar month, providers must report the high watermark to Microsoft via their SPLA resellers.
  • Microsoft’s Cloud Solution Provider (CSP) program offers licensed cloud services directly from authorized partners and flexible payment options, allowing service providers to scale up/down as needed. CSPs offer higher margins for hosting providers in Azure than the SPLA model.

Introduction to Microsoft SPLA and CSP licenses

Licensing has always been an essential aspect of cloud services, and providers are currently transitioning towards subscription-based models. In this section, we will introduce Microsoft’s two licenses: SPLA and CSP, and examine the importance of licensing in cloud services. We will also analyze the challenges that service providers face when selecting the appropriate licensing model and provide a comprehensive comparison of these licenses.

Understanding the importance of licensing in cloud services

Licensing of cloud services is essential. It is needed to make sure regulations are followed. There are different licensing models and they can affect the costs, margins, and business strategies of service providers.

It is hard for service providers to select the correct licensing model, because the policies and terms are complex. Making the wrong decision may lead to compliance issues or fines. So it is key to choose a license model that meets the company’s needs and respects regulations.

Microsoft provides two main license models: SPLA (Service Provider License Agreement) and CSP (Cloud Solution Provider). Each license has its own features, benefits, and factors to consider when choosing the right one.

SPLA and CSP differ in how software usage is billed. SPLA is pay-as-you-go, while CSP has flexible pricing and scaling options. Also, hosting partners have different profit margins with each license model depending on usage levels.

Knowing the SPLA and CSP license models can save time, money, and avoid penalties. It also allows businesses to make the most profits while following regulations.

Challenges faced by service providers in choosing the right licensing model

Cloud service providers have to decide on a suitable licensing model. Providing licensed software and apps is important for a successful business. The licensing landscape is complicated and keeps changing, so this can be overwhelming.

When selecting a license, service providers must consider factors like scalability, flexibility, cost-effectiveness and Microsoft regulations. Evaluating the advantages and limitations of each license option helps them find the right model for their needs.

For instance, CSP licensing has flexible payment options and greater profits. SPLA licensing offers unlimited accounts and instances at a low cost. Also, changes in customer infrastructure can affect the decision between these two licenses.

To make the correct licensing choice, service providers need to stay updated on industry developments and regulations and factor in their own business requirements. Ultimately, choosing the best license involves considering all the available options and other influencing factors.

Microsoft SPLA license, for example, provides pay-as-you-go and unrestricted instances to maximize the potential of your cloud service business.

Understanding Microsoft SPLA licensing and benefits

Microsoft’s Services Provider License Agreement (SPLA) licensing program can be complex. However, service providers must understand its advantages. This section explores SPLA benefits, including a pay-as-you-go model for software usage, unlimited user accounts and instances for service providers, and monthly reporting of the high watermark to Microsoft. Stay with us as we break down everything you need to know about SPLA licensing for your business.

Pay-as-you-go model for software usage

Microsoft SPLA and CSP licenses provide service providers with various options, including the pay-as-you-go model for software usage. This model is designed to offer flexible features that can be adjusted based on varying needs. Service providers are only billed for the software they need – great for small service providers with fluctuating demand.

The SPLA licensing program offers unlimited instances, user accounts, and the capacity to serve multiple customers. However, service providers must submit monthly reports of high watermark utilization to Microsoft.

One unique feature is customers can deploy shared infrastructure under listed providers. This can be advantageous for customers but challenging for service providers who must educate their clients and guide them to informed decisions.

The pay-as-you-go model provides flexibility, cost-effectiveness, and scalability for service providers who need Microsoft software.

Unlimited instances and user accounts for service providers

Microsoft’s Service Provider License Agreement (SPLA) is great for service providers who need to serve their customers.

It offers the ability to use licensed software on unlimited machines and allow an unlimited number of users to access it. This means they can use an unlimited number of software instances on multiple machines and virtual environments.

Their customers get ‘pay-as-you-go’ pricing, with a custom structure. Plus, SPLA has extensive reporting capabilities. This enables service providers to keep track of individual customer resource usage.

They also have better control over hardware infrastructure, so they can provide reliable services with quick scalability. Microsoft partners get updates for enterprise-level commercial software, plus discounts.

However, service providers must report their high watermark usage to Microsoft once a month. SPLA gives them control over how many software applications their clients use, plus unrestricted machine locations and granular reporting needs.

The SPLA and Cloud Solution Provider (CSP) licenses both have flexible pricing. But they have some differences. CSP direct billing might be better for businesses that have irregular usage patterns of cloud services. SPLA is better for those who need versatility and control over their services.

Therefore, SPLA is the optimal choice for service providers who want unlimited instances and user accounts. Just remember to keep track of usage and report high watermark data to Microsoft.

Reporting high watermark to Microsoft monthly

Microsoft SPLA licensing demands monthly reporting of the highest watermark usage from service providers. They must keep track of the max licenses used during the month and report the data to Microsoft.

This reporting process is vital for SPLA, as it ensures compliance with licensing policies and guidelines. Failure to adhere might lead to fines or penalties. What’s more, high watermark reporting allows service providers to meet their clients’ needs. This helps avoid financial risks that may arise from license misuse or overuse.

To sum up, reporting high watermark to Microsoft monthly is an essential part of utilizing Microsoft SPLA licensing. Service providers must comply to avoid possible legal or financial risks.

Understanding Microsoft CSP licensing and benefits

Microsoft CSP (Cloud Solution Provider) licensing is a popular and flexible way to buy Microsoft licenses and cloud services from authorized partners. This licensing option differs from other Microsoft licensing programs in a few ways. The purchasing of licenses and cloud services can be done directly from authorized partners. Furthermore, it offers flexible pricing and payment options, which can be beneficial to businesses. Additionally, the ability to scale up or down based on changing business needs is a major advantage of this licensing program.

Purchasing licenses and cloud services directly from authorized partners

Microsoft offers two licensing options: the Service Provider Licensing Agreement (SPLA) and Cloud Solution Provider (CSP).

CSP grants customers the capability to buy licenses and cloud services from authorized partners. This spares service providers money and difficulty of buying the software themselves.

With an approved partner, service providers can focus on using the software and providing more adjustable solutions to their clients. CSP’s direct buying feature makes it easy to scale up or down, with many payment choices, offering more flexibility.

Customers who use a Microsoft-approved CSP partner get a wider range of services and availability. For hosting providers, partners manage the whole billing process, reducing admin expenses.

Using an approved partner through the CSP program for SaaS product, pricing can be tailored and negotiated based on customer needs. Partners work on a weekly payouts premise within one month, generating a more stable cash flow than traditional resale models.

Flexible pricing and payment options

Microsoft’s CSP licensing offers service providers the ability to customize their pricing and payment options. It’s common for software companies to offer flexible pricing, but CSP license model offers unique benefits. Service providers can buy licenses and cloud services directly from authorized partners. This customizability allows them to select the amount of resources they need without overpaying.

CSP licensing has various payment options such as utilities usage-based billing, 1-year commitment subscriptions, and 3-year commitment subscriptions with monthly billing. Customers can easily scale up the services they need for cost optimization. Hosting partners are able to provide better customer service due to the level of customization.

License management under CSP licensing is user-friendly. Users have a comprehensive view of all purchased licenses in one portal. CSP licensing also lets hosting providers manage hybrid environments with resources on-premises and in the cloud.

The main advantage of Microsoft CSP licensing’s flexible pricing and payment model is resource utilization at a lower cost. This model simplifies billing processes and provides support structures for both parties.

Ability to scale up or down based on changing needs

Cloud services need to be able to change with changing needs. Microsoft CSP licensing offers that flexibility.

It makes it possible to add or remove licenses quickly and easily. This way, more resources (like storage and processing power) can be provided. It also helps match customer needs and save money.

Plus, CSP has a payment model with no upfront costs. Service providers can pay monthly or yearly. This makes it easier to keep track of finances and grow the business.

Microsoft’s CSP program says channel partners can make a 20% monthly margin from Azure consumption-based services.

Service providers must understand these models to get the most profit, give good service and have happy customers.

Comparison between Microsoft SPLA and CSP licenses

Microsoft offers different licensing programs to its partners, including the Service Provider License Agreement (SPLA) and the Cloud Solution Provider (CSP) program. The SPLA is a legacy program that is being phased out. The CSP program is the current offering from Microsoft, which provides partners with a wide range of options to resell Microsoft cloud services such as Microsoft 365, Azure, and Dynamics 365.

In this section, we will compare Microsoft SPLA and CSP licenses and examine the differences between them. CSP partners have more control over their customer accounts, which enables them to customize their offerings. On the other hand, SPLA partners have less flexibility and cannot offer customized solutions. Additionally, the CSP program requires partners to commit to an annual revenue target, while SPLA operates on a pay-as-you-go model.

When it comes to margins for hosting providers in Azure, CSP partners are typically better off than their SPLA counterparts. This is because CSP partners can take advantage of Azure Reserved Instance prices, which provide significant discounts on virtual machines (VMs) when pre-purchasing usage for a one- or three-year term. SPLA partners do not have access to these discounted prices, which means they may struggle to keep pace with the competition.

In terms of costs, SPLA partners must pay for licenses on a monthly basis, which can add up to substantial costs over time. CSP partners, on the other hand, have more flexibility when it comes to billing their customers. They can choose to bundle various Microsoft cloud services, which reduces their costs and makes it easier for them to manage their billing processes.

In summary, the CSP program offers several advantages to Microsoft partners, including greater flexibility, access to discounted prices, and more control over customer accounts. As Microsoft continues to push partners towards the CSP program, SPLA partners may need to reevaluate their business models and determine whether or not it makes sense to migrate to the newer program.

Margins for hosting providers in Azure through CSP program

Microsoft’s Azure cloud computing platform offers a range of services, like virtual machine hosting, data storage, and app services. Hosting providers in the CSP program can earn great margins by offering these Azure services to their customers.

The table below shows the margins that hosting providers can make through the CSP program:

Product One-Year Prepaid Margin One-Year Monthly Pay Margin
VM 9% 7%
Storage 17% 15%
O365 Services 12% 6%

By providing prepaid options, hosting providers can generate higher profits than with monthly pay transactions. Plus, they can give their customers more value through flexible pricing. The margins for hosting providers in Azure through the CSP program are truly impressive.

It’s important to be aware that the margin table may evolve over time. Hosting providers must keep up with pricing changes in their region to maintain profitability. This way, they can maximize profits, while the margins for hosting providers in Azure through the CSP program remain lucrative for their business.

Margins for SPLA license model

Microsoft’s SPLA license model offers an economical and flexible way for hosting providers to provide cloud-based services to customers. We will now analyze the margins of this license model.

To calculate the margins, we must consider the minimum commitment levels, payment terms and volume discount levels. The pricing is based on the number of licenses and services offered.

This table shows the approximate gross profit margins for a typical SPLA offering with hypervisor-based virtualization:

SPLA Gross Profit Margin Percentage
Infrastructure Software 48%
Virtualization & Management Software 31%
RDS Subscriber Access Licenses 65%
SQL Server Web Edition Per Core License 45-50%

Service providers’ margin will vary due to their offerings, customer demand and other factors.

CSP license program contracts can also be bundled to increase profitability. Both models offer good business growth opportunities. Hosting providers should analyze the margins and other factors to choose the best licensing option.

Differences in payment models and potential costs for hosting partners

When it comes to licensing options for hosting partners, payment models and costs should be taken into account. Microsoft’s SPLA license and the CSP licensing model are two popular ones.

SPLA requires monthly payments based on user and instance count, along with extra reporting. CSP offers more flexible pricing and payment options. Let’s compare their costs side by side. SPLA needs a monthly payment, while CSP has more adaptable fees. But CSP may have lower initial costs but more long-term costs.

Infrastructure and support fees must be considered when selecting a model. Hosting partners should assess their present and future needs to decide which model fits best. SPLA can bring consistent payments, but CSP has scalability for rapidly growing or fluctuating demand.

Comparison of license models

In the world of Microsoft licensing, it can be challenging to choose between the right license models. In this section, we will compare different license models, including SPLA vs. CSP subscription licensing with a 1-year commitment, SPLA vs. CSP subscription licensing with a 3-year commitment, and SPLA vs. Azure pay-as-you-go licenses. Our aim is to help you understand which licensing option may be the best fit for your organization, based on factual data.

SPLA vs CSP Subscription licensing 1-year commitment

Comparing Microsoft’s SPLA and CSP Subscription Licensing models requires looking at various aspects, especially the subscription licensing for one year.

To compare these two license types over one year, a table can be made. It should include criteria like: payment options, software usage, user accounts, scalability, reporting requirements, and cost structure. Both license types’ details should be filled in each column to make an informed comparison.

Criteria SPLA Subscription Licensing CSP Subscription Licensing
Payment Options Monthly payments Monthly or upfront payments
Software Usage Pay-as-you-go model Licenses bought directly
User Accounts Unlimited instances Flexible to adjust needs
Scalability Scale up or down Scale up or down
Reporting Requirements Directly to Microsoft Directly to Microsoft
Cost Structure Based on usage Fixed pricing per user/VM

Both models have their own advantages and disadvantages, based on these criteria.

The cost structure is a major difference. SPLA is based on usage, while CSP has fixed pricing per user/VM. This means SPLA is suitable for varying workloads, while CSP is better for less dynamic operations.

The choice between SPLA and CSP depends on business requirements and preferences. It needs consideration of factors such as software usage, scalability needs, payment options, and cost structure.

SPLA vs CSP Subscription licensing 3-year commitment

Microsoft offers two licencing models for cloud services: SPLA and CSP. Consider which model is right for your business needs, especially when you commit to a 3-year period.

We can check out key factors that may affect your decision between SPLA and CSP subscription licences in the table below:

Factors SPLA CSP
License term Renew annually Commitment of one year, with renew option up to 3 years
Payment model Usage-based, monthly Upfront purchases for all services in the term
Flexibility Less flexible More flexible to adjust numbers
Discounts Volume-based discounts, pricing varies on services. Discounts applied after agreement on price scheme. Discounts based on Azure resource consumption.

Each model has its own advantages, limitations and financial variables. If you need a flexible scale-up/down approach, CSP subscription licensing is better than SPLA.

When choosing between SPLA and CSP subscription for Microsoft cloud services, think about your business needs. Remember to consider all factors before committing to a licence.

SPLA vs Azure Pay-as-you-go licenses

SPLA and Azure pay-as-you-go licenses both provide options for service providers. However, Azure pay-as-you-go licenses offer more flexibility in payments. With SPLA, service providers must submit usage reports to Microsoft monthly. Whereas, with Azure pay-as-you-go there is no such reporting requirement. Additionally, SPLA requires an annual commitment, whereas Azure pay-as-you-go does not need an upfront fee.

Looking at the table, we can see that SPLA provides a subscription-based model with a longer commitment period. On the other hand, Azure pay-as-you-go licenses are charged on an hourly basis, according to region.

Azure pay-as-you-go licenses also provide the ability to scale up or down based on needs. This feature prevents overpaying and ensures efficient usage.

In conclusion, if a hosting provider is looking for payment flexibility and scalability, Azure pay-as-you-go licenses may be the best choice.

Understanding Listed Providers and deployment options

With the increasing demand for cloud services worldwide, it is crucial to understand the various providers and deployment options available. This section will focus on the recent changes to deployment for end customers on shared infrastructure, explore opportunities for service providers to educate end customers, and highlight the challenges for service providers due to competition. With this information, you can make informed decisions about the best cloud service provider between Microsoft SPLA and CSP.

Changes to end customer deployment on shared infrastructure

Microsoft SPLA and CSP licenses have brought big changes to end customer deployment on shared infrastructure. Shared infrastructure is a cloud where multiple customers share computing resources – like servers, storage, and networking devices. This can cause issues for end customers due to conflicts and security risks.

Service providers must show customers how to select the right license for their needs. Thanks to CSP licensing, customers can buy licenses and cloud services from authorized partners. This gives more flexible pricing and payment options. Customers can scale up and down as needed, with no long-term contracts. They also keep control of their data and applications, even if the apps are on private infrastructure.

But, shared infrastructure brings risks. Service providers must put in place security measures like firewalls, intrusion detection and access controls. They must also understand the different licensing models offered by Microsoft SPLA and CSP licenses. This impacts their margins when hosting in Azure through the CSP program or licensing via SPLA models.

By teaching customers about the advantages of SPLA and CSP licensing, service providers can build stronger relationships. Education is key to help customers understand these license models. This is beneficial for everyone in the long run.

Opportunities for service providers to educate end customers

Service providers have plenty of chances to teach their end customers about Microsoft’s SPLA and CSP licenses. They can fuel growth and give insight into cloud licensing models. By showing the advantages of each model, service providers can help end customers make decisions that suit their business. This makes customers happier and gives providers a competitive edge.

To teach customers, providers should stay up-to-date with any changes or new options listed providers have. One way to educate is to explain the advantages of each model and which is best for their needs. SPLA licenses give more control over usage and unlimited accounts. CSP licenses offer flexible pricing and payment options that are easier to scale.

To keep customers and grow revenue, providers should use educational tools like webinars, training, and online resources. Showing expertise can build trust and long-term partnerships based on success.

Challenges for service providers due to competition

Competition in the cloud service provider industry is fierce. Microsoft created two new licenses; SPLA and CSP, forcing providers to restructure their strategies.

A challenge for providers is to stand out from their competitors. This can be hard for small providers who have less resources than larger corporations. It can result in lower market share and revenue.

SPLA and CSP licenses have presented challenges for providers. SPLA license has a pay-as-you-go model; others might benefit more from CSP’s scalable pricing options.

Changes to customer deployment also bring challenges. Providers must educate their customers to stay profitable. They must keep adapting to the changing market and competition.

Conclusion: Which license option is better for your business?

When selecting between Microsoft SPLA and CSP license options, the decision is up to what your business requires. SPLA has a convenient pay-as-you-go system which is perfect for service providers who want to manage and alter their software licenses easily.

CSP, on the other hand, provides more flexibility and customizations for any size of business. This allows them to choose the products they need and how they want to utilize them. Microsoft continues to change and improve its licensing options, so it’s crucial to stay informed and evaluate your options regularly to get the best deal for your business.

So, which license option is ideal for your business? It depends on your demands and preferences. If you are a service provider searching for a straightforward and adjustable pricing model, SPLA could be the better choice. However, if you are a business looking for more control and flexibility over your software licensing, CSP might be the right way to go.

It is important to do extensive research and get advice from professionals in order to make an educated decision about which license option is best for your unique business needs.

Five Facts About Microsoft SPLA vs CSP:

  • ✅ Microsoft SPLA is a licensing program for service providers and independent software vendors to license Microsoft software for hosting and delivering their applications. (Source:
  • ✅ CSP stands for Cloud Solutions Provider program which allows organizations to purchase Microsoft software licenses and cloud services directly from authorized partners. (Source:
  • ✅ SPLA licenses do not require a Windows Server, but if used, it can affect the ability to move Microsoft apps to the cloud. (Source:
  • ✅ Shifting workloads to Microsoft Azure through the CSP program can result in better margins. (Source:
  • ✅ CSP licensing may be more cost-effective than SPLA licensing, depending on various factors such as licensing models, core numbers, and deployment options. (Source:

FAQs about Microsoft Spla Vs Csp: Which Is Better?

What is Microsoft SPLA?

Microsoft SPLA is a licensing program for service providers and independent software vendors to license Microsoft software for hosting and delivering their applications. It enables a pay-as-you-go model, allowing customers to pay for the use of software monthly without needing to buy licenses upfront. Service providers use SPLA licenses to provide hosting and other commercial services, with the licensing agreement between the provider and Microsoft. Unlike traditional licensing agreements, there is no entitlement with SPLA, and providers may deploy as many instances and create as many user accounts as needed to provide services. At the end of each calendar month, providers must report the high watermark to Microsoft via their SPLA resellers. End customers rent services from the provider and pay service fees, with end-user licensing terms.

What is the difference between Microsoft SPLA and CSP?

Microsoft Service Provider Licensing Agreement (SPLA) is a license model that allows companies to license Microsoft products to deliver hosted applications and software services to customers. Microsoft CSP, on the other hand, stands for Cloud Solutions Provider program, which allows organizations to purchase Microsoft software licenses and cloud services directly from authorized partners. Unlike SPLA, which requires a Windows Server, CSP licensing offers flexible pricing and payment options, allowing customers to manage their cloud subscriptions from a single dashboard created by the partner.

Which license model is more cost-effective, SPLA or CSP?

Many hosting providers may hesitate to migrate current customers to Microsoft Azure through the CSP program due to fear of reduced profitability under the SPLA license model. However, a transition to Azure does not necessarily hurt profitability if Azure license policies are used properly. Microsoft has been billing licenses based on core numbers since 2018, which can be difficult to understand for Windows Server. SPLA requires a Windows Server, which can affect the ability to move Microsoft apps to the cloud. CSP licenses differ from SPLA licenses in their payment model and potential cost to hosting partners. To determine cost-effectiveness, comparisons can be made between different license models, including SPLA, CSP Subscription licensing 1-year commitment, CSP Subscription licensing 3-year commitment, and Azure Pay-as-you-go (PAYG) licenses included in the VM price.

What are the benefits of using Microsoft CSP?

Microsoft CSP, or Cloud Solutions Provider program, offers organizations the ability to purchase Microsoft software licenses and cloud services directly from authorized partners. Some benefits of using CSP include flexible pricing and payment options, the ability to manage cloud subscriptions through a single dashboard created by the partner, and the option to scale cloud services based on changing needs. This program is also ideal for working with a trusted partner to manage cloud services and helping smaller companies achieve discounts in available services.

What are the challenges of Microsoft SPLA and CSP?

Many hosting providers may be hesitant to migrate current customers due to fear of reduced profitability under the SPLA license model. Additionally, service providers need to be educated on the different deployment options and what software their customers own or how they bought them. Competition can also be a challenge for service providers. To support Microsoft products, extended support campaigns, license verification forms, and Azure Hybrid Benefit programs are available, which can be difficult to fully understand for end customers and service providers alike.

Do you still sign a contract with Microsoft for CSP?

Yes, to transact through the Microsoft CSP program, partners must still sign a contract with Microsoft. This contract is usually included in the terms and conditions agreed upon with the partner and offers end-to-end customer experience, from initial sales to ongoing support and billing. The program additionally allows organizations to purchase Microsoft software licenses and cloud services directly from authorized partners, helping them manage their cloud subscriptions through a single dashboard created by the partner.

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